44th Parl. 1st Sess.
March 31, 2023 10:00AM
moved that Bill C-42, An Act to amend the Canada Business Corporations Act and to make consequential and related amendments to other Acts, be read the second time and referred to a committee.
He said: Madam Speaker, I am pleased to be here this morning to talk about Bill C-42, which is a very important bill. I am pleased to have the opportunity to speak to Canadians about the important role Bill C-42 will play in combatting money laundering and bringing greater transparency to corporate Canada.
Today, I am proud to speak to Bill C-42, which deals with amendments to the Canada Business Corporations Act as well as other acts, to create a public beneficial ownership registry for businesses incorporated federally. 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. Creating a free, public and searchable registry of beneficial owners of federally regulated Canadian corporations would increase corporate accountability and improve public trust in corporate institutions.
Why do we need a public beneficial ownership registry?
Corporations are the driving force behind our economic growth, innovation and competitiveness. They are the primary source of jobs and prosperity for Canadians. They are the means for entrepreneurs to make strategic investments and take calculated risks without jeopardizing their financial stability.
Unfortunately, bad actors can misuse the legal structures of corporations to engage in illicit activities such as money laundering, corruption and tax evasion. Corporate entities can be misused to avoid economic sanctions and to impair the tracing or freezing of assets. This reprehensible conduct can in turn have serious negative consequences for Canadians, notably impacting crime rates and tax revenues. For these reasons, Canada's federal and provincial finance ministers agreed in 2017 to pursue legislative amendments to improve transparency with regard to the individuals who ultimately control businesses incorporated in Canada.
Shortly thereafter, the Canada Business Corporations Act was amended to require federal corporations to hold accurate, up-to-date information on their beneficial owners. Additional changes were enacted to allow law enforcement and tax authorities to requisition this information when they believed it would be relevant to an investigation. All of these changes came into force in 2019. Since then, nearly all provinces have followed suit and enacted similar amendments in their respective jurisdictions, and now our government is taking a significant step toward a more transparent marketplace.
Through this bill, we are seeking to implement a pan-Canadian registry of the beneficial ownership information collected by corporations. This is a bold and significant undertaking that we are doing as a government.
First and foremost, it would strengthen Canada's efforts to prevent and combat financial crimes by providing law enforcement agencies with timely leads on potential suspects, witnesses and evidence. The registry would also facilitate tax administration and the identification and seizure of suspected proceeds of crime and terrorism financing. More generally, the registry would improve corporate accountability and thus help protect the public, improve trust in business institutions and ensure a well-functioning marketplace.
Simply put, increasing beneficial ownership transparency will enhance Canada's good international reputation as a safe, fair and competitive place to do business and provide even greater legitimacy to law-abiding Canadian businesses.
Unfortunately, over the years, some individuals have managed to take advantage of Canada's corporate framework to try to hide assets and hide other criminal activity. We need to work together to tackle this unacceptable practice.
In budget 2022, our government announced plans to accelerate the creation of a public beneficial ownership registry. Obviously, since corporate law is a shared jurisdiction, the registry will apply to the approximately 500,000 entities governed by the Canada Business Corporations Act. However, in developing the registry, we will ensure that provinces and territories that agree to join forces with us to combat tax evasion will have access to that shared data.
I will note what Bill C-42 would amend.
The amendments proposed in Bill C-42 represent the second series of changes to the Canada Business Corporations Act in relation to the creation of the registry. The first series of amendments, which were adopted by Parliament last June, would require federally incorporated companies to proactively submit information on their beneficial owners to Corporations Canada on an annual basis or when a change of control occurs. They would also allow Corporations Canada to disclose all or part of that information to an investigative body, the Financial Transactions and Reports Analysis Centre of Canada, otherwise known as FINTRAC, and other prescribed entities.
Furthermore, the amendments proposed in Bill C-42 would require corporations to collect and send additional information about their individuals of significant control, namely residential address and citizenship. They would also require that Corporations Canada make publicly available a portion of this information, while introducing an exemption regime for certain at-risk individuals, including minors. The bill also includes protections for whistle-blowers, bolsters investigation powers of Corporations Canada and creates new penalties to ensure robust compliance with the new regime.
Bill C-42 further proposes consequential amendments to other federal statutes, namely the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act, to facilitate information sharing and data validation in order to maintain the accuracy of the information in the registry.
Let me elaborate now on a few key features of the upcoming registry that deserve highlighting.
First, Bill C-42 would adopt a charter-compliant, made-in-Canada balance between corporate transparency and the protection of privacy. A number of key elements of information, including the name and address of each individual with significant control, would be publicly accessible and searchable. Other more sensitive data points, such as date of birth and citizenship, would only be available to law enforcement and certain authorized entities.
