Colleagues, I too want to support Senator Wetston in his work in this area. Prior to a few remarks I have prepared I want to explain to colleagues by highlighting an article that was in the Toronto Star on May 6, 2018. It talks about and highlights how far behind other countries Canada has fallen in recent years. We used to be a leader in tax policy. We used to be a leader in the fight against corruption, organized crime and money laundering. Other countries have jumped ahead of us. The article states:

Britain has passed a law that will require company owners in Bermuda, the Cayman Islands and British Virgin Islands — notorious offshore tax havens where shell companies shield billions of dollars in illicit money — will soon have more open corporate records than in Canada. In a stunning move last week —

This was in May this year.

— Britain’s House of Commons passed legislation that will lift generations of corporate secrecy in its offshore territories by compelling company owners registered on the islands to reveal themselves in public databases.

That kind of transparency is not available in Canada where corporate owners can mask their identity behind lawyers and figurehead directors. There is no requirement for real company owners — or “beneficial” owners — to list their names in provincial or federal registries.

The U.K. is becoming the global leader for beneficial ownership, transparency and holding tax havens to account, said Richard Leblanc, a professor of corporate governance at York and Harvard universities. Canada is rapidly being left behind in a race to the bottom and now has an unenviable international reputation as the go-to country for lax beneficial ownership transparency laws.

This is an indication of the importance of what Senator Wetston is talking about, and I’m so glad he introduced the inquiry given his personal background and career experience in this area.

This beneficial ownership is a subject I stumbled upon when I was studying overseas tax havens, and part of the problem with the Canada Revenue Agency is finding out who actually owns assets. The issue of beneficial ownership and tax evasion are closely linked. Over the course of my work I began to appreciate the importance of information and the knowledge and the understanding and the connection between assets and owners. Put simply, if you can hide who owns a given asset, you are well on the way to hiding the asset itself. It is also not surprising to know that a policy favouring secrecy is one of the defining traits of tax havens.

By way of illustration, let me once again talk about the Liechtenstein case, when details of those 102 Canadians who had secret accounts in one bank in Liechtenstein were released by a former employee it was a mystery who they were. But in an article in October 2012, about the affair for iPolitics, journalist Elizabeth Thompson noted that almost half the named account holders — 51 of them — “were not the real beneficial owners of the account.” This demonstrates the added layer of difficulty inherent in discovering who really owns a given asset, never mind what can ensue when those owners set out to make such discovery as difficult as possible.

Earlier this year I was invited to speak on a panel sponsored by Transparency International Canada in Toronto, where the theme was “Spotlight on Corruption.” Senator Wetston was there that day as well. The day brought together a host of experts, government, the media, the police, and other organizations dedicated to exposing and combatting financial crime and corruption. They spoke about the effect of hidden money, whether it is through the laundering of the proceeds of crime, tax evasion, the funding of terrorism or other activities, or the basic corruption that threatens the rule of law and economic development around the world.

To stem this tide, nations need to be able to tie money to the person who owns it. So it is with more complicated assets like companies. As honourable senators have heard, this is a field where Canada has fallen behind. We have heard how easily one can form a business in this country. When Jon Allen, a former senior public servant, appeared before the Senate Banking Committee, he told the committee that in many cases you have to disclose more information to get a library card in Toronto than you do to set up a corporation. In that context the word “register” starts to lose all meaning.

How do you ensure the word does have meaning? Information, or the requirement to disclose more information, is the way to go. One way to achieve this is a national public beneficial ownership registry. Described in a recent article in Policy Options as “a database of individuals who own, derive benefit from, or exercise control over a legal entity, whether or not they are the same as the formal legal owners,” such a registry would provide an invaluable resource for those chasing hidden assets. In an age when money can be moved around at a keystroke, a database with accurate up-to-date information is the only way to ensure that Canadian laws are being enforced and to demonstrate our commitment to financial transparency to the international community.

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Now, obviously a Canadian registry of beneficial owners would not solve the problem of assets hidden in other countries — that’s a fight for another day. If Canada is serious about combatting overseas tax evasion, we must ensure we are not ourselves a haven for those trying to evade other countries’ legitimate taxes or to hide the proceeds of corruption or other crimes.

When laws and regulations allow individuals and companies to avoid paying their fair share of taxes or the proceeds of crime to be hidden under a pile of paper or for corrupt practices, such as to buy businesses, lands or houses, particularly in our major cities, driving up rents and making it unaffordable for the average citizen of Canada, then all Canadians bear the burden.

Senator Wetston has spoken of the 2014 statement by the G20 nations regarding the need for greater transparency regarding beneficial ownership and a similar measure in June 2013. The countries of what was then the G8 endorsed what they described as a series of “core principles that are fundamental to the transparency of ownership and control of companies and legal arrangements.”

Among those with the proposal of beneficial ownership are companies that should be accessible onshore to law enforcement, tax administrators and other authorities, including, as appropriate, financial intelligence units. This could be achieved through central registries of companies with beneficial ownership and basic information at national or state levels.

Countries should consider measures to facilitate access to companies’ beneficial ownership information by financial institutions and other regulated businesses. Some basic company information should be publicly accessible. Fine sentiments indeed, but they need to be followed up with concrete action.

As Transparency International and others have reported, other countries are making progress on this file but Canada is not. In fact, in 2018, the report this year on beneficial ownership entitled G20 Leaders or Laggards, Transparency International stated:

Canada remains one of only two assessed countries still to have a weak legal framework, with average, weak or very weak scores across 8 of the 10 G20 Principles.

Surely, honourable senators, we can agree that “average, weak or very weak” efforts would not solve what is a very real concern in this country. Without coordinated efforts at the federal and provincial levels to ensure transparency in the area of beneficial ownership, the problem of shell companies and hidden assets will not go away, but its efforts will continue to be felt throughout the Canadian economy and society.

Senator Wetston’s inquiry is an ideal opportunity to bring this issue out in the open so that in the future, the true beneficial owners of Canadian businesses will be there for all to see. Thank you, colleagues.