Long overdue beneficial ownership registry would curb money laundering

Long overdue beneficial ownership registry would curb money laundering

Long overdue beneficial ownership registry would curb money laundering

Canada lacks a publicly accessible ownership registry—a major reason money launderers exploit real estate to conceal ill-gotten gains—but that could change by month’s end in British Columbia.

After extensive consultations, the B.C. NDP introduced a motion to implement a beneficial ownership registry on April 1 that made its way through a second reading at the beginning of this month, and it’s believed it will pass by the conclusion of the legislative session.

According to a C.D. Howe Institute report, Why We Fail to Catch Money Launderers 99.9 Percent of the Time, such a measure would deal an immense blow to criminals looking to clean dirty money through the housing market.

“Anonymity and invisibility could be reduced by implementing a publicly accessible registry of beneficial ownership of companies, trusts and real estate,” Kevin Comeau, the report’s author. “Structured properly, a public registry would offer a two-way flow of information—communication of beneficial ownership information to the world and communication of foreign-based information to Canadian authorities—which would bring more bad guys into the light of day.”

Comeau added that, where real estate is concerned, and among Western liberal democracies, Canada has among the weakest protective measures against money laundering, and he estimates there’s likely $100-130 million laundered through its housing market every year.

Another key to curbing the free flow of dirty money through real estate is introducing hefty legal penalties.

“Obstacles to following the dirty money could be reduced by creating a new criminal offence: A false declaration of beneficial ownership, whether made on a public registry or submitted by a customer to a reporting entity,” said Comeau. “Not only would such an offence bring more integrity to the beneficial-ownership information being disclosed, it would also provide a solid base from which law enforcement agencies could conduct investigations of suspicious transactions.”

Calum Ross, a leverage wealth expert and VERICO broker with Mortgage Management Group—and author of The Real Estate Retirement Plan: An Investment and Lifestyle Solution for Canadians—believes a public registry is long overdue. While he says it won’t completely eradicate money laundering in Canada, an ownership registry is still a necessity.

“It won’t completely prevent money laundering from happening, but it would make it significantly more difficult and, therefore, draw more attention to it,” said Ross. “The key reason money laundering is done through corporations is because if I look up the property, it only comes up with a number rather than a name. The real question I’d ask is what are we gaining by not having this information disclosed?

“When I went to speak at U.S. banking conferences, this came up and they thought we were crazy here in Canada. I was asked, ‘Is money laundering not a problem for you in Canada? Why wouldn’t such information be disclosed?’”