Bill C-42

An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts

This enactment amends the Canada Business Corporations Act to, among other things,
(a) require the Director appointed under that Act to make available to the public certain information on individuals with significant control over a corporation;
(b) protect the information and identity of certain individuals;
(c) add, or broaden the application of, offences and provide the Director with additional enforcement and compliance powers; and
(d) add regulatory authority to prescribe further requirements in certain provisions.
It also makes consequential and related amendments to other Acts.

Canada Business Corporations Act

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, as I was saying in my concluding remarks, it is very important that the provinces be on board. Many provinces are showing leadership already. I think it is one of the virtues of the way the government is proceeding on this that provinces will be able to onboard and provide information out of their own registries into the federal registry. I understand there has been a lot of discussion between the federal government and the provinces.

What I would say with respect to the tax fairness points that my colleague raised is simply this. As Canadians, we look around at other jurisdictions and see revelations like the Panama papers and others. We hear the government talk about investing in recovering some of those funds, but the record is that Canada has not and other jurisdictions have. When we hear about the resources given to the CRA, they seem to be spent more on chasing the poor to recover CERB funds, which they were encouraged to get by this very government, while the big tax cheats are getting away with it, either through tax havens or through the Canada wage subsidy program, from which the government has not even deigned to try to recover a dime.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I wonder if the member opposite has given any consideration to the kind of amendments he would want to see made to this bill in order to improve it.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, one thing that has emerged from debate in the House is that the question of stacked ownership structures is something we need to look at. I will not prejudge the outcome of that study by already thinking I know the answer to that, but I certainly think this is something the committee should be looking into. I hope that, in its wisdom, the committee will find some recommendations that make sense and can improve the bill in that regard.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Madam Speaker, in the past, it has been common for the government to pass imperfect but still useful legislation and then tell us that it has done everything it can, it has taken action and there is nothing left to do.

This was true in the case of the whistle-blower legislation, which was passed 17 years ago. It is full of flaws, but for 17 years, we have been told that the job is done, even though there is no protection.

I have a question for the member for Elmwood—Transcona. Once we pass the bill that is before us today, will the job be done? What are the next major steps for the government if it really wants to get tough on tax evasion, especially internationally?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, the short answer is no. The work will not end with the passage of this bill.

I would say it is not a matter of resources, because the Canada Revenue Agency has a lot of resources, but rather a matter of resource allocation. The agency is heavily focused right now on recovering CERB overpayments from Canadians who are already experiencing financial hardship.

When it comes to the high rollers with deep pockets, however, the agency leaves them alone. It really is a resource allocation issue. The Agency needs to focus on these high rollers. It has to stop chasing after people who do not have the means to repay the CERB—that is not a wise investment. It should be chasing down people who have the money to pay back what they owe.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Madam Speaker, I really appreciated my colleague's remarks regarding the Conservatives' crusade against carbon pricing, because he is right. If we were to get rid of carbon pricing tomorrow, it would do nothing to change the structural deficit that exists in our economy and the fact that we have a system today where 40% of Canadians control 1% of the wealth, and 1% of Canadians control 40% of the wealth. There has been a massive hoovering of wealth from a large group of Canadians to a very small group. That is why we need a beneficial registry; we need to see who is benefiting from these obscene amounts of wealth.

Over the decades that this has been occurring, what has that structural deficit led to? What could Canada of today have been had we tackled these problems several decades ago? What does that mean to people's overall health, their well-being and their ability to access services? This is the structural problem that is fundamental to our policy direction today.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, one of the big watershed moments was in the mid-1990s when the federal government decided to cut services massively and pushed the burden of spending down onto provinces. Many of them then pushed it down onto municipalities, and ultimately it has landed on the shoulders of Canadians because we do not have the same level of funding of social infrastructure that we had over 30 years ago in Canada. If we look at the corporate tax rate, in the year 2000 the corporate tax rate was 28% and today it is 15%. If we look at the percentage of government revenue that is paid by large corporations, that is down in proportion.

