THE STANDING SENATE COMMITTEE ON BANKING, COMMERCE AND THE ECONOMY
EVIDENCE
OTTAWA, Thursday, October 19, 2023
The Standing Senate Committee on Banking, Commerce and the Economy met this day at 11:32 a.m. [ET] to examine Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts.
Senator Pamela Wallin (Chair) in the chair.
[English]
The Chair: Welcome to this meeting of the Standing Senate Committee on Banking, Commerce and the Economy. My name is Pamela Wallin and I serve as the chair of this committee.
Let me introduce the committee members here with us. We have Senator Loffreda, Senator C. Deacon, Senator Bellemare, Senator Gignac, Senator Marshall, Senator Massicotte, Senator Miville-Dechêne, Senator Ringuette and Senator Yussuff. We have two visitors with us today, Senator MacAdam and Senator LaBoucane-Benson, who are here ex officio today.
We will continue our examination of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts. We have the pleasure of welcoming the Honourable François-Philippe Champagne, P.C., M.P., Minister of Innovation, Science and Industry. He is accompanied by Mark Schaan, Senior Assistant Deputy Minister, Strategic and Innovation Policy Sector at ISED. Welcome to you both, and thank you for joining us today.
Minister, we welcome you and ask you to make some opening remarks.
Hon. François-Philippe Champagne, P.C., M.P., Minister of Innovation, Science and Industry: Thank you, chair. It’s my first time appearing in front of a Senate committee. I have come to your Question Period, which I very much enjoyed — as much as I enjoy it in the other house, trust me. I am grateful that you would allow me to be here with you. As a minister, I cherish my interaction with senators and the important role that you play. Before my remarks, it comes from my heart to say that I am very pleased to be here.
As I was saying to the chair, senators, please indulge me, there is a vote in the House in a few minutes. If I have to stop for a few minutes, I hope you will excuse me.
[Translation]
I’m pleased to present Bill C-42, which, once it comes into force, will enable the creation of a public and searchable beneficial ownership registry for federally regulated corporations. The registry will be a powerful new tool in the fight against financial crime. It will improve the enforcement of economic penalties and, more generally, protect all Canadians.
Unfortunately, Madam Chair, some bad actors use corporations for illegal purposes. Specifically, anonymous Canadian shell companies can be used to hide the real ownership of assets and launder proceeds of crime, including corruption, fraud, drug and human trafficking and other offences that cause great harm to our Canadian communities. We must take rapid, decisive action, and that is our goal with Bill C-42.
[English]
Our government is committed to a robust and effective regime that will combat money laundering and tax evasion, improve Canadians’ trust in the marketplace and make Canada a leader in corporate transparency. To catch these bad actors, law enforcement, tax and other authorities need access to accurate and up-to-date data on the individuals who own and control corporations in Canada.
The amendments proposed in Bill C-42 will require CBCA corporations to collect and send additional information about their additional individuals of significant control, namely residential addresses and citizenship. Bill C-42 will also require that Corporations Canada make publicly available a portion of this information. It is important to note that individuals will continue to have the option to provide an address for service, and that when they do so, it is that later address that will be made public.
Creating a free, public and searchable registry of beneficial owners of federally regulated Canadian corporations will increase corporate accountability, and I think it will improve public trust in corporate institutions in our country.
[Translation]
Citizenship and date of birth will be available to the authorities, but will not be made public in order to protect Canadians’ privacy and prevent fraud and discrimination. The bill also introduces exemptions for certain at-risk individuals. These exemptions are necessary to ensure that our modalities are Charter-compliant, and they’re for very specific cases and limited public disclosure. Law enforcement authorities will have full access to all data collected.
[English]
It is for these reasons that I am delighted and proud that the bill received the unanimous support of the House of Commons. I must tell you, it’s not every day that you see that. It sends a strong signal to everyone in this country that we are serious about doing something. There is widespread recognition of the benefits that a new registry will bring to Canada, and after significant study and deliberations, all parties support the specific modalities that have been put forward in the legislation.
These modalities include a Charter compliant balance of privacy protections; a strong compliance apparatus, including both civil and criminal remedies; multiple measures to ensure the accuracy of the data in the registry; and provisions to ensure the interoperability with provincial, territorial and other international registries.
I would like to add to these remarks that the interoperability is key. If you want something meaningful, it needs to be interoperable not only with other jurisdictions in Canada, but also internationally. While we’re doing that, it’s going to leverage existing reporting mechanisms in order to reduce the additional administrative burden on corporations to the maximum extent possible. That was something that was clear to me. Coming from a family of small- and medium-sized business, you want to make sure that whatever you do is not unduly increasing the reporting requirement for businesses.
[Translation]
The creation of this registry is an important step in the government’s multi-pronged approach to fighting financial crime, and it will serve as the foundation for our ongoing efforts in the coming years.
Madam Chair, in the interest of the Canadians watching us today, I hope your committee and the Senate will recognize the importance of this bill and will ensure it is passed without delay so that the registry can be created as soon as possible.
