Conservative MP Michael Chong believes that Canada’s lenient laws have made it a haven for money launderers and those evading sanctions for international crimes. He argues that the current bill proposed by the federal government, Bill C-42, does not sufficiently address this issue. Introduced in March, the bill aims to create a corporate beneficial ownership registry to increase transparency and identify corporations involved in money laundering, financial crimes, and tax evasion.
However, Chong points out that the current version of the bill has critical loopholes that could leave about 90 percent of Canada’s corporations unchecked, potentially facilitating money laundering and other illicit activities. The problem lies in the bill’s limited coverage, which only applies to businesses incorporated under the Canada Business Corporations Act, leaving a vast majority of Canadian companies outside the registry’s purview.
As of 2020, Corporations Canada reported records of approximately 460,000 businesses, representing only a fraction of Canada’s total business landscape. According to Statistics Canada, the country had nearly 4.3 million businesses in June 2022, including 1.3 million employer businesses and almost 3 million non-employer businesses with annual revenues exceeding $30,000.
Chong argues that the current beneficial ownership registry would not address the issues that have allowed Canada to become a destination for sanctions evasion, proceeds of crime, terrorism, and money laundering. He expressed his concerns on Twitter and reiterated his argument in the House of Commons on June 19.
Chong also highlighted the lack of progress in creating beneficial ownership registries in provinces, particularly Alberta. He pointed out significant loopholes in the registries established by other provinces, particularly regarding the inclusion of real estate assets, which are commonly used for money laundering, as identified by the Cullen Commission in British Columbia’s money-laundering inquiry.
Instead of the current approach, Chong called on the government to use its broad criminal powers to create a national beneficial ownership registry that covers all corporations, regardless of their federal or provincial incorporation. He also emphasized the need to include all trusts and beneficial owners of real estate to effectively address money laundering and related illicit activities.
According to a 2019 report by the U.S. State Department, Canada is designated as a “major money laundering country.” Another report from March 2022 estimates that $36 billion to $91 billion is laundered annually in Canada.
Overall, Chong raises significant concerns about the loopholes in the current bill and the need for more comprehensive measures to combat money laundering and other illicit activities in Canada.