In addition, Bill C-42 proposes to permit exemptions from publication for minors as well as individuals who are incapacitated or who fear for their safety. All in all, this would ensure the registry is useful to foreign law enforcement agencies and regulated entities under anti-money laundering legislation, as well as media and not-for-profit organizations, while ensuring that it is not being misused for fraud, discrimination or other nefarious activities.
Second, the government is making a significant effort to ensure the integrity of the data available to law enforcement and the public. The experience of other jurisdictions has shown that the value of a registry is directly correlated to the accuracy of the data it contains. If the information is not current or reliable, police, tax authorities and financial intelligence analysts will stop relying on it, which would defeat the purpose.
For that reason, the government is proposing a rigorous system to ensure compliance, and it will include administrative and criminal penalties.
For example, companies that fail to provide information about beneficial ownership to Corporations Canada may be prevented from obtaining a certificate of compliance, which is often required to support a loan application or to enter into a contract with a supplier or even a potential buyer.
Corporations Canada also has the power to carry out the administrative dissolution of a business, which is a powerful deterrent to repeated and extended lack of compliance.
From a criminal law perspective, an administrator or manager of a business who knowingly violates the requirements for beneficial ownership transparency could be fined up to $200,000 or be sentenced to six months in prison. These are among the harshest penalties in the world for this type of offence.
The government is also taking a robust ecosystem approach to data verification and validation. The director of Corporations Canada would, to begin with, be empowered to request proof of the steps taken by a corporation to verify its beneficial ownership information, enabling the creation of a risk-based audit system. Whistle-blowers would be explicitly protected to incentivize the disclosure of corporate wrongdoings, and consequential amendments would ensure that the information can be cross-referenced with relevant data collected by the government pursuant to the Income Tax Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Third, I want businesses to know that we have made and will continue to make every effort to limit the administrative burden of the new requirements. The government is well aware that the vast majority of business corporations are small and law-abiding and wants to ensure Canada remains a place of choice to invest and grow.
The bill would minimize the administrative burden by leveraging existing intake and reporting mechanisms that businesses incorporated federally are already familiar with. Corporations would, for example, have to report their beneficial owners on an annual basis, which aligns with the annual updates they are already required to file on other corporate matters. The requirement for corporations to report information within 15 days of a change also aligns well with the requirement already in place for directors.
The government would also assist corporations by publishing guidance documents and engaging in education efforts to ensure corporations are not unwittingly failing to comply with their new obligations.
Now let us talk a little about collaboration with the provinces and territories.
We started working on beneficial ownership transparency with the provinces and territories just over five years ago, and that successful collaboration continues to this day.
We recognize that corporate law is an area of shared jurisdiction and that any legislative amendment to facilitate the collection of information on beneficial ownership under that umbrella would ultimately be up to the discretion of each legislature within the Canadian federation.
That being said, we are very aware of the importance of maximizing coverage to ensure that the pan-Canadian registry reaches its full potential.
That is why we are working hard to ensure that the federal registry is scalable and provides access to the beneficial ownership data held by provinces and territories that agree to participate, as we committed to doing in budget 2022.
I am pleased to see that the Government of Quebec will soon launch its own beneficial ownership registry, and my department is in regular contact with the Quebec teams to ensure the interoperability of our registries.
One of my colleagues in the House even told me that the registry was online as of today. We will do the same with all of the provinces and territories that have this same objective of enhancing corporate transparency.
Let me say a word about international best practices. Canada is working closely with many of its international counterparts that have introduced or are about to introduce a beneficial ownership registry. The majority of the G7 and Five Eyes countries, as well as 112 other countries, have promised to put this in place, but few have finalized the implementation. With financial crimes being increasingly cross-border, which I think all colleagues can agree on, we need to contribute to the global fight against these crimes.
Indeed, as a founding member of the Financial Action Task Force, which is the intergovernmental standards-setting body for financial transparency led by the G20, it is incumbent upon Canada to act in tandem with other countries and international partners to stem further proliferation of illicit corporate activity. Strengthening beneficial ownership transparency, as we are doing through this bill, would allow Canada to do its part in the global fight against financial crimes and align with international best practices.
Let me conclude with a few remarks.
The government has committed to protecting Canadians from money laundering, terrorist financing and tax evasion and avoidance, while ensuring that Canada remains an attractive place to do business.
Making beneficial ownership information publicly available supports broader corporate transparency, good governance and trust. Police and tax authorities will have ready access to the data they need to enforce the law; regulated entities such as banks and realtors will have a new tool to support their due diligence obligations; investigative journalists and NGOs will be better equipped to trace ownership across entities and jurisdictions; and entrepreneurs and consumers will know whom they are doing business with, injecting more trust in the marketplace.