[English]
In conclusion, we must stop those who want to use Canada as a place to incorporate shell companies and rather provide law enforcement and the public with new tools to deter the abuse of our corporations and reinforce trust in the Canadian marketplace.
With that, Madam Chair, I will be more than happy to take questions from you and members of the committee.
The Chair: Thank you very much for that. What is your voting timetable?
Mr. Champagne: I am required to vote, if you will allow me one minute.
The Chair: We will do that.
Mr. Champagne: I will stay in the room.
The Chair: As frequent a visitor as Mark is to this committee, we will wait and begin our questioning with our deputy in just a moment. I am sure your question is for the minister first and then Mark will be here with us.
I will just say that in the House of Commons, they are actually allowed to vote remotely. We do not do that in the Senate of Canada, and so the minister is literally pausing, walking over to his phone and casting a vote in the House of Commons. We would like him to be able to answer the initial questions from our committee, so we’re just going to informally pause here for a moment. It’s not like he ran out of the room and we’ve lost him. He is actually doing his job.
We won’t even ask what you are voting on.
All right, we will now begin our formal questioning, and we will go first to our deputy chair, Senator Loffreda.
[Translation]
Senator Loffreda: Thank you, and welcome to the Standing Senate Committee on Banking, Commerce and the Economy, Minister.
[English]
We have heard from witnesses and experts, and I will mention some of the comments. One witness, who was specified as an expert, said that this legislation will allow Canada to leap to the head of the class. It would be nice to see Canada at the head of the class, and thank you for putting this piece of legislation together so we can study and analyze it adequately.
Some have said it is only a tool. Another witness said that although it’s not perfect, we’re ready to go and it should be passed.
Based on your analysis, studies and evaluations, is this a first step? Is there much more that has to be done with respect to corporate transparency and anti-money laundering? I would like you to share your thoughts with us on some of these comments that were put forward by our expert witnesses.
Mr. Champagne: Thank you, senator. I like the way you framed it. I always like Canada to lead, not only domestically but, obviously, internationally.
When we look at the Financial Action Task Force of the G20, you will see that our registry is up there in terms of what it covers and the way we have structured it. We have also learned from the European Union to strike the right balance. You may have seen that a similar registry was challenged in court, and that’s why there will be some public information as well as non-public information available to law enforcement authorities.
I agree. For too long, we had some bad actors who used Canadian corporations in the way that I think Canadians would find very disturbing, and it’s a step in the right direction. We can always do more. Bad actors out there will always try to find ways. However, if I compare our registry to best practices in terms of the task force, I think there are more than 100 countries now that have agreed to have similar registries. That’s why I stressed the interoperability before, because, as you know, you want to get to the ultimate beneficial owner, which is a legal person. Obviously, in different corporate structures, you need to have this interoperability and collaboration with other jurisdictions as people would try to hide assets or otherwise.
If you ask me, I think we’re going to be best in class, and we made choices in the legislation. Hopefully, we’ll find senators that are smart. For example, there is some data that will be collected — as I said — but won’t necessarily be public, so they will be Charter compliant. We certainly want to avoid what the U.S. has gone through. At the same time, the type of information we collect and the way I would say law enforcement authorities — as you know, we are amending different acts to make sure they could be cross-referenced so that we share that information with other law enforcement agencies to make sure the information is accurate and up to date. I must say — as you have seen — the types of penalties you see in the act are very significant. If you compare it with other acts, you will find that members of Parliament sent a very strong signal. If you look at the amendment that was proposed, some individuals could be subject to significant penalties.
I will leave it there, senator, but, yes, I think we will be best in class.
Senator Loffreda: Based on your objectives, to what extent do you feel this bill will reduce money laundering? Without giving us a percentage — obviously; that’s a crystal ball — do you feel all your objectivities will be met?
Mr. Champagne: Someone once said that sunshine is the best disinfectant — or something similar to that. But the fact that we will be seeing the ultimate beneficial owner of corporations is, I would think, going to give back trust to people in our corporations. Certainly, I would think bad actors will probably not want to come to Canada or at least use corporations in the way we may have seen in the past where people were using our corporations.
Yes, I think that disclosing that kind of information is going to prevent bad actors coming to our shore and using our legitimate corporate act to engage in illicit activities.
Senator Loffreda: Thank you.
The Chair: Thank you very much, minister.
[Translation]
Senator Gignac: Welcome, Minister, and thank you for joining us despite your very busy schedule to talk to us about a bill that is of great importance to Canadians’ confidence in our system.
You consulted with your provincial and territorial counterparts given that provinces, such as Quebec, have business registries.
Are the provinces supportive of Bill C-42? Have they expressed concerns about any of the provisions?
Mr. Champagne: It’s a pleasure to be here today to testify.
You’re right, Senator Gignac: Quebec and British Columbia already have systems in place. That’s a good thing, and the idea that came out of discussions with Quebec had to do with interoperability. We made sure to employ the beneficial ownership data standard in order to reach all authorities so they join the registry. If we look at the number of federally registered corporations in Canada, that’s about 500,000 entities, or about 15% of all businesses. That makes system interoperability very important.
