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

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Madam Speaker, another question on where the government stands on possible amendments relates to the impact of significant interests. Under the legislation, only individuals with over a 25% interest in a corporation would be covered under the beneficial ownership registry before us today. Is the government open to making amendments to the law that would lower the threshold of significant interest?

Second, it has come up in debate today that there are questions about whether trusts will be covered under this beneficial ownership registry. Is the government open to examining the impact of trusts as they relate to money laundering as well?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the government has indicated that it wants to get the bill to committee and has always been open to ideas that would ultimately make the legislation stronger for the betterment of Canadians.

I would suggest to the member that if he has some very specific amendments he would like to put forward, he does not necessarily have to wait until the bill gets to committee. Some ideas might flow out of committee presentations from witnesses, or the member might have his own personal ideas. I think of lawyer trusts, for example, which were mentioned earlier today, and how those trusts could possibly be incorporated, or something of that nature.

There are opportunities here, and I look forward to the legislation going to committee. I know the member has expressed a great deal of interest in this issue, and I wish him well in terms of working, maybe not in a politically partisan way, towards how we could give strength to the legislation. We should keep in mind that there have been consultations not only here in Canada but also with other nations, from what I understand, to ensure that we have good, solid legislation going to committee.

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

Madam Speaker, I have heard the member for Winnipeg North make reference several times today to the resources that have been dedicated to the CRA in order to fight tax evasion and other things of that kind. However, what we have seen from the CRA is a very persistent focus on Canadians in difficult financial situations, who availed themselves of CERB when the government encouraged them to do that at the height of the pandemic but do not have the money to pay the government back. This means that the time and resources spent on pursuing that debt will not yield a return.

Meanwhile, as we heard in debate earlier today with respect to the Panama papers and other revelations about global tax fraud, we see Canada really not comparing at all to our allies in recovering that tax debt. When we talk about the Canada emergency wage subsidy, we know that there were companies that took money that they were supposed to pay directly to workers and, in some cases, they locked out their workers after getting the wage subsidy. The government has not tried to get any of that money back.

How does giving more resources to the CRA help with the problem if it just means the CRA is going to pursue the poor and let the big fish off the hook?

[Kevin Lamoureux, Liberal, Winnipeg North, MB]

Madam Speaker, the government has not let the big fish off the hook. There are hundreds of millions of dollars, getting close to a billion dollars, and it may be just over a billion dollars, but do not quote me on that, over the last number of years that we have invested in the CRA to look at going after the big fish. We have seen a dramatic increase of files now that the CRA is pushing as a direct result of those investments.

With regard to issues that the member talked about in terms of CERB, I am not too sure exactly what the NDP's opinion is. Based on some of the comments I heard, and please correct me if I am wrong, the NDP seems to be of the opinion that circumstances do not matter, that the CRA should not be going after people in whatever form CERB was collected. I think that there—

[The Assistant Deputy Speaker, Carol Hughes]

It being 1:30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's Order Paper.

The House resumed from April 28 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.

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, I am here today to talk about Bill C-42, an act to amend the Canada Business Corporations Act, to create a beneficial ownership registry to combat money laundering.

I have the honour today of sharing my time with my friend and colleague, the member for North Okanagan—Shuswap.

Canada has a big problem with money laundering, and nowhere is that more evident than in metro Vancouver where my community of Langley—Aldergrove is located. Now, this is well known around the world. People have given Canada's very accessible money laundering streams a special name. They call it “snow washing”.

Generally speaking, Canada is known to have a stable government and economy, and to be a safe place to invest, so honest people make assumptions that money coming from or going to Canadian-registered corporations must be legitimate, but sadly that is not always the case. We need to work hard to maintain that favourable impression that the world has of us. It is easy to ruin one's reputation. That is sadly what is happening.

According to a 2017 analysis by Transparency International, Canada is tied with South Korea for the weakest corporate transparency rules among G20 nations. That is why I welcome this legislation, Bill C-42, which is going to create a beneficial shareholder register so that crooks cannot hide behind a veil of secrecy, complexity and confusion. We want things to be transparent. We want to know who owns what.

