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There’s a reason that dirty money from around the world washes up on Canadian shores.

International consultants are promoting Canada as an ideal place to set up anonymous shell companies because Ottawa is unable to unmask their true owners, according to a new report.

Published by Transparency International Canada, a non-governmental anti-corruption organization, the report is titled Snow-washing, Inc: How Canada is marketed abroad as a secrecy jurisdiction. The research in its pages provides a startling glimpse into how shell companies established in this country can be readily exploited by kleptocrats, money launderers, tax dodgers and other crooks.

The report highlights Canada’s vulnerability to financial crime just as Russia’s invasion of Ukraine has led to heightened global concern over illicit money flows. It’s apparent, for instance, that sanctioned Russian oligarchs can easily hire an army of intermediaries, including corporate service providers and tax consultants, to stash their cash in Canada with little prospect of getting caught.

“A cottage industry of consultants – many with no apparent links to Canada – has emerged promoting Canadian entities as fronts for opaque offshore company structures,” the report states. “Framed through the lens of ‘tax optimization,’ these structures appear intended to conceal ultimate ownership and leverage Canada’s strong reputation to access the global financial system.”

Although shell companies can be established for plenty of legitimate purposes, such as takeover vehicles or to raise financing, these corporate entities are nonetheless vulnerable to abuse.

As the report points out, Canadian shell companies are routinely created and controlled from other countries. What’s more, there’s no oversight or public disclosure of their ownership information, providing a convenient cover to criminals.

Limited partnerships (LPs), for example, are especially appealing because they can be used to open bank accounts, are subject to fewer reporting requirements and may not necessarily pay Canadian taxes, the report said, adding that the Cullen Commission of Inquiry into Money Laundering in British Columbia heard evidence about these risks.

Consultants, of course, position these as perks when offering to set up Canadian companies for their clients.

“Nearly all of the service providers we identified are located abroad and have no apparent links to Canada beyond the shells they are promoting,” the report adds.

“They are a diverse group, covering an array of jurisdictions and languages, yet their sales pitches all focus on the same key point: Canada is a reputable high-tax jurisdiction whose opaque entities can provide valuable cover for offshore companies that would otherwise attract unwanted attention.”

Indeed, some of the consultant advertisements featured in the report are audacious.

ICD Fiduciaries, for instance, states on its website the advantages of a Canadian company include “No Disclosure of Beneficial Owner to the Authorities.” ICD didn’t respond to a request for comment from The Globe and Mail.

A Russian-language website run by International Wealth, meanwhile, says that Canadian LPs provide “unique business opportunities” for non-residents who are seeking alternative investment vehicles now that other countries, such as the United Kingdom, have open corporate registries in place.

“If you have previously used UK partnership structures in your business, which were distinguished by a high level of confidentiality, then, given today’s realities, many factors have changed and a Canadian LP will be the best choice,” reads its online advertisement as translated by Transparency International.

International Wealth also did not return a message seeking comment from The Globe.

Perhaps, though, the most brazen example cited in the report is the Tax Free Today blog, which states in partly bolded font: “Canada, as a high taxation country, is not a bad front at all, it is actually a very useful cover for almost all types of offshore companies.”

Christoph Heuermann, the entrepreneur behind the website, told The Globe that his company has not offered services to establish Canadian structures for “several years,” but continues to inform the public about their opportunities. He also cast doubt on Canada’s attractiveness as an alternative to traditional offshore jurisdictions, contradicting his blog.

“Canada has become a neo-fascist regime comparable to Venezuela and North Korea. There is no legal security at all in your country any more. Our clients feel much better with similar structures in the U.S. and the U.K.,” Mr. Heuermann wrote in an e-mail to The Globe.

“We are happy to have reduced millions of taxes for our escaping Canadian clients and happily do so in future. Our clients are in the majority self-employed and small business owners with less than a million revenue. They have very transparent, verifiable online businesses. Much more transparent than most of Canada’s crony political elite.”

Well, at least he provided a colourful response. Hopefully, it will light a fire under our legislators.

Although Canada has vowed to establish a publicly accessible corporate beneficial ownership registry, a database that will store details about who ultimately owns and controls millions of private companies, it won’t be operational until at least 2025.

In a perfect world, that deadline would be moved up, but Ottawa has yet to disclose specifics about its plans. Moreover, the project also hinges on the co-operation of provincial and territorial governments.

The big worry, of course, is that public access will be limited even if common sense dictates that it should be a searchable online database anyone in the world can use free of cost.

“Open data allows journalists, civil society and other stakeholders to investigate wrongdoing,” the report says. “This is particularly important for Canada, where law enforcement and regulatory authorities have limited capacity to investigate domestic crime, let alone criminal activity beyond our borders.”

As an example, one of the report’s case studies about a Russian transnational laundromat builds on previous reporting by investigative journalists, including The Globe’s Mark MacKinnon.

For far too long, Canada has been saddled with a reputation as an international haven for financial crime. As the report rightly argues, transparency is the only antidote.

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