Minister Freeland and I sent a letter to all our provincial and territorial counterparts urging them to do what Quebec did. The idea is to cover all corporations in Canada. We can do that at the federal level, but we have a leadership role to play, as Senator Loffreda noted, in urging the provinces and territories to do likewise to ensure that corporations are not being used for illicit activities. Yes, we consulted Quebec.
As I said, interoperability is key. People have asked us why the 25%. That has to do with the Canada Business Corporations Act, but it’s also the international standard. If there’s no consistency with the international standard, we can’t do searches and we lose interoperability. We know that, typically, bad actors set up a number of corporations to hide assets or activities.
Collaboration is important, but so is having a standard so that, when we do a search using a person’s name or a corporation, we can find the beneficial owner. That’s the goal.
Senator Gignac: You touched on the fact that, in 2022, the Court of Justice of the European Union put a stop to Luxembourg’s bill to make information publicly available because it went way too far. I imagine you have legal opinions.
I know you’ll probably be circumspect, but what justification is there for making information available to the general public instead of just law enforcement? There has to be a reason. Do you have legal opinions that provide assurance the law will not be challenged like Luxembourg’s was?
Mr. Champagne: That’s a very good question. The public information will be the name and address. Citizenship and date of birth will not be public. All the information will be available to law enforcement. The choice we made to make that public was because civil society demanded transparency. Around the world, if you want people to have confidence, civil society needs a search tool that’s easy to use, and that’s the open registry model.
At the same time, Senator, I would say that we made that decision after looking at the European experience with what’s private versus public, and we knew we had to protect citizenship and date of birth because there may be discrimination issues and other related issues. We said yes for law enforcement, but in the public interest, the fact that name and address are out there, I think that’s the right way to do it.
We tried to take a balanced approach to avoid exactly what you asked about, Senator, to avoid Charter challenges. We also consulted the Privacy Commissioner of Canada to make sure what we were doing was consistent with his standards.
[English]
Senator Yussuff: Thank you, minister, for being here. Like my colleagues, I offer a sincere thanks for finally seeing this legislation being tabled. As you know, this has been years in the making, and has involved efforts by many to say that Canada needs to get on board.
We learned a lot from the B.C. commission about what happened in the gaming community and how money laundering was happening, and it speaks volumes to how criminals are using our system in this country. I have three quick questions. Obviously, federal jurisdiction is small compared to the jurisdiction that provinces hold in this country, and two provinces are already on side. I assume the conversations were robust with the provinces. We can see Ontario joining here soon and, of course, both the Maritimes and the Prairie provinces are coming on side.
Second, I think the legislation is in its infancy and there is a lot to be learned and discovered as time goes on. What is not in the legislation is a time frame for a review of how we can improve this, or look at it in a very timely manner that will help us make sure the law is working to the advantage that we were hoping to achieve. The last point I would like to make in the context of any good legislation is that enforcement is critical. I assume the resources have been prioritized for CRA and other officials in the different departments, and they will give them the tools so that once the legislation is in place, they will have the necessary tools and support to ensure they are doing what is expected because having the law on the books without enforcement doesn’t mean anything. Maybe you can speak to those points.
Mr. Champagne: Thank you very much, senator, and allow me to say thank you for everything you did in the labour movement before you became a senator, and for what you are doing today. You’re right. That discussion started back in 2017, so there has been a lot of consultation and, as you said, it’s not only our hope, but I would think that as members of Parliament and as senators, we should use our collective influence to bring every province and territory on board. I think Canadians would expect nothing less. We can act within our own jurisdictions, but I would say that the discussions we had with the provinces are encouraging.
I think, as you said, Quebec and B.C. have already been leading the pack, but the fact that it’s interoperable, the fact that we have a framework that is well regarded among our peers around the world is a positive step. In terms of review, the Financial Action Task Force of the G20 has a review every five years of legislation that exists or the current status of beneficial ownership, and that’s why in the law we allow new regulations, to keep it up to date. I am the minister who has to deal with AI, and I can assure you that as you’re eventually looking at Bill C-27, it’s the same thing; you need to have a framework that will survive the test of time. Today, those are the four data points that the international community and best practices suggest we have.
Five or ten years from now, maybe best practices would suggest that we should collect different information or more information or collect it in a different manner, so that regulation will allow us to remain current with best practice. As Senator Loffreda was saying, we want to be at the head of the pack, and we have been very much engaged since the early days. The fact that we started in 2017 has given us the time to ensure that this is well thought through; this is not something being rushed in any way.
There has been discussion. I am told that at the federal-provincial-territorial meeting, this has been a common agenda item. I think there is a broad consensus, senators, as you are looking at the law, among the people we consulted in the provinces and territories, who are experts, to say it is time to do that and that it will be beneficial for the country.
[Translation]
Senator Bellemare: Welcome to our committee, Minister.