B.C. has been taking the lead in building transparency rules to combat money laundering. In March 2019, in a report entitled “Combatting Money Laundering in BC Real Estate”, an expert panel appointed by the B.C. government had this to say about the problem of money laundering. It focuses on British Columbia, but of course it applies right across the country. It reads:

Money laundering significantly damages our society and causes ongoing harm, not limited to the real estate sector or other economic sectors. Money laundering is a contagious, corrupting influence on society...It facilitates other criminal activities, contributing in particular to drug trafficking and the violent crime and opioid deaths that result, as is sadly so evident in [British Columbia].

The report goes on to say that, given the secret nature of money laundering, it is very difficult to estimate how much damage it is doing to our economy, but they do estimate that somewhere around $50 billion in dirty money is pumped into our national economy every year. This activity is estimated at 5% of real estate prices in British Columbia, feeding into the housing unaffordability crisis.

The expert panel recommended several anti-money laundering tools, starting with implementing a land ownership transparency register, which is in effect at the moment in British Columbia. They were of the opinion that transparency in real estate would be the single most effective tool in the anti-money laundering arsenal, but they also acknowledge that money laundering touches on more than just real estate transactions.

I think it is informative to understand what money laundering is. It is effectively the process of making illegally gained proceeds appear to be legitimate. These proceeds can come from monstrous activities like fentanyl trafficking, for example, but sometimes it is much less nefarious than that. For example, it could be legally earned and obtained money which has been brought illegally into Canada by evading the originating country's arbitrary capital controls.

All of this activity is illegal. Actors become very creative in hiding their trails by creating layers of complexity, but it all follows the same basic process. It is usually done in three phases: first of all, placement; second, layering and third, integration.

Placement is the introduction of cash into the legitimate payment system. Layering is conducting multiple levels of complexity for no purpose other than to hide the paper trail. Integration is working the money back into the legal system. Money properly laundered, and I use the term loosely, can be very difficult to trace.

One of the layering tools that professionals like to use is secret trusts. This is where somebody owns something, but that is the front person. They are the registered owner, but they are not the real owner. They are holding it in trust for somebody who is working in the shadows. The real owner is invisible to law enforcement agencies.

Today we are talking about amendments to the Canada Business Corporations Act to create a share ownership transparency register to eliminate this layering tool that professionals like to use. How can this be beneficial? Let us take a look at what some provinces have done.

British Columbia is really taking the lead. It bears to note that every province in Canada has its own corporate registry, as there is a federal registry, so it is very important that the provinces and the federal government work together. There needs to be a pan-Canadian approach. Otherwise, we would be encouraging forum shopping among professional crooks. They are going to go to the province with the most relaxed and most permissive laws. I am happy to say that Bill C-42 at least attempts to tackle that.

British Columbia has implemented a requirement that all British Columbia-registered companies keep a beneficial owners register at their corporate records office. This is an early version of a beneficial shareholder register and it is a good start, but it is not enough, and that is recognized. It is not a very useful tool for law enforcement because it does not allow law enforcement agencies to work undercover. The register is not free. It is not publicly accessible. It is not centralized, and it is too bureaucratic. It is also too difficult for law enforcement agencies to use and therefore it needs to be amended.

I am happy to say that is in the works. By 2025, there should be a centralized register in British Columbia that is readily searchable by law enforcement agents without the police coming to the registered office and saying they want to see their corporate records, which gives too much notice to the crooks. Quebec and Ontario are following a trajectory similar to British Columbia's.

The United Kingdom is really taking the lead with its people with significant control register for all registered companies in that country. It is free, and it is publicly accessible, but so far it is presenting only mixed results in being an effective tool for law enforcement. Bill C-42 needs to go past second reading to go to committee, where it needs to be studied in detail. I hope that we would have witnesses coming from United Kingdom to tell us what is good about their system and what is lacking so we can learn from their successes and their mistakes.

Bill C-42 is the federal government's attempt to tackle money laundering, tax evasion and other illegal activity. The minister, in his speech when he introduced this legislation, said, “Simply put, increasing beneficial ownership transparency will enhance Canada's good international reputation as a safe, fair and competitive place to do business and provide even greater legitimacy to law-abiding Canadian businesses.” Those are all very laudable objectives, which I support.

