Canada’s landmark efforts to implement reforms to stop criminals and sanctioned oligarchs from moving money through secretive shell companies may falter without substantial buy-in from the country’s provinces and territories, a new report warns.
Canadian authorities are preparing to collect ownership information of companies registered in the country, a key way to strip criminals of secretive shell companies they rely on.
But a new Transparency International Canada report calls out Canadian provinces and territories — where the vast majority of Canadian companies are incorporated — for rarely even collecting basic shareholder data.
The report found that provinces and territories often keep information hidden from the public, and almost never take steps to verify the accuracy of company information that they do collect.
While transparency advocates have lauded the ongoing federal effort to collect ownership data, the existence of abuse-prone jurisdictions across the country could significantly reduce the meaningfulness of any federal reform, experts say.
“This is a wake-up call for provinces and territories,” James Cohen, the executive director of Transparency International Canada, told ICIJ. “They are vulnerable. They can’t go at it alone.”
The International Consortium of Investigative Journalists has for years covered financial secrecy around the world, and Canada’s planned registry follows pushes for similar reforms in the United States and the European Union. ICIJ’s 2021 Pandora Papers investigation shed light on the extent to which wealthy Canadians use secretive incorporations both at home and abroad to hide wealth and save on taxes. The global investigation, led by ICIJ in partnership with more than 150 media partners, was based on a trove of millions of leaked documents that disclosed assets of more than 330 politicians and high-level public officials in more than 90 countries and territories.
ICIJ’s reporting partners identified more than 500 Canadians in the data, including figure skating star Elvis Stojko and racecar Jacques Villeneuve, according to the CBC. As part of the project, reporters at the Toronto Star dug deep on the business dealings of an offshore company linked to a Saudi military official, a U.S. defense contractor, and a Serbian arms manufacturer.
Canada’s corporate registry push comes in the context of growing global efforts to set up ownership registries with countries like the United States, Switzerland, Cyprus and Ghana launching efforts in recent years to lift the veil on company ownership.
Cohen of Transparency International Canada said that, in its efforts to create the federal corporate registry, the Canadian federal government is not forcing provinces and territories to collect and report beneficial ownership data that could feed into a national registry. Instead, federal authorities are trying to convince provinces and territories to voluntarily join the federal push to collect beneficial ownership information. These efforts have not yet yielded solid commitments from Canada’s largest provinces like Onterio and Alberta, Cohen said, although the discussions appear to be continuing.
Cohen said that British Columbia might become what he calls an “early adopter” of a beneficial ownership registry after a provincial commission recommended establishing one earlier this year.
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Transparency International Canada’s new report grades the effectiveness of Canada’s 13 provincial and territorial systems for registering companies, which are independent from Canada’s federal registry. Out of a score of 100, the report gave the most favorable score of 37 points to Prince Edward Island, largely because the data that the regional government does collect is made accessible to the public. The lowest score went to the far northern province of Nunavut, which received an overall score of 6.25 that included zero points in subcategories describing public accessibility of the data.
The Canadian Federal government proposed $2.1 million to establish the registry in last year’s budget and said it would make the registry accessible to the public. This past May, the country committed to fast-tracking implementation of the registry, which is now being scheduled for completion next year. Cohen said that some exact details of how the federal registry will operate have not yet been released.