I would like to pick up on Senator Yussuff’s line of questioning. I had two questions, and the first one was already asked. It was about the bill’s five-year legislative review clause. Putting that in regulations is one thing, but putting it in the bill offers greater certainty that it will happen.
My second question is about how the coming-into-force part is written. It’s a little vague. I believe the coming into force will take place on a date fixed by order of the Governor in Council. Why not do it upon Royal Assent? Would it be possible to get a more specific date? This could end up never coming into force. That happens sometimes.
Mr. Champagne: Thank you for your question, Senator.
That was a choice that was made. I understand your point of view. It could have been done another way. It’s a Canadian law, but it’s part of a bigger picture within the G20’s Financial Action Task Force. A lot of things happen at the international level. The registry is important nationally, but much of its value comes from the fact that there are other registries internationally.
The vast majority of Canadian corporations have very simple share structures, if you think of the vast majority of people. Bad actors tend to have very complex corporate structures. The value of this is really in interoperability and the fact that we are working with our partners.
As of now, we have a five-year review with the task force. I won’t make any assumptions, but, maybe one day, the task force will say it has to be every three years because bad actors will come up with other strategies when they see there are more countries. We wanted to give ourselves that flexibility.
We expect the registry to come into force in early 2024. That too is a choice because we’ve prepared all the systems. I would note that the law will come into force, but the implementation will be gradual. Every year, corporations are required to produce an annual report, and they are also required to issue a report within two weeks of a significant change.
We also wanted corporations to comply with the new registry knowing that this isn’t about imposing a burden as of a certain date. There will be a coming-into-force date, but people will start to report based on their usual obligations that are already part of the law because we’re asking for two extra pieces of information. We already ask for names and dates of birth. The new information we’re asking for now is residential address and citizenship.
That will all happen as part of the annual reports that are already produced on set dates to avoid putting too great a burden on the vast majority because 98% of Canadian businesses are SMEs. That’s another thing we kept in mind. We want to maintain that balance.
[English]
Senator C. Deacon: Thank you, minister and Mr. Schaan, for being with us today. Congratulations on a unanimous vote. They are wonderful when they occur, and it is not often when it occurs. Maybe we’ll find ourselves in the same place in the Senate.
I want to ask a question about the whole-of-government approach to this issue. It builds off of the Canadian Bar Association letter to us where they state:
. . . Bill C-42 will disproportionately impair the privacy and personal security rights guaranteed by the Canadian Charter of Rights and Freedoms.
They don’t ask it as a question; they make a statement.
I want to consider how this fits in with changes to the privacy protections of Canadians under Bill C-27, our Privacy Act in terms of how the Government of Canada behaves, and provincial privacy legislation. You also then look at related legislation like PCMLTFA and FINTRAC, and different organizations across government. There is really a need for a whole-of-government perspective on this legislation.
Could you speak — and perhaps Mr. Schaan wants to step in as well — about how you have future-proofed this legislation to manage those complexities that, at this point in time, the Canadian Bar Association is pushing back on?
Mr. Champagne: I love the Canadian Bar Association. I have been a member of the bar for I do not know how many years. I would say, respectfully, to my colleague of the bar that we have consulted widely.
Senator, first of all, thank you for your leadership and for your question. It is a very relevant question, especially when we see what has happened in Europe. We have been informed in our deliberations and choices to go back to senators with the different questions we had as to what would be made public. We have also consulted with the Privacy Commissioner to make sure that this would be Charter compliant. We have been very careful on one end to make sure that law enforcement would have the tools, but that we would not find ourselves out of place.
In our opinion, and in the opinion of the House, this is Charter compliant. We have taken all measures necessary to make sure that we respect privacy. I will give you an example. Someone could have the address for service, not their residential address. Minors do not have to provide their names. There are a number of things that we have taken into account to protect what people would say is their privacy, while also having the public policy objective that we have.
There are a number of exemptions where people could say they would be targeted if their name and residential address were there. There are a number of exemptions. As I said, minors are excluded already. You could have an address for service of process.
I think it has been well thought through. I have always respected the bar’s view on that. The work that we have been doing is to strike the right balance. We have been informed of what happened in Europe and, therefore, that is why we decided to put the line there. I am happy for Mr. Schaan to add something, as you requested.
Mark Schaan, Senior Assistant Deputy Minister, Strategic and Innovation Policy Sector, Innovation, Science and Economic Development Canada: Corporations Canada is subject to the authorities of the Office of the Privacy Commissioner and has already submitted a draft privacy impact assessment related to the collection of information and, as noted, we have consulted widely with the Privacy Commissioner in the development of the overall structure. I feel very satisfied with the minister’s contention that this is Charter compliant and respectful of privacy, while also ensuring the balance of transparency that Canadians are seeking.
With respect to the whole-of-government approach — this came up in the technical briefing — the beneficial ownership registry is one additional important tool for law enforcement. There have been a number of efforts on the FINTRAC side and on the side of the CRA — their work on trusts, for instance — of work that will have to happen at the provincial and territorial level that all need to come together to root out the noxious practices of these folks.
With respect to Bill C-27, there is an exception already to consent for the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and there is good work underway to look at that framework.
