44th Parl. 1st Sess.
June 20, 2023 10:00AM
Madam Speaker, I was on a roll until I was interrupted. I was actually saying some positive things about the Conservative Party.
At the end of the day, it is good, healthy legislation. One of the things to recognize is that Ottawa plays a leadership role on the issue of money laundering that is taking place in Canada and on the other types of illegal financial transactions that we see.
We are not the only level of government that has to play this role. We have to recognize that there are provincial and territorial governments that have responsibility for corporations and small businesses in their jurisdictions. We have seen that some provinces have been more proactive in terms of trying to deal with issues such as money laundering, the funding of terrorism and tax avoidance. They have actually already started the process.
It is not like it is an issue that has been overwhelmed by governments around the world. More and more, we are getting attention paid to this particular issue. One would expect that a government, in recognizing it, would want to bring forward legislation, as this government has. It has done a very thorough job in the development of the legislation, and presented it to the House. I suspect that is one of the reasons we are getting the support that we are from all parties inside the House.
There is a scale within the legislation that would enable Ottawa to incorporate the provincial and territorial participation. I believe we have a couple of provinces in Canada, Quebec and possibly British Columbia, but do not quote me on that, that have actually already come forward with legislation. That legislation would complement the federal registry that we are attempting to put in place through the framework that is being established with Bill C-42.
It is a commitment that we made to Canadians quite a while ago. In fact, it was in budget 2022 that we talked about establishing the framework, or, should I say, establishing the bill. We did not know the number then, but it is Bill C-42. It is a commitment that is being fulfilled by the Prime Minister and the government to support the building of confidence in corporations.
I look at the bigger picture. We often hear how important small businesses are, and the biggest corporations often start as small businesses. In the last year, I have been to a number of announcements of small businesses, and even medium-sized businesses, opening up in Winnipeg North. They have contributed to the overall success of our economy over the years. We can talk about small businesses being the backbone of the Canadian economy, creating the hundreds of thousands of middle-class jobs that are so very important.
Many of those small businesses are going to be the medium-sized and larger businesses of the future. They are the businesses that ultimately believe in the importance of issues such as trade and international trade. At the end of the day, as I indicated in previous speeches, trade is very important to Canada.
As a country that is so dependent on trade, it is important that we send a message around the world that we take money laundering seriously. We take the issue of funds that could indirectly or even directly go to terrorist organizations seriously.
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By doing that, I would argue we are demonstrating leadership not only from within our national boundaries, but even beyond them. It is not an easy task. As I say, at the end of the day, within this legislation, we provide enough scale to allow for provincial jurisdictions. Those numbers are actually even larger, in terms of the number of corporations and businesses, than what we would have in Ottawa. I suspect, if we were to canvass these jurisdictions, we would find that all of us benefit if we can pool the resources and get everyone onside in the form of a larger national registry, and that is what this legislation is doing.
Corporations do a lot of amazing things. There is no doubt about that in the business community, but there is a percentage of those companies that do a great disservice. Those are the ones that continue to seek out ways, directly or indirectly, to launder money or to cause issues related to real estate, such as speculation of property, tax avoidance or even tax evasion. There is a difference.
We also see the issue of terrorism being financed, all through illegal money. Members should be aware that money laundering takes many different forms. I know British Columbia is a good example of it in terms of the casinos. Illegal money comes in, gets washed and then somehow exits as clean, filtered or cleansed money. That has cost millions of dollars.
We can talk about cryptocurrency. A number of months ago, there was an article in the Winnipeg Free Press on the police department cautioning people about fraud taking place with cryptocurrency. These are the types of things we need to be aware of. That is why we need to be careful.
I know we often mock the leader of the Conservative Party because of his attitudes toward endorsing cryptocurrency. He talks about it being a good way to fight inflation. At the end of the day, we have to be very careful. It is one of those possible tools that can, in fact, be used for unethical financial exchanges.
