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Hon. Michael Chong

Member of Parliament
Member of the panel of chairs for the legislative committees
Conservative

Wellington—Halton Hills
Ontario
Voting Attendance: 65%
Expenses Last Quarter: $120,269.09

Government Page

Hon. Michael Chong (Wellington—Halton Hills, CPC)

Feb/6/24 2:38:08 p.m.
Watch

Mr. Speaker, Bill C-59 will do little to combat the problem of organized crime and money laundering in this country, which by the government's own estimate is $133 billion a year, equal to 5% of GDP. The government has ignored numerous reports and protected lawyers from money laundering and terrorist financing law and failed to crack down on Canada's big banks and their funnelling of money laundering and terrorist financing through our financial system. When is the government going to subject lawyers to federal law and start cracking down on our big banks and the gobs of money laundering going through our financial system?

107 words

Context: House Hansard - 216 - Jun/19/23

Hon. Michael Chong

Jun/19/23 6:46:20 p.m.
Watch

Madam Speaker, the member's question allows me to highlight that there is a distinction between tax havens, like the Cayman Islands, which was mentioned, and money laundering. The whole purpose of money laundering is separate and distinct from that of tax havens. The purpose of money laundering is to hide the provenance of the money, and, in particular, to hide the fact that the money was produced illicitly through criminal activity, terrorism or sanctions evasion. With the plethora of sanctions that have been announced by the government and other governments in the last year because of the Russian invasion of Ukraine, it becomes even more important to enforce sanctions, and it starts with having a proper beneficial ownership registry, which this one is not. I am pointing out the holes in this registry so that when we come back in another Parliament, the holes can be fixed and plugged so we can start cracking down on money laundering in this country.

162 words

Context: House Hansard - 216 - Jun/19/23

Hon. Michael Chong (Wellington—Halton Hills, CPC)

Jun/19/23 6:35:17 p.m.
Watch
Re: Bill C-42

Madam Speaker, I am rising today to speak to Bill C-42, which is the government's proposal for a beneficial ownership registry. I would like to critique this registry, because this is an incredibly important issue. The fact of the matter is that Canada has become a haven for global money laundering. In fact, do not take it from me. Here is just some international reporting on Canada. In the New York Times, just a few months ago, on March 25, an article written by Ian Austen, the Times journalist who covers Canada, begins with the sentence, “Canada is such an attractive place for money laundering that there’s even a special name to describe the activity here: ‘snow washing’.” The U.S. State Department, in 2019, designated Canada as a “major money laundering country”. In fact, I pulled up the State Department's report from March 2022, titled “International Narcotics Control Strategy Report”, volume 2. The report says, under “Canada”, that it is estimated that between “$36 billion [and] $91 billion is laundered annually in Canada”. Assuming those are U.S. dollars, that represents, roughly, between $50 billion and $120 billion a year that is laundered through this country. One hundred and twenty billion dollars a year is roughly 5% of our GDP. Five per cent of our GDP consists of money laundering. That March 2022 report says, “Noted deficiencies include limited oversight of the domestic non-profit sector, gaps in [customer due diligence] responsibilities for [designated non-financial businesses and professions], and a lack of beneficial ownership transparency for trusts and similar legal mechanisms.” Therefore, not only has our status as a money-laundering haven and, by consequence, a sanctions-avoiding haven and a proceeds-of-international-crime haven become documented in The New York Times; it has also been noticed by the State Department. It is not just internationally that it has been documented. In the province of British Columbia, there was a huge commission of inquiry into money laundering. Its final report was published in June 2022 by the Honourable Austin Cullen, who was the commissioner. The commission found that billions of dollars were being laundered through British Columbia companies, British Columbia real estate and British Columbia trusts, and that this was having a deleterious impact on people living in British Columbia. This report came out just last year, highlighting the problems with money laundering in just one province, which represents roughly 10% of Canada's population. It is clear that we have a problem with money laundering and that, by consequence, we also have a problem with becoming a destination for the proceeds of sanctions evasion and a destination for the proceeds of international criminal activity. The government introduced this legislation, in part, to try to respond to these very real concerns, but the problem with the legislation in front of us is that it is deeply flawed. I asked the Library of Parliament to do some research on the number of federally incorporated entities in Canada. The information it provided for me was that, for the year 2020, the most recent year for which data have been provided, the number of CBCA corporations, federally incorporated entities, is 421,301. The problem is that there are some 4.3 million businesses in Canada, of which only roughly 10% are CBCA corporations. Ninety per cent of businesses in Canada are incorporated under 10 different provincial statutes, of the ten different provinces, and these corporations and trusts would not be included in Bill C-42's beneficial ownership registry. The Liberal government would say that it is working with the provinces to encourage them to create a beneficial ownership registry. The problem is that one province, Alberta, has not made any moves to create one. The problem with the other provinces is that their beneficial ownership registries have major loopholes in them. The only beneficial ownership registry in the country that is worth the paper it is written on is that of the province of British Columbia. That proposed registry includes provincially incorporated entities, trusts and real estate; it is capturing all of that in its registry. As a result, that provincial registry, combined with the federal one, would include all companies in the province of British Columbia. The problem for the other nine provinces is that they are not including real estate, which the Cullen commission in British Columbia identified as a major asset through which money, international money in particular, is being laundered. The registry in front of us would only be as good as the weakest link in the entire system, and at least eight of the 10 provinces are not including real estate in their beneficial ownership registry. As a result, people overseas trying to avoid sanctions enforcement and trying to launder the illicit proceeds of crime and terrorism would be able to use Canadian real estate in eight out of 10 provinces to continue to launder their money, just like the Cullen commission identified in the province of British Columbia. Those individuals overseas and outside of Canada who want to avoid sanctions or want to launder the illicit proceeds of their crimes or terrorism could do so through provinces where a beneficial ownership registry for provincially incorporated entities has yet to be proposed. It is clear that the proposed beneficial ownership registry that the government has put in front of us today would not solve the problem of Canada's status as a destination for snow washing, a destination for international money laundering. What the government should have done is to have used the broad and deep criminal powers accorded to it in the Constitution, which courts in this country, through various rulings, have long upheld as being broad and deep, to create a national beneficial ownership registry that would have included all companies in Canada, whether they are incorporated under the Canada Business Corporations Act or whether they are incorporated under one of 10 provincial statutes. It should have included all trusts in Canada, whether they were incorporated federally or provincially, and it should have included the beneficial owners of all real estate, real property in Canada, in order to ensure that we start cracking down on those who would use our country as a haven for money laundering for the proceeds of terrorism or for the proceeds of crime. The Liberal government did not proceed down that path, so, once again, we would have implementation of a good idea from the government in a very flawed manner, as it has been with so many things that the government has made announcements about. I will finish here. The beneficial ownership registry in front of the House today would not plug the hole that has allowed this country to become such a haven and such a destination country for sanctions evasion for the proceeds of crime, for the proceeds of terrorism and for money laundering in general that landed us, in March, on the front page of the New York Times, and in the State Department's assessment of global havens for money laundering.

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Member of the panel of chairs for the legislative committees

Hon. Michael Chong