Taken as a whole, the government is trying to make sure that all of the right tools are in place, because it will not just be one thing, it will be the collection of things together that allow law enforcement to root out the bad behaviour.
Senator Marshall: Thank you, minister and Mr. Schaan, for being here this morning.
The legislation is going to support some type of information system. Has that system been developed? When will it go live? I am interested in that aspect. When can people start using it?
Mr. Champagne: That is a very good question. Mr. Schaan can give you further details, but the fact that we started early gives me confidence. The worst is when you try to build a system, like a back office, to do all that.
That was a question I may not have addressed fully. Maybe that was a part of Senator Deacon’s question as well. We have put resources behind it. We already collect information. So, in a way, adding a bit of information was easy, but the enforcement part of it is where we needed to have more people and more systems in order. For collection, if you just add a bit of data, that is one thing — making sure that the person and the information is accurate and up to date. As one senator said before, it is one thing to have a law on the books, but if you do not have the enforcement capabilities, it is not going to achieve the public policy purpose. We had a lot of time to prepare that.
Going back to Senator Bellemare’s question of when the system is going to be in place, we had a reasonable amount of time to prepare all of the systems and the back office to do that, to beef up Corporations Canada and, as Mr. Schaan said, to work with our partners at FINTRAC and the CRA. As you said, this is whole-of-government. You want that information to also have a system to be able to detect people who would be either hiding information or providing false information. The will of the house, when you look at the penalties — and I look at the amendments that have been put on the record — is very significant. You are talking about imprisonment for those who would provide that and also significant fines.
Senator Marshall: But is there a date? Once the legislation is passed — I know Senator Bellemare asked a question on that — people are very anxious to see when it is going to be implemented because the legislation is like the first step.
When are you going live? Is there an implementation date? You are saying that you have got a lot of work done up front, but will it be ready for December 31? You must have a date for when the system is going to be up, running and accessible. The objective is a publicly accessible system.
Mr. Champagne: Totally.
Senator Marshall: So, do you have a date?
Mr. Champagne: I will ask Mr. Schaan to be more specific. We expected that bill to come in the summer, so we were ready by the end of the year. Now we are where we are. Now we are saying that the beginning of the year is the time, because we anticipated that this bill would have been earlier in the calendar year so that we could start by the end of the year. Obviously, with where we are, that will take more time, but the system would be ready. I will turn it over to Mr. Schaan to give you more details.
Senator Marshall: Could you also work the cost into your answer?
Mr. Schaan: Additional resources were provided to Corporations Canada to be able to beef up their capacity, particularly on the enforcement side. But the Canada Business Corporations Act has traditionally been a self-policing function and more powers are afforded through this bill to the Corporations Canada regime to allow for them to fund that.
We are anticipating very early 2024 as the launch date for the registry. We are building as you are studying, while preserving the prerogative of Parliament to potentially shift the dimensions of the act. What is currently being built is what we proposed initially as what would be collected, but we obviously need to make sure we leave room for Parliament to do its work. As soon as this bill has received Royal Assent, we will be able to give the appropriate notice to corporations that they will have to provide this information and we can then go live with the registry.
Senator Marshall: Is there any number for dollars, the cost?
Mr. Schaan: I think that we can come back to the committee on what additional resources were provided to Corporations Canada.
Senator Marshall: Capital and operating. Thank you.
The Chair: The other issue raised on the money side yesterday was about the provinces, whether there is any incentive, a cost of setting it up and a bureaucracy around it but also enforcement. Are you providing any encouragement or enticements for the provinces?
Mr. Champagne: Encouragement, always, Madam Chair. In a sense, the letter sent with Minister Freeland was more than encouragement; it was really an ask. But we’ve been talking about 2017 and the way we did that, in a way, and we can always look at what more we can do. But the fact that we have used what they call the Multi-Jurisdictional Registry Access Service, which is a portal; a lot of the back office you need has already been set up, so it is quite easy to plug in. A lot of the development costs are already something that we have. It is really about them having a collection of information. We built a frame that anyone and everyone could plug into, and that ensured it was possible domestically and would be interoperable internationally. I would say the development costs are what we bear, and then it is for them to plug into our system or make their system be able to talk to our system from a back-office perspective.
The Chair: If you are to discourage people or particular provinces or territories from becoming Delaware, you might want to make sure that there is no cost.
Mr. Champagne: That is something that we can look at down the road. That is my sense, Madam Chair. I have not heard from any colleagues across the nation that there is reluctance or pushback, and I do talk to them because as the industry minister, you tend to have a lot of friends around the country. I think that people realize we’re in 2023. Preventing money laundering, illicit activity, it is pretty tough not to be. I have not heard pushback. Certainly, I will be listening.
[Translation]
Senator Miville-Dechêne: Welcome, minister. To combat money laundering, not only does law enforcement need transparency, but so too, does the public, and by extension, journalists, who as you know, have raised a lot of questions about these activities in recent years.