Conservatives and Liberals both said that they were going to cut corporate taxes and that it was going to allow business owners to invest in their businesses, it was going to raise productivity and it was going to generate a lot more economic activity than would holding the corporate tax rate where it was to be able to fund social services. However, a common complaint of Conservatives these days if we listen to them at committee, as well as private sector economists and a lot of people in the business sector, is that Canadian business investment is pathetic compared to our peers and our productivity is not keeping pace, because that money was never invested back into their businesses. It was shunted out into tax havens or paid out in dividends, which, frankly, are not taxed enough, and all sorts of other things.

Therefore, the promise of the big tax cuts for the fat cats never came home to roost. This is why we should change what we are doing instead of doing the same thing and hoping for different results.

[Mike Morrice, Green, Kitchener Centre, ON]

Madam Speaker, we have heard from many across the country that one of the ways to address the $30 billion in corporate tax loopholes from last year alone is to put in place a minimum tax on reported profits; that is, the profits that some of the largest corporations in the country report to their shareholders. Canadians For Tax Fairness estimates that this could recoup $11 billion of that $30 billion every year. The governing party chose not to do that in budget 2023. Could my colleague from Elmwood—Transcona share more about that?

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Madam Speaker, we absolutely need to be engaging in the enterprise of trying to ensure that this tax revenue is not lost, to go out of the country or to go to people who already own and control 40% of Canada's wealth as part of that small 1%.

I have a private member's bill requiring that if people want to benefit from the tax advantages of these tax treaties that Liberal and Conservative governments have put in place over the years, they have to have some economic substance to their business. Right now, what counts as a business is just a business number and a small mailbox somewhere in Barbados. Requiring that business to actually have something like a manufacturing facility or a desk and a computer with somebody hired to do some work seems like a pretty bare-minimum requirement for any legitimate business.

There is what my colleague suggested, and then there are some other ideas about how we can ensure that people are not just paying a lawyer somewhere else to set up a fake company in order to get massive tax benefits.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I will be splitting my time with the member for Calgary Centre.

It is a pleasure to rise today and speak to Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts.

Bill C-42 amends the CBSA to require Corporations Canada to make public certain information regarding those with significant control or ownership of federally regulated private corporations in Canada, creating a national registry of these individuals. In this case, “significant control” is defined as someone owning or controlling at least 25% of the corporation's shares. The bill will also better protect whistle-blowers, add new offences and give Corporations Canada additional inquiry, data validation and information-sharing powers.

The government has stated that its goal with this bill is to protect Canadians against money laundering and terrorist financing, deter tax evasion and avoidance, and ensure that Canada is an attractive country in which to conduct business. The bill's title, while literal, does not speak to the good the bill would do to combat money laundering and criminal financial activity in our country. Because of this, the Conservatives support the bill in principle, with important amendments recognizing the sheer need for action on money laundering in Canada. I will talk about the amendments later. First of all, I need to outline just how serious financial crime is in Canada and, thus, speak to the need for this bill.

Money laundering in Canada is so well known in the world that criminals call it “snow-washing”. While it is a problem throughout the country, the worst of the issue is concentrated in British Columbia, especially in the Vancouver area. As stated in the Cullen commission's final report on the issue of money laundering in British Columbia, money laundering has, as its origin, crime that destroys communities. This includes drug trafficking, human trafficking and fraud. Such crimes victimize the most vulnerable members of society. Money laundering is also an affront to law-abiding citizens, who earn their money honestly and pay their fair share of the costs of living in a community. There can be few things more destructive to a community's sense of well-being than a governing regime that fails to resist those whose opportunities are unfairly gained at the expense of others.

Under the Liberal government, and going back into certain governments in the 1990s, Canada became a haven for money laundering. Specifically, in the nineties, the British Columbia provincial NDP government changed regulations that governed casinos. Five-dollar bets became $500 bets at baccarat tables and private gambling salons, and the bets only grew from there.

The Cullen commission report indicates a stunning growth in cash transactions in B.C. casinos; first flagged by investigators in 2008, transactions continued unabated until at least 2014, when casinos accepted more than $1.2 billion in cash transactions. Many of the transactions matched the indicators for criminal funds, where bricks or even duffle bags of cash were delivered to casinos. The commission indicated that these criminal transactions involved loan sharks delivering bundles of $20 bills, which had been packaged in a way that was consistent with the proceeds of drug trafficking, to high-profile foreign gamblers. These gamblers had travelled primarily to Canada to play baccarat in secluded areas of the casino. These high rollers often paid back the loan sharks the funds they gambled via transactions in their country of origin. In this evolution, B.C. gambling, real estate and luxury items became favourite tools of criminals to launder illicit foreign funds.