We are very dependent on our financial institutions and the protections that we put into place to track money that is flowing into Canada, and even money that is not flowing into Canada but has been acquired in an illegal fashion. We need to be cognizant of that fact. That is why, if someone goes into a bank and makes a deposit of more than $10,000, there is an obligation to report it.
There are many outstanding Canadians who work at our financial institutions who are very aware of the types of things to watch out for. We need to watch out for certain behaviours that take place. They also play a critical role in terms of protecting the integrity of our system.
From my perspective, and I would ultimately argue in the best interests of Canadians as a whole, the government takes actions where it can, like it is doing regarding Bill C-42, with the idea of establishing additional confidence in the public regarding corporations.
There is something that I should make a quick reference to, as I felt quite good about it a couple of budgets back. The federal government found that we had a lot of people outside of Canada investing in real estate who were driving the costs up. In particular, cities like Vancouver and Toronto were being subjected to all forms of speculative investments. There were also issues surrounding money-laundering allegations and so forth in real estate, in particular in condo developments. I heard about some of the empty units. Imagine building a unit that is worth $2 million-plus and no one is living in it. After I talked to some people, I found out that a huge percentage of the overall new condos being developed in communities like Toronto and Vancouver were empty. They were sitting empty. One of the measures the government put in place to try to deal with that issue was a special tax for non-residents.
Like many others, I think housing should be all about homes for people. However, they are becoming more of an investment, and a lot of the investments are driving up costs, especially with some of the vacancy rates across the country. It could be that or just a mindset that is often referenced about corporations in general: Corporations are greedy, and there is a lot of corruption, laundering and tax evasion or avoidance. A lack of trust is often found among the public in regard to corporations.
That is why when looking at the very heart of Bill C-42, what we are really talking about is corporate accountability and public trust in our corporate institutions. We see this because of the requirement to have a public, searchable ownership registry. That is at the core of the Canada Business Corporations Act and the amendment the government is proposing today. One could ultimately argue that the industry itself has been saying it wants to see this legislation.
The other day when I was speaking to this legislation, it was interesting. I was one of the individuals expecting to see the legislation ultimately pass unanimously or very close to unanimously. That will depend on what the leader of the Green Party and its other members do. That is the type of support potential it has.
I often suggest that members see the legislation for what it is worth and listen to the comments being made at the committee stage. If members really want to help restore confidence in our corporations, one of the best things they can do is get this legislation passed so we can make a very strong statement. That statement deals with the beneficial ownership that individuals have in corporations, which would have to be part of a registry. Individuals could then find out about ownership when someone has a major portion of that ownership. I know that some want to see a lower percentage and that others might want to see a higher percentage. However, at the end of the day, what we are seeing, which I think is 25%, is an acceptable percentage for now.
At least let us get the legislation through. By doing that, we are establishing the framework. I would then hope to see more discussions taking place at the different provincial legislatures in support of it.
I talked about smaller businesses in our communities and the impact they have. I do not want to in any way try to imply that corporations as a whole need the legislation as much as it is important that the legislation is there to support corporations. We will find that law-abiding corporations and businesses are actually very supportive of the legislation. They understand the need for it. It is the idea that we have a registry that would enable consequential penalties. I would like to cite one in particular. By passing this law, to use a very specific example, corporations that fail to provide their beneficial ownership information to Corporations Canada may be prevented from obtaining a certificate of compliance.
Keep in mind that if they cannot get that certificate of compliance, that has an impact on their ability to borrow funds. If a corporation wants to expand and go to a bank, they will need that certificate, in good part because without that certificate, chances are they will not be able to get financing. This is not to mention exports. Many corporations today are dependent on exports. To get those exports and have the market, these certificates are absolutely critical.
If I look at it from that perspective, I think of my own community of Manitoba and some of the corporations that have done exceptionally well. The other day I talked about Hylife. Hylife is a company located in Neepawa, Manitoba, that creates hundreds of direct jobs, not to mention hundreds of indirect jobs. We can find out who those beneficial owners are, which is really important. It is the same thing with New Flyer Industries. These are in provincial jurisdiction, but some are in federal jurisdiction.
