Dear Mr. Chairman and members of the committee, I would like to thank you for the opportunity to contribute to the committee's review.
I will make my remarks in English. However, I will be pleased to answer your questions in French or in English.
I have worked for the past 30 years as a forensic accountant, an M.B.A. lecturer, as well as an expert on the subjects of anti-bribery and anti-corruption. I'm also a senior adviser with the Canadian Centre of Excellence for Anti-Corruption at the University of Ottawa. The centre is an academically based platform that promotes ethical practices aimed at countering corruption, bribery, and money laundering.
Mr. Chairman and committee members, corruption and money laundering go together. A report issued by the World Bank clearly showed the link between corruption and money laundering. According to some experts and media reports, the term “snow washing” is now associated with Canada as is the term “Vancouver model” for laundering the proceeds of crime.
Canada's reputation must be protected from reputational risk. Therefore, I would recommend that Canada address the weaknesses identified by amending the act and other acts in the following manner.
First is beneficial ownership.
It is essential that Canada make beneficial ownership more transparent in order to prevent abuse from corporations and trusts held by secretive beneficial owners. To that end, an urgent reform of corporate registries across all 14 Canadian jurisdictions is needed to ensure that beneficial ownership information is not only collected but also made available in a publicly accessible registry.
With public access to the beneficial ownership information, the act should also be amended to require all reporting entities to verify the identity of the beneficial owner; verify if their customers are politically exposed persons or their family members or associates; and identify the beneficial owner and verify their identity with government-approved ID before opening an account or completing a financial transaction.
Second is investigation and prosecution of money-laundering offences.
In view of the difficulty prosecutors encounter in proceeding with money-laundering charges because of the complexity of linking money laundering to predicate offences, we recommend that the government bring forward Criminal Code amendments to make money laundering easier to investigate and prove, and that more resources be available to law enforcement and prosecutors to enforce the money-laundering provisions of the Criminal Code.
Last is the role of legal professionals in the money-laundering scheme.
Legal professionals are inherently highly vulnerable to money laundering. Journalists have mentioned that “Company owners who don't wish to be identified in Canadian corporate registries can pay a lawyer or a stand-in to appear on all public filings.”
Where lawyers are conducting financial transactions on behalf of clients, and the clients are using negotiable instruments at risk for money laundering, lawyers should be required to know who their clients are and to be accountable for conducting due diligence, meeting their obligations, and inquiring about their clients' sources of funds and wealth.
In order to do so, it is recommended that the government bring legal professionals into the AML/ATF regime in a constitutionally compliant way; and that the act designate as high-risk all financial transactions by legal professionals, especially those using trust accounts, and require reporting entities to take enhanced due diligence measures on those transactions, including identifying the beneficial owner and the source of funds.
In closing, I want to emphasize that Canada must immediately take action in order to change the perception that it welcomes, or even encourages, corrupt behaviour.
I would like to thank you for your time. I sincerely hope that my comments will be helpful in combatting the laundering of proceeds of crime and the financing of terrorist activities in Canada.
I will be happy to answer any of the questions you may have.