It is ironic that it is the Liberal government strengthening money-laundering bills. I am glad to see it, but if we look at the history even since I was elected, there was Joe Peschisolido, who was accused of money laundering. Then we had Raj Grewal, who asked questions about money laundering to FINTRAC at committee just before being arrested and charged with fraud. We also have another backbencher who is flipping real estate, even though we know that real estate is one of the key ways in which money laundering is happening. As I said, it is ironic that they are bringing this forward, but I certainly agree that we need to do something to rein in out-of-control money laundering.

The commission also found that, in B.C.'s economy, casinos, real estate dealings, banks and law offices face big money-laundering risks and that the failures of the federal RCMP and FINTRAC allowed money laundering to grow. The report indicated that FINTRAC's reporting regime is essentially wasteful and that the RCMP's lack of attention has allowed for the unchecked growth of money laundering since at least 2012.

The report states:

One of the primary criticisms of the federal regime is the ineffectiveness of FINTRAC.... While...there is a statutory threshold that must be met before FINTRAC can disclose information to law enforcement, the number of disclosures to law enforcement is [allegedly] not commensurate with the volume of reports that FINTRAC receives, nor with the scale of money laundering activity in British Columbia.

That is according to Cullen and his team. He suggests:

Law enforcement bodies in British Columbia cannot rely on FINTRAC to produce timely, useful intelligence about money laundering activity that they can put into action.

It is true that FINTRAC receives an enormous volume of reports from public and private sector reporting entities, but it produces only a modest number of intelligence packages that actually go to law enforcement. For example, in 2019 to 2020, the Cullen commission found that FINTRAC received over 31 million individual reports. In that same year, it disclosed only 2,057 intelligence reports to law enforcement agencies across Canada and only 355 to law enforcement agencies in B.C.

Global News reporter Sam Cooper has been investigating dirty money in B.C. for years. He found that, as of 2016, fully half of the luxury properties in Vancouver were owned through suspicious circumstances. The Prime Minister has known about this for years. The global money-laundering watchdog warned the Prime Minister in 2016 that Canada was a safe haven for money laundering, particularly in our real estate market, and that a registry was needed to help identify and deter this activity. In fact, the watchdog gave the Liberal government a failing grade in five key areas because dirty money was able to slip into our businesses and real estate market undetected, with no questions asked. That was 2016, and it is now 2023; the legislation is pretty late in coming.

The Panama papers data leak in 2016 exposed that international criminals have long exploited the gaps in Canada's corporation beneficial ownership regulatory scheme to engage in corrupt conduct through federally, provincially and territorially administered corporations. Canada is generally perceived as having weak laws to combat money laundering and the proceeds of crime. As a result, in 2018, B.C. launched the expert panel on money laundering in real estate. The panel estimated that in B.C. alone, more than $7 billion of dirty money was laundered in 2018 and between $800 million and $5.3 billion was laundered through the real estate market, raising housing prices by an estimated 5% on already wildly expensive properties.

The Cullen commission report demonstrates that money laundering within real estate often involves the use of loans, mortgages and, in some cases, lawyers' trust accounts in the legal system. It can also involve cash. The report provides this example: A criminal might take out a mortgage with the purchase of a property and repay the mortgage with the proceeds of crime. If the cash deposited for each payment is under $10,000, it will not trigger the requirements for a large-transaction report to FINTRAC. Over time, criminals may accumulate multiple properties or higher-value real estate using this strategy. The properties can then be sold, often at a significant profit in the Vancouver real estate market, with the criminal property owner receiving clean funds from the purchaser to complete the money-laundering process.

Law-abiding Canadians across the country have been suffering as a result of this issue. Since the Trudeau government was elected, the price of a home in Canada has—

[The Assistant Deputy Speaker, NDP, Carol Hughes]

I would remind members not to use the first or last names of MPs in the House.

The hon. member for Sarnia—Lambton.

[Marilyn Gladu, Conservative, Sarnia—Lambton, ON]

Madam Speaker, I apologize.