We are talking about millions of dollars in transactions. If we look at New Flyer Industries, a huge corporation—
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Madam Speaker, I appreciate the opportunity to ask a question of the member for Winnipeg North.
He mentioned money laundering and the real estate market. We know, as reports are telling us, that the main factor causing disaster in the real estate market and inflation in the real estate market, besides government policies, is money laundering. There is a blind spot that launderers and criminals have found to break through the real estate market and make it unaffordable for the average Canadian to buy.
I believe it is too late now. Although this bill is a step in the right direction, it is too late to really solve such a fundamental problem in that area. Can the hon. member tell us where the government has failed? The government did fail, we have to admit, in protecting the real estate market from launderers.
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Madam Speaker, I do not think it is fair, whether it is the Conservatives in Ontario or the NDP in British Columbia, to point a finger at them and say they have failed, or at Ottawa and say it has failed, because I think all three governments have brought forward different initiatives to try to prevent real estate speculation and keep pricing more affordable for Canadians.
At the end of the day, we have a national government that is prepared to invest in housing. Has there been laundering in real estate? Of course we believe there has been. However, we are working with provincial jurisdictions and financial and real estate associations to try to minimize it, because by doing that, we will in fact make homes more affordable.
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Madam Speaker, I am going to put the hon. parliamentary secretary out of any sense of suspense over how I will vote on this bill. I will probably vote for it.
The reason I waffled was that I was so impressed the other day by the speech from the hon. member for Mission—Matsqui—Fraser Canyon, who took us through, as a collective, what it was like to be in committee and to have the evidence from Transparency International put forward minutes before clause-by-clause amendments. Those improvements could have been made.
Transparency International is the gold standard, and Canada has been falling behind. Obviously we need the beneficial registry. We need this legislation, and we should have had it years ago. However, it is not great to be famous, as a country, for being a great place for money laundering, and we could have done better. I just wanted to explain that to the parliamentary secretary.
I do not how the member for Kitchener Centre will vote. We do not whip votes here. We find it liberating for people to represent their constituents. In any case, I will be voting for it, but with some considerable regret that the bill was pushed through without entertaining good amendments based on witness testimony.
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Madam Speaker, Conservatives are proposing that we amend the motion before the House today, the motion that Bill C-42 be read for a third time, in order to send Bill C-42 back to committee for some important additions, with number one being thresholds.
During our study at INDU, the RCMP officials were clear that reducing the threshold for significant control would strengthen the registry and law enforcement agencies' ability to utilize it in the fight against money laundering. Let me quote Denis Beaudoin, director of financial crime at the RCMP. He stated:
The RCMP standpoint is that the more names and more information, the better. As we're trying to make links in a criminal investigation, it certainly can help.
This was in respect to thresholds.
The End Snow-Washing campaign also pushed for a 10% threshold, though the officials have since suggested it could be done at a later date through the Proceeds of Crime (Money Laundering) and Terrorist Financing Act review, which takes place every five years.
During testimony, the representative from Transparency International, which is tied to the End Snow-Washing campaign, stated:
I don't think, for one, lowering the threshold from 25% to 10% and a risk-based approach are mutually exclusive. I think they actually go hand in hand. I would note that the 25% isn't so much a standard as it was an initial global recommendation that everyone just kind of grabbed on to.
This quote contradicts the point that we have seen raised repeatedly by Liberal members that 25% is an international standard. They argue that moving the threshold away from the standard would hurt interoperability, but I have doubts. Does the government really believe that provinces would not follow suit and align with a new federal threshold? Twenty-five per cent remains far too open to abuse. The lower we bring the threshold, the less opportunity there would be for criminals to circumvent it. As I understand this bill, a sole owner of a small business worth $100,000 in gross profit on an annual basis would be subject to reporting requirements and included in this registry. Meanwhile, a person with a 20% stake in a $100-million corporation would not.
