Canada is a global laggard when it comes to forcing private corporations to reveal ownership information, says a new report documenting how easily money launderers, tax dodgers, terrorists and other criminals can remain in the financial shadows.
“The level of transparency is really inadequate in this day and age,” said Ottawa-based lawyer Mora Johnson, author of new study on lax corporation-registry rules across Canada. “It shouldn’t be so easy for criminals to use laundered funds.”
Johnson’s study, entitled Secret Entities, was commissioned by the Canadian arm of PWYP, a global coalition that helps citizens have a say in the conduct of resource firms, such as mining companies. The Canadian branch includes Canadians for Tax Fairness and Transparency International Canada as members.
The report focuses on “beneficial ownership,” that is, the question of who really profits from mysterious corporations that often hide their financial affairs behind obscure names and numbers.
Johnson’s report shows that private firms can apply for a certificate of incorporation from a provincial government, where the corporate name is then listed on a provincial registry.
“The corporation’s directors and their addresses will be included in the provincial directory but no beneficial ownership information is disclosed,” she notes.
“A securities register which includes the names, addresses and numbers of shares of all registered shareholders (not necessarily beneficial owners) must be maintained at the place of business. There is no requirement to make this information public.”
Obscuring ‘true ownership’
The group is pressing for tougher and more thorough business registries in Canada, in the provinces and federally, that would compel private corporations to disclose the identities of their secret owners.
Johnson writes in the report, to be made public Monday, that laws in Canada allow “one person to conduct business on another person’s behalf without disclosing their relationship, including agents, trustees, nominees, directors and nominee shareholders,” Johnson writes in the report, to be made public Monday.
“Powers of attorney are frequently used to perpetrate real estate fraud, and may be abused to obscure the true ownership or control of the holder of the power of attorney. Trust laws in Canada easily allow for the abuse of…