The price of a home under the Liberals has doubled, and many Canadians have entirely given up on the dream of home ownership. Most young people now believe that owning a home is unachievable. Even if the money-laundering problem is adequately combatted by the passing of this bill, it is years too late. Therefore, it is not enough to stop the snow-washing in our housing market that is escalating costs for Canadians.

I have concerns about the bill; not only does it exclude real estate in the scope, even though we know that this is a major place for money laundering to happen, but it also covers only federally regulated businesses. Many business owners are provincially regulated, so if the provinces do not come on board, then there are many ways that this could slip through the cracks.

In terms of amendments, Conservatives would like to see amendments to protect privacy rights in the registry. We also want the registry to achieve the government's stated goal and have the capacity to do so. Will the bill give law enforcement enough necessary tools to capably combat money laundering and terrorist financing?

Conservatives have some recommendations. The new and existing penalties for violating reporting requirements under the CBCA should be strengthened, corporations should be held accountable as individuals, and if the act is violated, there needs to be clarification on who can and cannot be exempted from the regulations.

This bill is a critical update to our laws, and I look forward to seeing it at committee, where we can make amendments to improve the bill and eliminate money laundering in Canada.

The House resumed consideration of the motion that Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, be read the second time and referred to a committee.

[Greg McLean, Conservative, Calgary Centre, AB]

Madam Speaker, it is my honour today to rise in the House to talk about Bill C-42. “Money laundering” is the short description. Canadians would be surprised to know that, aside from the soft reputation our country has on the international scene, Canada is increasingly known as a popular safe haven for criminals to launder and hide their money.

In 2022, Canada ranked 14th on Transparency International's corruption perceptions index, with a score of 74 out of 100. Canadians would be in their right minds to ask why our country's score is not higher, especially since this problem with lack of transparency has been known for a long time, for the past seven years, to be exact.

People will remember that, in 2016, the Panama papers leak exposed the fact that international criminals had been exploiting the gaps in Canada's corporate beneficial ownership regulatory scheme to engage in corrupt conduct through federally, provincially and territorially administered corporations.

That same year, the Financial Action Task Force, which acts as the world's international money-laundering watchdog, warned Canada that it was being used as a safe haven for money laundering and that a registry was needed to help identify and crack down on this activity. However, since then, under the current government, Canada has been slow to act, and when it did, it failed to go far enough. It took until 2018 for the Liberal government to begin introducing requirements to increase transparency around who exerts significant control over corporations and assets in this country. In 2021, the Financial Action Task Force indicated that Canada had made improvements but remained only partially compliant in five areas and wholly non-compliant in one. Laundered money was still able to find its way into our country with no questions asked.

Now, here we are in 2023, introducing measures that are long overdue to tackle a problem that should have been dealt with years ago by the government. Unfortunately for Canadians, while the Liberals were in no hurry to tackle the issue of money laundering throughout all those years, it has had a very real and devastating impact on a sector of our economy that affects everyone, one that keeps being mentioned extensively as of late. I am referring to the housing market.

Since the government took office, the price of a home in Canada has doubled, leaving citizens across the country to give up on the dream of home ownership. The situation is dire: Seven in 10 Canadians now believe owning a home is financially reserved for those who are wealthy. Part of this phenomenon of housing growing increasingly out of reach for Canadians is explained by criminals using real estate as a vehicle to launder their money in Canada. This is enabled by the fact that Canada's anti-money-laundering compliance regime is itself least compliant with international standards, when it comes to supervising real estate agents and identifying the buyers of property. For young Canadians looking to start a home and a family, this pushes prices up and puts their dreams of home ownership farther out of reach. Why is this? It is partly because they have to compete against criminals who wish to use real estate to hide their dirty money. It is supply and demand.

The situation is especially problematic in British Columbia. In 2018, the province launched the expert panel on money laundering in real estate. That panel estimated that, in B.C. alone, more than $7 billion in dirty money was laundered across the economy in 2018, and that up to $5.3 billion of that money was laundered through the real estate market, raising housing prices by an estimated 5%. It is no secret that housing is exceptionally unaffordable in cities like Vancouver, and criminal activity plays a non-negligible part in aggravating the situation.

