ICC Commercial Crime Service

To Canada from Transparency International: Unmask Anonymous Owners of Companies & Trusts

Canada is one of the world's most opaque jurisdictions when it comes to ownership of private companies and trusts, according to a new report by Transparency International Canada (TI Canada). In fact, more rigorous identity checks are required of individuals getting library cards than of private companies setting themselves up with anonymous beneficial owners.

The report was produced by Adam Ross, TI Canada's lead researcher on beneficial ownership transparency. Its key recommendation is that the government of Canada require all companies and trusts in the country to identify their beneficial owners and that it publish this information in a central registry accessible to the public in an open data format.

The report acknowledges that while beneficial ownership disclosure is not a silver bullet for the burgeoning problem of financial crime, it would be a major step forward in piercing the veil of secrecy that anonymously-owned shell companies and private trusts provide for a cornucopia of criminal activity. Under this highly instrumental “cover,” criminals hide the proceeds of fraud, corruption, and insider trading, while also evading government-imposed taxes and legal sanctions. For example, in Canada, nearly 70% of money laundering cases involve the use of beneficially-owned corporate structures, and the RCMP's success rate in pursuing money laundering is a fraction of what it is for other crimes. A suspect cannot even be identified in more than 80% of AML cases, and only a third of the cases that go to trial result in a conviction.

Although governments around the world appear to be recognizing the threats posed by under-regulated legal entities and arrangements, Canada is lagging. In 2014, Canada and the other G20 nations adopted 10 High-Level Principles on Beneficial Ownership Transparency. However, in 2016, the Financial Action Task Force – the global anti-money laundering authority that helped develop the principles – published an evaluation of Canada that was highly critical of the secrecy it affords corporate owners and called on the government to make beneficial ownership information accessible "as a matter of priority". Meanwhile, several G20 countries – including the UK, France, Australia and South Africa – have committed to establishing public registries of beneficial owners or taken concrete steps toward doing so.

Using specific case studies and original research into the luxury real estate property sector in Vancouver, TI Canada's report demonstrates how little is known about who truly owns Canadians companies, trusts, and the assets they control. TI Canada believes that an open, public registry will speed up investigations, save the government money, help the private sector meet its AML obligations, enable better investment and business decisions, and enhance public trust and confidence in the Canadian government.

TI Canada's full report, "No Reason to Hide: Unmasking the Anonymous Owners of Canadian Companies and Trusts" is available here.

Lincoln Caylor of Bennett Jones is recognized as a “leading counsel and commentator in the asset recovery field,” by Chambers Canada 2016, and is listed as a Most Highly Regarded Individual in North America by Who’s Who Legal: Asset Recovery 2016. The sole Toronto member of ICC FraudNet, he is internationally recognized for leading state-of-the-art asset tracing investigations and pursuing asset recovery litigation and enforcement actions in prominent, high-value international financial frauds and other economic crimes.

The author appreciates Grace McKeown’s contribution to this piece.





ICC FraudNet is an international network of independent lawyers who are leading civil asset recovery specialists in each country. Recognized by Chambers Global as the world’s leading asset recovery legal network, our membership extends to every continent and the world’s major economies, as well as leading offshore wealth havens that have complex bank secrecy laws and institutions where the proceeds of fraud often are hidden. Founded in 2004 by the Paris-based International Chamber of Commerce (ICC), the world’s business organization, FraudNet operates under the auspices of the ICC’s London-based Commercial Crime Services unit.