Transparency International Canada and Canadians for Tax Fairness have made a joint submission in response the Government of British Columbia’s open call for consultations on a proposed Land Owner Transparency Act.
“The proposed Act, if enacted with several key amendments, could become a key tool to reduce money laundering, tax evasion and other criminal activity in BC real estate,” said Alesia Nahirny, Executive Director of Transparency International Canada. “It is an important piece of legislation and we commend the BC government for moving quickly to propose reforms that would make ownership of real estate more transparent in BC. It is an example that should be followed by other provinces. The devil is in the detail, however, and if the Act is to be effective several changes need to be made. That includes extending the Act to individuals who hold property on behalf of others (i.e., nominees), and ensuring that those who evade the new rules are appropriately punished.”
The submission makes several recommendations, including a suggestion that the Act be amended to require all titleholders of residential properties in BC to file an initial disclosure report indicating whether they are the beneficial owners of that property. We also suggest that the Act explicitly apply to individual nominees (i.e., natural persons) who are listed as property owners on title but who do not beneficially own the property.
“We’re pleased to see this piece of legislation being introduced and it sends a signal to the federal government that BC is willing to take the lead on beneficial ownership transparency by implementing a publicly accessible land registry,” said Sasha Caldera, Program Manager at Canadians For Tax Fairness.
TI Canada and C4TF further submitted that penalties under the Act should include punishment by imprisonment and the seizure of properties linked to the violations for egregious violations of the Act. The proposed $50,000 and $100,000 financial penalties in the Act will not dissuade those laundering million or tens of millions in illicit money through real estate.
“Meaningful prison sentences for intentionally false declarations will not only deter money laundering in BC real estate, but will also improve the quality of data submitted to the registry so that the government will have a better picture of who actually owns that real estate, thereby enabling the development of better policies to meet the housing needs of the province,” said Kevin Comeau, Lawyer and Member of TI Canada Working Group on Anti-Money Laundering and Beneficial Ownership Transparency.
The recommendations also include making data contained in the disclosure reports public and available online for free in machine-readable format as well as introducing appropriate enforcement measures to ensure the Act is complied with.
“Like any law, the Act will only be effective to the extent it is adhered to,” said Adam Ross, the lead researcher on beneficial ownership transparency for TI Canada. “If penalties for non-compliance are minor, or if the Act is unenforced, then abuses of opaque ownership will continue unabated. By increasing the maximum penalties under the Act and giving its administrator a strong enforcement mandate, the government would send a clear message that our housing market is no longer a safe haven to launder money or evade tax obligations through anonymous ownership.”
“Overall, this is a step in the right direction” said Denis Meunier, Transparency International Canada Board Member. “We would like to see the BC government continuing to lead on beneficial ownership transparency by requiring the disclosure of beneficial ownership information for BC companies and advocating that other Canadian jurisdictions follow suit.”
You can read the full joint submission and recommendations can be found here.
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*TI Canada and C4TF would like to thank Adam Ross, TI Canada Lead Researcher on Beneficial Ownership Transparency, Kevin Comeau, Lawyer and Member of the TI Canada AML/BOT Working Group, and Denis Meunier, TI Canada Board Member, for their substantive work on this submission.