We are already hearing from transparency organizations that this bill would be a massive blow to money launderers. I call on my colleagues in the House from all sides to join forces and support it. I think Canadians expect that from all of us.
I encourage all parties to support Bill C-42 and work with the government to ensure that it is passed quickly. I think that is necessary and it is exactly what Canadians want. The sooner the legal framework is in place, the sooner we can launch the registry and reap the benefits of enhanced transparency.
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- Mar/31/23 10:29:05 a.m.
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I have to give the minister time to answer.
The hon. minister.
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- Mar/31/23 10:50:22 a.m.
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I have to give the hon. member for Mission—Matsqui—Fraser Canyon the time to answer.
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- Mar/31/23 11:26:04 a.m.
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The hon. Leader of the Opposition knows the rules and that we do not mention the presence or absence of members in the House.
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- Mar/31/23 11:26:24 a.m.
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I asked the hon. member to be wary of the rules, and the hon. member repeated comments that he knows are against the rules. We will take one question out of the next round of Conservative questions.
The hon. member for Manicouagan.
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- Mar/31/23 11:29:20 a.m.
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The hon. member for New Westminster—Burnaby.
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- Mar/31/23 11:31:49 a.m.
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The hon. member Dauphin—Swan River—Neepawa.
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- Mar/31/23 11:33:01 a.m.
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I advised members that I was going to take out the next question from the Conservatives and I am taking it out. As members know, it is the prerogative of the Chair to determine who the next speaker is, and my prerogative is to choose the hon. member for Dauphin—Swan River—Neepawa.
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- Mar/31/23 11:34:24 a.m.
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The hon. member for Cypress Hills—Grasslands.
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- Mar/31/23 11:37:30 a.m.
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The hon. Parliamentary Secretary to the Minister of Environment and Climate Change.
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- Mar/31/23 12:10:00 p.m.
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We do not use that language in the House, as the hon. member well knows. The same thing could be said in different ways.
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- Mar/31/23 12:10:39 p.m.
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The hon. member will be invited to rethink her choice of words. The hon. member will be invited to exercise judgment in the use of words, and please consider that it is not a parliamentary acceptable word.
I would invite her to apologize and retract that word from the record.
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- Mar/31/23 12:11:15 p.m.
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Withdraw the words—
Some hon. members: Oh, oh!
The Assistant Deputy Speaker (Mrs. Alexandra Mendès): Order, order. This will be looked at in Hansard, to answer the hon. member for Fort McMurray—Cold Lake. We will get back to the hon. member on what happened.
The hon. member for Mégantic—L'Érable on a point of order.
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- Mar/31/23 12:13:33 p.m.
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I am sorry, I did not hear what was said.
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- Mar/31/23 12:14:23 p.m.
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Order. As I told the hon. member for Fort McMurray—Cold Lake, we will listen. I did not hear it right now. I was discussing—
Some hon. members: Oh, oh!
The Assistant Deputy Speaker (Mrs. Alexandra Mendès): I do not dispute it. I am just saying that we will look at Hansard, and we will get back to the hon. member on what is found. I cannot rule on this right now. I have to wait until we look at what Hansard and the tapes will tell us.
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- Mar/31/23 12:17:00 p.m.
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Indeed, I will continue on the point of order raised by the member for Mégantic—L'Érable regarding the list used during oral question period. The lists provided by the parties are only used as a guide. The Chair has no obligation to follow them.
After I decided to take out the question, I discussed the matter with the clerks. An exchange took place with the individuals working with the official opposition whip in order to reach an agreement. It is really at the Chair's discretion as to whether to follow the order on the list when taking out a question.
The hon. member for Mégantic—L'Érable.
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- Mar/31/23 12:18:31 p.m.
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The member is absolutely right. It is true that, technically, there is no list. There is just an agreement among the parties. That is why we consulted the whip's office to sort this out. Thank you.
On the other point of order, the hon. member for Longueuil—Charles-LeMoyne.
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- Mar/31/23 12:19:32 p.m.
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We are not going to debate what the initial point of order was, which is what happened during Oral Questions. It was more on the use of the words “liar” or “lies” afterward, which is truly the unparliamentary part of the issue.
On the exchange that happened during question period, I did not hear what was said. We will have to go back to the recordings and Hansard. I am talking about the initial comments. I am not talking about the word “lies”. Everybody heard that, and that is certainly not parliamentary language.
The hon. member for Pontiac on the same point of order.
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- Mar/31/23 12:20:32 p.m.
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We are not debating the issue that gave rise to the point of order, but rather what followed. That is what needs to be addressed.
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- Mar/31/23 12:20:56 p.m.
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We will continue, and I will come back to the hon. member with a resolution.
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