May 24, 2022
Canada’s ability to effectively sanction and track the wealth of Russian kleptocrats has been called into question by a Transparency International report issued today.
Canada joined other G7 nations in March to form the Russian Elites, Proxies and Oligarchs (REPO) Task Force, recognizing the urgency of tracking and freezing the financial and other assets of Russian Oligarchs in the wake of the invasion of Ukraine.
The new study, Up to the task? The state of play in countries committed to freezing and seizing Russian dirty money, finds that authorities across the G7 lack information, capacity and powers to track down illicit wealth. As things stand, governments may also face significant legal challenges when attempting to confiscate and return these assets to the victims of corruption.
Despite the Government of Canada’s commitment to establish a public registry of beneficial ownership by the end of 2023, it must still rely on the information provided by financial institutions to identify the owners of assets, a deeply flawed approach. Canada also suffers from a lack of systematic collection of beneficial ownership information for real estate property and luxury goods - assets long known to be illicit stores of wealth for sanctioned individuals.
“Anonymous companies and trusts have made it easier for kleptocrats to purchase real estate or other luxury goods throughout the countries covered by the research, often successfully launder their ill-gotten gains,” according to James Cohen, Executive Director of Transparency International Canada.
“Key gatekeeper professions have anti-money laundering requirements in Germany, France, Italy, Netherlands and the UK, but not in Australia, Canada and the US”, the Transparency International report says. “ Most significantly, trust and corporate service providers, and lawyers are under no obligation to undertake customer due diligence, identify the beneficial owner of legal entity clients or establish their source of wealth.”
“We welcome efforts by the Canadian government to sanction oligarchs and stem the flow of dirty money but more needs to be done,” Cohen continued, pointing to the report’s specific recommendations for Canada, including:
Provinces and territories should be integrated into the proposed beneficial ownership register
Rules that require the registration and disclosure of beneficial ownership of foreign trusts
A constitutionally compliant method to require lawyers to follow anti-money laundering rules
For media inquiries, please contact:
James Cohen
Executive Director, Transparency International Canada
Phone: 416-488-3939
Email: ti-can@transparencycanada.ca