This bill should go to committee where it could be studied in detail. I will be looking there for efficiencies and effectiveness, and how adaptable it would be so that provinces can adopt it as well. As I said, the solution needs to be pan-Canadian.

[The Deputy Speaker, Chris d'Entremont]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for Sherwood Park—Fort Saskatchewan, Democratic Institutions; the hon. member for North Okanagan—Shuswap, Carbon Pricing; and the hon. member for Spadina—Fort York, Democratic Institutions.

[Kevin Lamoureux, Liberal, Parliamentary Secretary to the Leader of the Government in the House of Commons]

Mr. Speaker, I concur with the member in that there are a number of issues related to money laundering and the impact it has on Canadian society, in many different ways. One could talk about that very strong criminal element and how it gets into our communities. Therefore, it is an issue that needs to be dealt with. I am glad to hear that the member is anxious to see the bill go to committee.

Does the member or the Conservative Party already have a sense at this time of some amendments they would be proposing, or are they going to wait until committee stage?

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, ultimately, we will be waiting to see what comes up at committee and what the study will be, but a couple of things come to mind.

One is that this system has to be efficient. It cannot be overly bureaucratic. Before I was elected to Parliament, I was practising corporate law. I was talking to my law partners the other day, and they were saying that the rules are just too complicated, making it time-consuming and expensive, as the costs are passed on to their clients, so I will be looking for efficiency.

Also, my understanding is that the threshold for having to register someone as a beneficial owner is 25%. I suspect that is too high. It probably has to be a lower number, like 10%.

[Xavier Barsalou-Duval, Bloc, Pierre-Boucher—Les Patriotes—Verchères, QC]

Mr. Speaker, Bill C‑42 is unquestionably an important step forward in terms of greater transparency and in knowing who really owns businesses registered in Canada. However, there are limits to that. Perhaps my colleague could speak about that.

For instance, if a company registered in Barbados, in a tax haven or in any other country in which the laws do not require the same transparency around the beneficial ownership of businesses, transparency ends when there is no transparency. If the business is held in a location where there is no transparency, that ultimately limits the possibility of obtaining all the information.

Does my colleague have any ideas about what could be done to resolve this problem in the future?

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, the member's question underlines how complicated it can be to tackle the problem of money laundering.

If I understand the question correctly, it relates to money coming into Canada from a foreign corporation that is registered, let us say, in Barbados, which maybe does not have the same transparency rules that we have. However, we have FINTRAC rules, so the money coming in would have to go into a bank, and if it were over a certain amount, the bank would be required to report it according to the FINTRAC rules. It is probably not enough, but we do have something, and this bill is another step in the right direction.

[Charlie Angus, NDP, Timmins—James Bay, ON]

Mr. Speaker, I listened with interest to my colleague. The issue with money laundering is severe in Canada. There is an international expression called “snow washing” because Canada is known as a jurisdiction to dump dirty money from the drug cartels, terror gangs, and all kinds of illicit activity. It can be moved through casinos to be cleaned. It is also being used to purchase real estate.

This issue is concerning. We know that, in 2018, there was $47 billion of illicit money snow washed in Canada, and it could have been as high as $100 billion, which has an impact on affordability. People cannot afford to buy in the real estate markets of Vancouver, Toronto or Montreal because they are being used as safe zones to hold money.

Does my hon. colleague think we should look at the impact of snow washing and using Canadian real estate as a zone to clean money that should actually be exposed as dirty money, given the fact that people cannot even afford to live in the cities they love?

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Mr. Speaker, that is a good question. It goes right to the very heart of what the problem is and what this bill is trying to tackle and remedy.

I agree with the member's analysis that snow washing and pumping money into the Canadian economy is forcing up real estate prices for the people who want to get into a home. We already have a housing affordability crisis. This is making it so much worse, and it needs to be tackled. It is a complex problem, and the solution will be multi-faceted. Bill C-42 is a step in the right direction. We need to deliver this for Canadians.

[Mel Arnold, Conservative, North Okanagan—Shuswap, BC]

Mr. Speaker, it is an honour to rise today as the member for North Okanagan—Shuswap, one of the most beautiful areas in the world at any time of year, and especially as we turn from spring to summer.

I rise today to speak to Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts. I would like to thank the member for Langley—Aldergrove for splitting his time with me and for his thoughtful intervention.