As you may or may not know, the committee met with a representative from Canadians for Tax Fairness yesterday. He recommended a number of amendments, one of which was including the country of residence and the name of the corporation in the publicly accessible information.
Why not? How would adding the country of residence be discriminatory, since we’re trying to find out whether Canadian corporations are being used to hide foreign interests? I’d like you to provide some clarity, because the provision in the bill never mentions disclosing the name of the corporation. The name of the individual concerned will appear in the registry, but not their connection to the corporation. I don’t see how that makes things more transparent.
Mr. Champagne: Thank you for your question. You know, the big question at the outset is whether to make the registry public or private.
Senator Miville-Dechêne: That’s right.
Mr. Champagne: For instance, our neighbour to the south, the U.S., opted for a registry accessible to law enforcement. Like the British and others, we decided to go with a public registry, which is a best practice, I believe. Sorry, I didn’t see the committee’s proceedings yesterday. I haven’t had a chance to hear what was said.
Coming back to the privacy element, I do want to point something out regarding the expert advice we received during our extensive consultations on identifying the name and address of the corporation. I’m glad you brought it up, because there was a desire to make sure that journalists had access to the information given the role they play in civil society. Yes, there is the law enforcement component. Journalists also play an important role, because, as we know, they are often the ones who blow the whistle.
Senator Miville-Dechêne: Because law enforcement doesn’t always have the necessary resources.
Mr. Champagne: What we heard was that having the ability to search by name as well as by address was important. I realize there are other views, but those are the things that were brought up first. The biggest choice we made, in Canada, was to make the registry public.
Senator Miville-Dechêne: Am I wrong to think that the name of the individual who owns 25% of the corporation’s shares is not linked to the corporation? Just the names will be available.
Mr. Champagne: The information you should get is the name, date of birth, residential address and type of control, but yes, there is a link between the corporation and the residence. I’m not sure how it was explained to you yesterday. For sure, there has to be a link because, as you say, it has to be possible to connect the two.
Senator Miville-Dechêne: That’s why I was asking.
Mr. Schaan: I’d like to make two quick points, if I may, in response to your question. In terms of how the registry is structured, other laws identify the corporation, but not the natural persons at the top of the chain, and those regimes provide less transparency. If you can’t find out who the natural persons are, what the names are, you have to dig further to find who the person at the top of the corporate chain is. The natural person is really the information that’s being sought through the registry.
As for the country of residence, there’s the country of residence and the address for service. According to the Privacy Commissioner, however, the person’s country of residence is one of the most sensitive pieces of information because of the country of citizenship. Occasionally, that information is quite sensitive.
[English]
Senator Miville-Dechêne: I just want to be sure that the name of the company we’re talking about is associated with the real owner who has 25%. Is there a link? It is not written in the law.
Mr. Schaan: It will be built into the existing registry so that when you click on Mark Schaan Incorporated and try to find out who the ultimate beneficial owner of Mark Schaan Incorporated is, you click on the company name, and then you get the beneficial owner, the natural person who is the actual controller.
[Translation]
Mr. Champagne: That’s a very good question. It has to be that way. It’s about the system. I understood your question, but I am glad it’s been clarified that the information will make it possible for people to connect the two.
Senator Miville-Dechêne: It’s just too bad for the country of residence.
[English]
The Chair: Thank you for that clarification.
[Translation]
Senator Massicotte: Thank you, minister, for being here today. It’s a real pleasure to have you here, along with Mr. Schaan. I have to commend you, because this is a piece of legislation we studied 10 years ago, as I recall. It’s very important for our reputation, for tax fairness. It’s in line with international standards. I tip my hat to you. Good work, team. The finish line is in sight.
I assure you it’s not personal, but I do want to point something out, minister. When you look at this whole debate around money laundering, all the professional associations — from accountants to real estate brokers — have put measures in place, often ordered to do so, to protect against and catch the troublemakers as much as possible.
As a member of the bar, you know that lawyers are still excluded. The Supreme Court made a decision that opened the door to lawyers, but solicitor-client privilege has to be respected. Why are they still excluded? This isn’t a scientific observation, but when you read stories about money laundering in the papers, law firms often seem to be involved. Maybe because it’s easy to do, I’m not sure, but lawyers are again being overlooked when all the other professional associations have to fall in line.
Mr. Champagne: Maybe this will create some momentum. The bill was centred on the Canada Business Corporations Act, so we focused on the 15,000 Canadian corporations that are federally regulated. You know as well as I do that professional associations are provincially regulated. Nevertheless, as mentioned earlier, I hope this will push provinces to think about it, as far as partnerships and trusts are concerned, because they do fall under provincial jurisdiction.
As I see it, what we are bringing forward — and I’m glad you brought this up, senator — could provide an opportunity to examine what more can be done. To my mind, this is just a first step. Some have suggested a transparent land registry, which exists in British Columbia, if I’m not mistaken. There is still a lot that can be done. To your point, in terms of what you’re asking, I would say this is just the start. What we did was focus on the areas over which we have full control, but I hope the professional associations and provinces will think about expanding the registry to other types of businesses and corporations, such as partnerships and trusts. The idea is to explore how the registry could be applied in a broader way.