As has been mentioned during debate so far, currently the Ontario Securities Commission requires that any shareholder with a 10% share or more has to be reported. Private corporations should be held to the same standard of transparency and accountability. Frankly, I do not understand or trust public servants who say they are going to follow through on this. I predict that we will be back in this House in less than 10 years, wondering why the threshold was not adjusted to a lower rate in this bill to account for the serious problem of money laundering that we have.
Conservatives are therefore proposing that we send Bill C-42 back to the Standing Committee on Industry and Technology with the aim of reducing the threshold for significant control from 25% to 10%.
The second point I would like to raise tonight relates to interoperability. We are also calling on the industry committee to adopt additional amendments in relation to the interoperability of the registry with provincial and territorial registries.
As of now, penalties for violating requirements in respect to reporting information would only apply to federally registered corporations, which represent less than 15% of private corporations in Canada. As we heard at committee, there is as much as $113 billion being laundered in Canada annually. We must ensure that this registry can reduce that figure as much as possible and end Canada's reputation as a haven for dirty money. To that end, by changing some of the clauses through the Criminal Code, we could achieve a higher standard of interoperability by making sure that provinces that opt in to a federal registry would impose the same penalties as a federally registered corporation.
Other areas for improvement of Bill C-42 were also raised through numerous amendments to strengthen the registry.
With my time here today I will talk about law enforcement. Conservatives also moved an amendment to ensure law enforcement would have back-end access to the registry without having to go directly to corporations. Department staff at committee assured members that there is already a provision for this in place. However, to my understanding this is not the case, based on the bill itself, and what we needed through more committee testimony was clarity through the officials on how that would actually be done.
The Budget Implementation Act, 2022, No. 1, did include an amendment to the CBCA to give law enforcement this access. However, it has never been brought into force.
We moved further amendments at INDU in relation to interoperability as well. The first would have added the jurisdiction of residents and the name of the corporation to the registry, ensuring it could have been searched by these fields. The second would have added specific language to require the registry to be made public in a searchable format.
I will quote Sasha Caldera from Publish What You Pay, which is associated with Transparency International. He said:
Searching by the name of the corporation is a function that the U.K. registry has, and it allows for reverse searching. If you don't know the name of the beneficial owner, you can look up the name of the corporation, for instance. That would be incredibly helpful. In some of our other recommendations, we just want to ensure that all publicly accessible data is searchable.
We wanted to achieve the same objective.
Another amendment we moved was raised by the End Snow-Washing campaign of Transparency International. One of them would have added “mechanisms to prevent beneficial owners from knowingly abusing the PO box system”. Officials outlined at the clause-by-clause debate that this is a regulation that already applies to federally registered corporations.
However, what was not made clear is whether that same regulatory standard would apply to provincially regulated corporations. As a result, we left the amendment stage of the bill not knowing whether P.O. box numbers where provincially registered corporations are held would be subject to the same standard as federally registered corporations if any set agreement was made between the federal, provincial or territorial government in their respective jurisdictions. What I am getting at here is that we just needed a bit more time.
I will quickly touch upon identity verification, another area we wanted to spend a bit more time on. An amendment we were unable to get to the floor in time from the Transparency International campaign related to identity verification. It requested language to require corporations to verify the identity of individuals with significant control. Indeed, there already is a precedent for this in Canada. B.C.'s Business Corporations Amendment Act, 2023, included the following language, which the organization included for reference in its submission to committee the hour before clause-by-clause:
Verification of identity of significant individual
(1) On the request of the registrar, a significant individual, or a person in a prescribed class of persons who can verify the identity of the individual, must provide to the registrar
(a) any prescribed records, or
(b) information or proof the registrar considers necessary
to verify the identity of the individual.
(2) The records, information or proof must be provided under subsection (1) in the prescribed form and manner.
We needed to do so much more for the bill, but I have just been informed by leadership that we will be removing our amendments to the bill, unfortunately, because it looks like we are going to recess for the summer this month. We will not be able to sit this summer and go through this important work.
That said, I still very strongly believe that, when we look at the proceeds of crime and money laundering act, we should revisit the CBCA to ensure we do the utmost to protect Canadians from money laundering. We have so much more work to do on this, and I am sad the Liberals tried to push this through right to the very end. If we just had a few more meetings, the bill could have been so much better.
