14/02/20

CANADA: Public Consultations on Corporate Registry of Beneficial Owners.

As published on ipolitics.ca, Thursday February 13, 2020.

The federal government has launched consultations on strengthening transparency rules around corporate beneficial ownership.

Innovation, Science and Economic Development Canada, the department overseeing the initiative, said on Thursday it is “now exploring options to make the information maintained in these registers more readily available to law enforcement, tax and other competent authorities, such as through the creation of a public registry.”

Forcing companies to disclose its beneficial owners is meant to target money launderers, tax evaders and terrorist financiers who use opaque corporations and other legal entities such as trusts to disguise their money and dealings.

A consultation paper released on Thursday said the Panama Papers, Bahamas leaks and Paradise Papers had highlighted the scale and ease of use of corporations and other entities as a vehicle to evade taxes and facilitate criminal activities, especially across international borders.

The paper also noted the variety of means used to obscure beneficial ownership information, including the use of real estate for shell companies, complex ownership structures, nominee shareholders and directors, trusts and bearer shares.

New Canadian rules came into effect in June 2019 requiring federally incorporated, privately-held corporations to maintain a database of individuals who have significant control of their company, and to update it regularly. Such information would be provided to government authorities on request.

That month, Finance Minister Bill Morneau and then-Organized Crime Reduction Minister Bill Blair met with provincial and territorial counterparts, who agreed on a need to improve beneficial ownership transparency.

Innovation Minister Navdeep Bains had been tasked in his mandate letter to work with Morneau, as well as the provinces, territories and other communities, to establish a nationwide approach so law enforcement and the Canada Revenue Agency would have the tools to crack down on financial crime in real estate while respecting Canadians’ privacy rights.

The letter said after consultations are concluded, legislation would be prepared to bring the conclusions of it into effect.

The consultation will consider a range of issues, such as what benefits a public registry could provide, how to lower compliance costs for corporations, and how to best protect the privacy of personal information.

The consultation paper noted a public registry could take a variety of forms, such as a single, centralized database or a network of independent provincial and territorial ones accessible through a single portal.

Public consultations will last from Feb. 13 to March 26.