I think we’ve succeeded in achieving interoperability, so if a decision is made to add that to the registry in the future, it’s something the system can accommodate. Our focus was on what we could do, but your question is about whether more can be done. I hope the senators will continue discussing it and hear what the various professional associations have to say. We did it, on our end, with the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, to establish that community within government to share information and identify bad actors. Are there other players in the ecosystem, apart from banks and those with reporting requirements? Isn’t there more that can be done? I think the point you’re making is worth considering.
[English]
The Chair: Thank you.
Senator Ringuette: I just want to make a comment before my question. I believe that tax evasion alone is the best incentive for the provinces and territories to buy in. This is very important.
You said that 25% is the international standard. I find that quite high. Is there any discussion at the international level to reduce that incentive to something around 10%? I believe that would capture more of the culprits we are trying to identify.
Mr. Champagne: Like you said, the 25% is the international norm. It is also our threshold for money laundering in Canada, and it is also the threshold in the Canada Business Corporations Act, which dates back to 2019.
Is there a discussion that one could have? In securities law, the threshold is oftentimes 10%. That does not deal with natural person. It deals with either natural or legal person. That is to address natural person. When we drafted the act, we knew that if we moved away from the international standard, then we would no longer be compatible and searchable. The interoperability was very key for us because if our registry is not interoperable with the others, we are not going to get — to your point, we want to get the bad actors. But the bad actors are typically not the ones who would have a single, straightforward ownership structure. They would probably incorporate different things. Before you find a natural person, you may have to go to a lot of places to find out who it eventually is.
That was the choice we made. Could there be a discussion internationally to review that? The Financial Action Task Force of the G20 would be the place to do that. Our laws on money laundering today — the other acts we have in Canada — are 25%. We went with that in order to have a standard we can apply to the different legislation we have in Canada and to the international standard.
To your question on whether there could be more of a discussion internationally on that, the answer is probably. That is why in the law — in the regulation — we left ourselves open to eventually be able to reflect the international standard if these things move over the coming years.
Senator Ringuette: If I understand you correctly, if a province decided they wanted the shares of their provincial corporation to be 15%, for instance, are you saying the current system could not accommodate that?
Mr. Champagne: Let me clarify or rectify.
It could, but my point is that you would not now be comparing apples to apples because, in some cases, you would have a different ownership. When you tried to go international, then you would have a discrepancy because the others are at only 25%.
That is why the task force of the G20 was really keen that we have a common threshold. If every country decides to have a different threshold, it becomes very difficult to try to compare when you are looking to see if you are meeting the regulation or the legislation or not. That was the thought.
There are about 100 countries that are looking at similar structures. Could there be more internationally to do that? That would apply as well to our money laundering laws, which are at a 25% threshold today in Canada. That is something that could be looked at to see what the international standard is.
I think there is a push internationally to do more. The door is open for committees to study.
Senator Ringuette: It is a good start. Thank you.
The Chair: We are going to try to squeeze in a couple of other questions that Senators Yussuff and Deacon have asked for. However, our time is short.
Senator Yussuff: Obviously, this law is not just about our image internationally, which is important because it is about investments and how transparent our system in this country is and how it is operating. It is also about those paying their fair share of taxes. There has been a huge debate about the fact that too many are paying their fair share and others are getting away with it. I could go through the list of the Panama Papers.
However, I think the law is equally about those who have been doing the work. The only way this is going to work is for the public to have knowledge of how the system works and being able to use it to shine a light to tell the government they need to do more.
Minister, would you consider creating an advisory committee as you work toward implementing the legislation to ensure the objective we thought about and the things people would like to see happen are at least being advised to you for you to consider? Because this is going to be a digital system and, as you know, we have not had the best record with our digital systems — not to be too critical.
My point is that people want to be sure they can use it and hopefully help the government do what its objective is in the first place.
Mr. Champagne: It is a very fair question, Senator Yussuff. I think we would always be open to look. The plan, as you would expect, is to have all the provinces and territories join on board, and I would think there would be something — I do not want to say governance — either at the official level or at the minister level to make sure that we have a system that works properly and evolves with time because, like you say, the technology we would have.
The plan is really to have a national registry. Certainly, there needs to be openness. It may come with time once we have more provinces on board. British Columbia and Quebec have their own, but it is going to be interoperable. Hopefully, with the push of the House — and, I would say, our colleagues from the Senate — Ontario and others will say that this is the right thing to do. The issue about paying their fair share of taxes is knowing who the ultimate beneficial owner is. That is a good tool in the tool box.
The Chair: Thank you.
Senator C. Deacon: Looking forward over the horizon, the ability to increasingly and robustly identify individuals and authenticate their credentials digitally will be very important. Do you see that this legislation holds the ability to ensure that we can be using globally best practices to make sure we are really truly getting the right person?
Mr. Champagne: I love the question, senator. You are looking ahead, as you should be. I think the provision in the law that allows for regulation would permit that. Things are evolving. So many things are evolving on AI and quantum. There are many things. We are moving at the speed of light.