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Madam Speaker, I take it my hon. colleague from Mission—Matsqui—Fraser Canyon is persuaded there is enough good in this bill in having a beneficial ownership registry that he will be voting for it. I ask him to comment on how he sees the use of this reducing money laundering, which has been a scandal, particularly in our home province.
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Madam Speaker, as I mentioned in the debate yesterday, perfection cannot be the enemy of the good. The Conservative Party will be supporting this bill reluctantly, but my cry tonight, my plea with the government, is to never again during this parliamentary session try to have witnesses the hour before clause-by-clause.
In British Columbia, we had the Cullen commission and the Peter German report. We have had so many people negatively impacted by money laundering. On the impact it has had and the deaths related to opioids, all of that money and those deaths are related to money laundering. We have not done enough in the House to address it. Lives are being lost in B.C. because of money laundering, and we could have done more.
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Madam Speaker, my hon. colleague from Nova Scotia is a true historian and parliamentarian in the very best sense of the word. Changing the threshold from 25% to 10% would have done what the RCMP said, in the testimony I shared today from that one hour from witnesses, which is that it would have given law enforcement organizations such as FINTRAC, and the RCMP and its money laundering unit more tools to combat the up to $113 billion that is laundered in Canada every year.
We are so far behind other developed economies when it comes to money laundering. This is one tiny step in the right direction. All we were trying to do is get tough on those individuals who are costing lives because of money laundering, and we wanted to strengthen this bill and follow the spirit of what the government put forward in the first place to make it better. Unfortunately, it did not agree with us and sided with the Bloc Québécois when the NDP and the Conservatives brought forward reasonable amendments.
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Madam Speaker, I congratulate my colleague from South Shore—St. Margarets for highlighting so many aspects of this bill. It begs the question of how serious this government is about fighting money laundering in Canada and controlling this. It damages so much of the Canadian economy and lives of Canadians.
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Madam Speaker, the leader of the Green Party is bang on. This is why a beneficial registry goes beyond just the money laundering issue. It could be of great benefit to other things.
I do not know how one would enforce, as DFO policy, that there cannot be a monopoly or monopolistic tendencies if one does not know which companies own the licences. One does not even know whether or not a particular company has a monopolistic tendency.
There is owner-operator fleet separation on the east coast, which has helped. That is good policy. It was enshrined in law. There are still some issues in making sure those companies are what they say they are and who the beneficial owner is.
On the west coast, there is no ability to do that. A survey was done by DFO on the licence-holders. As the hon. member noted, most of those licences are actually leased out to employees. The person who is holding a licence does not actually own it. Licences are owned by large corporations.
In lots of instances, there are companies from foreign countries, not necessarily all of which are open and democratic, which have acquired control of some of those resources too. They are now acquiring the resources of the fisheries and corporations on the provincial side. It is provincial. They are trying to get a whole of supply chain control of particular fish species.
This is a major problem on both coasts, but particularly so in British Columbia. It does not have the benefit of owner-operator fleet separation. It is something fishing groups are asking for. I believe it should be implemented on the west coast as well.
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Madam Speaker, I commend my colleague on his speech. There are certainly things that we do not agree on, but I would like to focus on what we do agree on. Obviously, we both agree that there must be co-operation between the federal government and the provinces, especially Quebec.
As members are aware, business ownership laws fall under the jurisdiction of Quebec and the provinces. There are things that work well. Every province has its own securities commission. In Quebec, we have the Autorité des marchés financiers. I want to reiterate that it is important that the federal government fully co-operate with the Government of Quebec to share information and to establish a framework or registry that will enable us to fight money laundering. We do not want the government to barge in and make decisions unilaterally, without coordinating those efforts. If we do not centralize the data, our efforts will be counterproductive and we will be duplicating work rather than working effectively.
I would like my colleague to share his thoughts on that. What practical action can the federal government take to work with Quebec and the provinces?
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