19 February 2020
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Canada's government has launched consultations on strengthening transparency rules around corporate beneficial ownership, while it examines the possibility of a publicly accessible beneficial ownership registry of corporations.
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.
The move was announced by minister of Innovation, Science and Industry Navdeep Bains and minister of Finance Bill Morneau, with the aim of "protecting the safety and economic interests of Canadians through measures against illicit activities such as money laundering, terrorist financing, tax evasion and tax avoidance."
Our government is committed to using every tool at our disposal to detect, stop and prosecute money laundering, but we can't do it alone. We must all work together"
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.
Under the consultation, this would be extended to a publicly accessible registry or registries: either a single, centralized registry, or a network of provincial and territorial registries accessible through a single portal. The consultation points out that in either case, "federal, provincial and territorial governments would need to work together on collection, storage, sharing and terms of use to produce a registry model that meets the needs of filing corporations, participating jurisdictions and end users, and to ensure consistency in type of data collected."
The consultation will consider a range of issues, such as what benefits a public registry could provide and how to lower compliance costs for corporations. The document examines whether individual beneficial owners should be able to seek exemption, and if "certain beneficial ownership information provided to the registry [should] be accessible only to law enforcement, tax and other authorities."
"Our government is committed to using every tool at our disposal to detect, stop and prosecute money laundering, but we can't do it alone. We must all work together and take the necessary steps to better protect Canadians. Knowing clearly who owns which company will help stop those who use corporations to launder money, evade taxes and finance terrorism, while not deterring good corporate citizens from conducting their regular business activities," Morneau said.
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