It’s the mystery of the missing words.
When Prime Minister Justin Trudeau’s office published mandate letters for cabinet ministers last month, there was a curious omission in a few of those missives regarding Canada’s plan to fight financial crime.
Finance Minister Chrystia Freeland, Industry Minister François-Philippe Champagne and Minister of National Revenue Diane Lebouthillier were tasked with establishing a beneficial ownership registry, a database that will store details about who ultimately owns and controls millions of private companies.
Although that central repository of information is considered an essential tool to unmask crooks who hide behind anonymous shell companies, the Prime Minister’s Office neglected to include a two-word stipulation in the final text of its cabinet directives.
Specifically, the PMO failed to instruct those cabinet ministers to create a “publicly accessible” beneficial ownership registry. This isn’t a trivial redaction. The exclusion of that crucial proviso from their mandate letters marked a notable departure from the Liberal Party’s election campaign platform, and the language used in previous government statements.
They’re just two words, but without them, Canada’s forthcoming beneficial ownership registry will be a guaranteed flop. That is why The Globe and Mail inquired about their whereabouts. Unfortunately, we didn’t get a fulsome answer.
“Canada will support the implementation of a publicly accessible corporate beneficial ownership registry by 2025 with a view to providing safeguards against money laundering, terrorist financing, tax evasion and tax avoidance, while ensuring it remains easy to do business in Canada,” wrote Adrienne Vaupshas, Ms. Freeland’s press secretary, in an e-mailed response on Thursday. “Preventing and fighting corruption remains a priority.”
Well, we’ll see. Ms. Vaupshas declined to explain the government’s definition of public accessibility or why that specification was left out of her boss’s mandate letter.
Let’s hope it was an accidental omission rather than a bad omen. The PMO should reissue its mandate letters with those details because the exclusion of that rubric risks giving the impression that Canada is backsliding on the government’s commitment to combat financial crime.
How could it not? Mandate letters set priorities, and until their publication, the PMO was diligent about including that all-important descriptor in its previous communications.
For instance, Canada pledged to implement “a publicly accessible corporate beneficial ownership registry″ at the 2021 Summit for Democracy, a virtual summit hosted by the United States. The Trudeau government also offered similar promises in last year’s federal budget.
Now that there’s the potential for confusion about Canada’s intentions regarding public access, the government should also unveil a detailed plan for its long-awaited beneficial ownership registry to set the record straight. After all, Ottawa has had more than enough time to study the issue – its consultation process concluded in May of 2020.
Let’s get down to brass tacks. There’s absolutely no point in Ottawa creating such a registry unless it’s truly “publicly accessible.” That means it should be a searchable online database that anyone in the world can use free of cost.
And as former labour leader Hassan Yussuff advocated in an op-ed prior to his appointment to the Senate last year, corporate ownership information must be “updated on a timely basis” and “verified by a registrar” to be useful. He also suggested Ottawa create a tip line for whistle-blowers and levy financial penalties for non-compliance.
If Ottawa actually makes public accessibility a defining feature of its database, then Canada could end up with a more transparent beneficial ownership registry for private companies than the United States.
The U.S. Treasury Department only plans to allow “authorized users,” such as law enforcement agencies, to access its database. That will prove to be a weakness because public access helps deter financial crime.
That’s why Canada should make as much beneficial ownership information available to the public as possible, including names, birthdates and addresses of business owners. Obviously, sensitive personal information, such as images of government-issued identity documents, should be kept private. Tiered access would ensure such protections.
American law already defines a beneficial owner as anyone who holds a stake of at least 25 per cent of a company or who has substantial control over it.
Ottawa should set an even lower threshold for beneficial ownership disclosure because, unlike the United States, Canada has a relatively poor record of investigating and prosecuting financial crimes.
Moreover, Canada already lags the United States in disclosure of ownership in public companies listed on stock exchanges. In the United States, investors must identify themselves once they acquire 5 per cent of a public company’s shares. In Canada, they can remain anonymous until they acquire 10 per cent.
Wouldn’t it be refreshing if Canada actually bested the United States on corporate disclosures for once?
An estimated $45-billion to $113-billion is laundered in Canada each year, according to a 2020 report by the Criminal Intelligence Service Canada. Moreover, tax cheats cause the government to lose billions of dollars in revenue each year.
Ottawa needs the public’s help to solve these problems. It should empower Canadians to snitch.
Establishing a beneficial ownership registry is a first step in repairing Canada’s reputation for being lax on financial crime. But its success hinges on the public’s ability to access that information.
Here’s hoping the Trudeau government eventually gets it right.
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