The situation is so dire that the number of British Columbians moving to Alberta reached a 20-year high in 2021-22, and for most, the main reason was affordability. Alberta is proud of its strong economy. It is one that welcomes Canadians from across the country with open arms and offers opportunity and affordability to its citizens. However, due to the Liberals' weak approach to money laundering in Canada, the problem that plagued British Columbians is now following them across the Rocky Mountains. Calgary, the city I represent here in Parliament, is now also being used as a hub for the criminal network of money-laundering groups that has grown across Canada under the current government.

I knocked on a lot of doors during elections in Calgary Centre, and I knock on doors between elections. When I go into the large condos that have recently been developed, sometimes I will find a condo where half of the units are empty. Nobody lives there, yet they are all sold. There has been a lot of construction in Calgary, with a lot of vacant suites, yet there is no one living in these buildings. It is quite clear that it was foreign owners who bought those properties. Whether it is legitimate foreign ownership because people are actually moving their money out of where they live and want to make sure they have some safety elsewhere, or whether it is connected with the criminal element that has also increased the illicit activity of drug addiction in Calgary, is another question entirely. It is a mix between the two. That is something we need to address here, going forward.

My constituents are particularly concerned about it because of the effects it has across society, not just on the housing market; housing is only one part of the problem. The broader issue at hand is the fundamental question of who owns what in this country. Are Canadian assets held by hard-working and law-abiding Canadians or by criminals using them as a means to engage in offshore money laundering? As someone who worked in the financial industry for decades, I understand the importance of transparency and accountability, two things that are currently lacking when it comes to the ownership of assets in this country.

In last year’s budget, the government committed to finally implementing a national public registry by the end of 2023, ahead of the previously committed year, 2025, but this acceleration of the timeline in the Liberal agenda was not prompted by the housing affordability crisis and its heart-wrenching impact on Canadians. Rather, it was the public concern about the misuse of nominee and corporate ownership by Russian oligarchs that led to the acceleration of this timeline.

That is why I support this bill, but I also believe that it should be more ambitious in its reach right now, as opposed to when the next international crisis forces the government to act. The fact remains that we are perceived internationally as having weak laws to combat money laundering and the proceeds of crime. Our Five Eyes partners see us as a laggard on corporate transparency. This is why Conservatives not only support the additional measures being introduced by Bill C-42 but also call on the government to do a number of things.

I will interject here and talk about my experience. I acted in the financial industry for years. I actually represented a number of investors who had their money laundered through a bunch of different vehicles. That was a manipulation of the legal process by several parties involved. This happens all the time in Canada. The laws are set out now. I know that since 9/11 in 2001, the government tried to get more transparency through the legal mechanisms, the legal profession, to try to make sure they disclosed when they had transactions of $10,000 or more coming into their accounts. That was overturned by the Supreme Court of Canada in 2015. It ruled that, in fact, lawyers had the right to withhold that information from governments. What I have seen personally is that those lawyers give good advice on how to launder money through accounts in Canada, whether it is offshore accounts or whether it is Canadian “quasi-criminals”. It is hard to call them criminals until they have actually been convicted. That is the direct experience I have had.

There are things we need to do. Of course, we need to change the offences outlined in the bill and the existing offences under the Canada Business Corporations Act from summary convictions to Criminal Code offences, which would then rank money laundering on par with the most serious offences under the Criminal Code in Canada, as it should be. We also need to change the threshold for significant interest at which disclosure is required, from 25% control of shares to 10%. That is a threshold already used by the Ontario Securities Commission for public disclosure requirements. Reducing the currently suggested threshold would further reduce the ability of criminals to hide their activities.

We need to clarify the degree of back-end access to the registry of law enforcement, in relation to the proceeds of crime and money laundering. Under the bill right now, in its current form, law enforcement, as well as the Financial Transactions and Reports Analysis Centre, or FINTRAC, would require an affidavit to access all of the information contained in the registry.

[Ken Hardie, Liberal, Fleetwood—Port Kells, BC]

Mr. Speaker, I was fascinated to hear the hon. member talk about some of the transactions between lawyers, because we know that transactions between lawyers' trust accounts are not captured by FINTRAC. Is he strongly in favour of changing that?

The other thing I would ask him to comment on is the beneficial ownership of broadcast outlets in Canada, because there are concerns about Chinese meddling. We have heard, at least anecdotally, that their control over radio and television and cable stations, if it is not ownership, is certainly something else. Is that also worth a closer look in connection with this bill?