The government has stated that the objective of Bill C-42 is to protect Canadians against money laundering and terrorist financing, deter tax evasion and tax avoidance, and make sure Canada is an attractive place to conduct business. One has to ask why the Liberal-NDP coalition has taken so long to act, when it has been evident for years that change is needed.

While I believe there is support for the concept of a national public registry of beneficial owners of companies, I also believe we may need to look at extending the transparency of beneficial ownership of other assets. For example, at the Standing Committee on Fisheries and Oceans, or FOPO as it is known around Parliament Hill, we have been hearing testimony from witnesses who are extremely concerned about the purchase and control of fishing licences and quotas by foreign entities, and even unknown entities. That is right: unknown entities. Let me take us back in time to explain what I am referring to. In 2019, the FOPO committee tabled a report titled “West Coast Fisheries: Sharing Risks and Benefits”. This report was the result of a study initiated partly out of concern at that time, over four years ago, over the situation of local fish harvesters unable to compete with unknown entities bidding higher prices for access to Canada’s fisheries resources, a common property resource for the benefit of Canadians. Now, over four years later, can members guess what is being studied at FOPO, the Standing Committee on Fisheries and Oceans? It is foreign ownership and corporate concentration of fishing licences and quotas.

I will go back to my earlier question about why the Liberal-NDP coalition taken so long to act. Here we are; it is four years after that report, and even longer into the government’s mandate, since the concerns were first raised by stakeholders. Here we are, restudying almost the same issue, hearing that the same issues and concerns still exist, and the government has failed to take steps to ascertain that Canadians are the primary beneficiaries to access to Canada’s common property resource, Canada’s fisheries. It was somewhat shocking to hear testimony over four years ago, and now to hear similar testimony over recent weeks, that there is no real method of tracking beneficial ownership of fishing licenses, quotas and possibly vessels on Canada’s west coast. Although some have tried to track beneficial ownership, in some cases the web becomes so tangled that no one can clearly identify who owns what.

The 2019 report I referred to contained a number of recommendations to the government. In fact, there were 20. However, there were a few key recommendations related to foreign ownership that the government should have acted on, but it has been slowly dragging its feet, with almost no response. I will refer to some of the recommendations quickly, and talk about what should have been done and what has not been done.

Recommendation 2 from the report stated, “That based on the principle that fish in Canadian waters are a resource for Canadians (i.e. common property), no future sales of fishing quota and/or licences be to non-Canadian beneficial owners based on the consideration of issues of legal authority, and international agreement/trade impacts.” What has been done on this? Little to nothing has been done. There is nothing that the committee has been made aware of.

Recommendation 4 is somewhat similar. It states, “That, to increase the transparency of quota licence ownership and transactions, Fisheries and Oceans Canada determine and publish, in an easily accessible and readable format, a public online database that includes the following”. Has that been achieved? Certainly not.

Recommendation 5 states, “That Fisheries and Oceans Canada prioritize the collection of socio-economic data for past and future regulatory changes and make this information publicly available.” Again, there has been no action that the committee is aware of.

Recommendation 14 states, “That Fisheries and Oceans Canada develop a new policy framework through a process of authentic and transparent engagement with all key stakeholders". For example, some of the key stakeholders are:

Active fish harvesters (or where they exist, organizations that represent them) in all fisheries and fleets including owner-operators, non-owner-operators, and crew;

First Nations commercial fish harvesters (or where they exist, organizations that represent them);

Organizations representing licence and quota holders that are not active fish harvesters, including fish processing companies.

The last recommendation was a key one, and there has been very little action by the government that the committee restudying the same issue has been made aware of.

I am going to cut my time a little shorter today to make sure there are opportunities for other members to speak, but I will repeat what I said earlier. We have heard from some who are most impacted by the potential of foreign investment and foreign ownership of our common property resources here in Canada, yet there has been little or no action with respect to who the beneficial buyers and owners are.

I will close by saying that there is merit in a registry of individuals with significant control of corporations in Canada. If this is done, it must be done in ways that protect personal privacy and also protect the common resources for the benefit of Canadians.

I look forward to following the debate on Bill C-42 as it goes through the process, to see if it accomplishes the stated objectives without unintended consequences.