To your point, having something that would be a bit like we have PIPEDA, our law on privacy — although it was adopted before Google, so that’s why I’m keen to have Bill C-27 to come to the Senate before Twitter, Google and Facebook to modernize that. On the other hand, you could say that it has served Canadians for quite some time. I hope what we have here and the provisions we put forward to allow for change as best practices become digital. We will have to see how this impacts that, but the fact that the provision on regulation will allow us — and working with our international colleagues.
It is good that we have this in Canada, but the real value, to go back to Senator Miville-Dechêne, is the fact that you can search elsewhere. Let’s be honest; for 98% or 99.9% of corporations in Canada, the ownership structure is straightforward. But for the bad guys, typically that’s not so straightforward. The only way to catch them is through international cooperation because they are likely not to have a straightforward ownership structure. That’s why international cooperation and interoperability standards are key. If you want to get to the real person, you need to have others to help do that. I doubt it would be a simple address and name. I suspect it’s a bit more complex.
The Chair: Minister, thank you very much for your fulsome responses to the many questions today. I think we got to almost everyone here who wanted to ask a question. Your officials will stay with us for the next process, but we want to thank you very much, Honourable François-Philippe Champagne, Minister of Innovation, Science and Industry. You are welcome at this committee at any time now that you have had your first experience.
Mr. Champagne: Thank you very much, chair, you have been very nice. Thank you to all the senators for your work in helping us to bring this into force in this country. I think we are doing a great service to our nation. Thank you for your service to the nation as well.
The Chair: Senators, we will now move to clause-by-clause consideration.
We have with us at the table Samir Chhabra, Director General; and Martin Simard, Senior Director of the department. They will be listening, and in the course of our discussions, if there are any questions or points of clarification, we can turn to them.
We will now proceed to the clause-by-clause consideration of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts. I would like to remind senators, which I must do, of a few points. As chair, I will call each clause successively in the order they appear in the bill. I will remind senators that when more than one amendment is proposed to be moved in a clause, the amendment should be proposed in the order of the lines of a clause. If at any point a senator is not clear where we are in the process, please ask for clarification. I want to ensure we always have the same understanding of where we are in the process.
If a senator is opposed to an entire clause, I would remind you that in committee the proper process is not to move a motion to delete the entire clause but, rather, to vote against the clause as standing as part of the bill. I would also remind senators that some amendments that are moved may have consequential effects on other parts of the bill. Should this be the case, it would be useful if a senator moving an amendment identified to the committee other clauses in this bill where the amendment could have an effect. Otherwise, it will be difficult for all of us to remain consistent in our decision making.
Staff will endeavour to keep track of the place where subsequent amendments need to be moved and will draw attention to them. Because no notice is required to move amendments there can, of course, have been no preliminary analysis of the amendments to establish which one may be of consequence to another or which one may be contradictory, and that may slow our process.
If committee members have any questions about the process, or about the propriety of anything occurring, they can raise a point of order. As chair, I will listen to the argument and decide when there has been sufficient discussion of the matter or order or make a ruling. The committee is the ultimate master of its own business within the bound established by the Senate, and a ruling can be appealed to the full committee by asking whether the ruling should be sustained.
As chair, I will do my best to ensure that all senators wishing to speak to have the opportunity to do so. For this, however, I will depend on your cooperation and ask that you consider all other senators by keeping your remarks and interventions as concise as possible.
Finally, I wish to remind honourable senators that if there is ever any uncertainty as to the results of a voice vote or a show of hands, the most effective route is to request a roll call vote, which obviously provides an unambiguous result. Senators are aware that any tied vote negates the motion in question.
Are there any questions on the comments that I have just read aloud as part of our process? No. Thank you. We will now proceed.
Senators, is it agreed that the committee proceed to clause-by-clause consideration of Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts?
Hon. Senators: Agreed.
The Chair: Agreed.
Shall the title stand postponed?
Hon. Senators: Agreed.
The Chair: Shall clause 1 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 2 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 3 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 4 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 5 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 6 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 7 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 8 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 9 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 10 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 11 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 12 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 13 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 14 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 15 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 16 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 17 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 18 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 19 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 20 carry?
Hon. Senators: Agreed.
The Chair: Shall clause 21 carry?
Hon. Senators: Agreed.
The Chair: Shall the title carry?
Hon. Senators: Agreed.
The Chair: Shall the bill carry?
Hon. Senators: Agreed.
The Chair: Do you want to consider appending any observations to this report? No? We don’t need to go in camera.
Is it agreed that I report this bill, as amended, to the Senate?
An Hon. Senator: It’s not amended.
The Chair: Sorry, I read both sides.
Is it agreed that I report this bill to the Senate?
Hon. Senators: Agreed.
The Chair: Thank you very much, honourable senators.
All right, I believe concludes our meeting. Thank you, officials, for being here in case we needed you, and we appreciate the cooperation of everyone here.
(The committee adjourned.)