ICIJ Investigation reveals Canada a hot spot for suspicious financial activity
For Immediate Release – September 25, 2020
OTTAWA – A coalition of organizations is urging the federal government to crack down on financial crime after Canadian banks, shell companies, and individuals were identified in a global investigation into suspicious financial activity.
The FinCEN Files investigationby the International Consortium of Investigative Journalists and BuzzFeed News found Western banks helped trillions in dirty or suspicious money flow across borders. Between 2000-2017, suspicious activity reports referenced individuals from more than 170 jurisdictions. Canada ranked 7thamong countries where individuals were flagged for suspicious financial activity.
“Canada has a reputation as a safe country with a robust economy, but our weak transparency laws have made us a haven for bad actors and complicit in all sorts of illicit global activity from drug trafficking to terrorist financing,” said Sasha Caldera, beneficial ownership transparency campaign manager with Publish What You Pay Canada, one of the coalition members.
Radio-Canada’sEnquêteinvestigated Canadian shell corporations flagged in the FinCEN filesfor receiving millions in suspicious transactions. Journalists traced front companies incorporated in New Brunswick and Alberta, with no legitimate business activity or beneficial owner in Canada, to Russia and alleged illicit activities ranging from insurance fraud to illegal fishing.
“This is just the tip of the iceberg of Canada’s snow-washing problem. For years, government policies have enabled international criminals to launder their dirty funds through Canadian banks, shell companies, and real estate,” said James Cohen, executive director of Transparency International Canada.
Canadian banks were also identified in the leaks. CIBC, RBC, TD, Bank of Montreal, UBS and HSBC Canada were involved in 183 suspicious transactions--$15.6 million coming in and $16.9 million going out, the investigation found. In one case, money was wire transferred to Canada for fentanyl deliverieswith the ringleader operating from a Canadian jail cell.
Suspicious activity reports failed to disclose key facts about customers such as the beneficial ownersof accounts involved in half the transactions. Bank officials also flagged that their own internal control and compliance measures were inadequate.
“Crises such as COVID-19 increase the opportunity for corruption and criminal activity. The government must do more to protect Canadians in this crisis by cracking down on loopholes that allow criminals to hide in the shadows,” said Cohen.
The coalition is urging the federal government to take immediate action by:
Prioritizing the creation a publicly accessible pan-Canadian registry of beneficial owners to help law enforcement, tax authorities, financial institutions, journalists and the public identify who owns and controls shell companies
Increasing funding for the Canada Revenue Agency and the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) to assist agencies with detecting and deterring financial crimes
Strengthening accountability requirements for Canadian banks and financial institutions including increased compliance measures and harsher penalties for enablers of financial crime
The FinCEN Files also found that more than 400 of the locations of organizations named in the files are known tax havens such as the British Virgin Islands and Hong Kong.
“Money-laundering and tax evasion benefit the richest members of society while lower-income individuals are left to deal with the negative effects of white-collar crime including drug and sex trafficking, rising housing prices, and foregone revenues for social programs and public services,” said Toby Sanger, director of Canadians for Tax Fairness.
“Without swift action from our government, Canada’s snow-washing problem will become one more way in which the pandemic worsens the gap between the wealthy and the most vulnerable.”
About us: The Coalition to End Snow-Washingconsists of three organizations that joined forces to advocate for a publicly accessible, pan-Canadian, company registry of beneficial owners: Canadians for Tax Fairness, Transparency International Canada, and Publish What You Pay Canada.
Media contact: James Cohen, Executive Director, Transparency International Canada
416-488-3939 | ti-can@transparencycanada.ca