Madam Speaker, it is my honour today to rise in the House to talk about Bill C-42. “Money laundering” is the short description. Canadians would be surprised to know that, aside from the soft reputation our country has on the international scene, Canada is increasingly known as a popular safe haven for criminals to launder and hide their money.
In 2022, Canada ranked 14th on Transparency International's corruption perceptions index, with a score of 74 out of 100. Canadians would be in their right minds to ask why our country's score is not higher, especially since this problem with lack of transparency has been known for a long time, for the past seven years, to be exact.
People will remember that, in 2016, the Panama papers leak exposed the fact that international criminals had been exploiting the gaps in Canada's corporate beneficial ownership regulatory scheme to engage in corrupt conduct through federally, provincially and territorially administered corporations.
That same year, the Financial Action Task Force, which acts as the world's international money-laundering watchdog, warned Canada that it was being used as a safe haven for money laundering and that a registry was needed to help identify and crack down on this activity. However, since then, under the current government, Canada has been slow to act, and when it did, it failed to go far enough. It took until 2018 for the Liberal government to begin introducing requirements to increase transparency around who exerts significant control over corporations and assets in this country. In 2021, the Financial Action Task Force indicated that Canada had made improvements but remained only partially compliant in five areas and wholly non-compliant in one. Laundered money was still able to find its way into our country with no questions asked.
Now, here we are in 2023, introducing measures that are long overdue to tackle a problem that should have been dealt with years ago by the government. Unfortunately for Canadians, while the Liberals were in no hurry to tackle the issue of money laundering throughout all those years, it has had a very real and devastating impact on a sector of our economy that affects everyone, one that keeps being mentioned extensively as of late. I am referring to the housing market.
Since the government took office, the price of a home in Canada has doubled, leaving citizens across the country to give up on the dream of home ownership. The situation is dire: Seven in 10 Canadians now believe owning a home is financially reserved for those who are wealthy. Part of this phenomenon of housing growing increasingly out of reach for Canadians is explained by criminals using real estate as a vehicle to launder their money in Canada. This is enabled by the fact that Canada's anti-money-laundering compliance regime is itself least compliant with international standards, when it comes to supervising real estate agents and identifying the buyers of property. For young Canadians looking to start a home and a family, this pushes prices up and puts their dreams of home ownership farther out of reach. Why is this? It is partly because they have to compete against criminals who wish to use real estate to hide their dirty money. It is supply and demand.
The situation is especially problematic in British Columbia. In 2018, the province launched the expert panel on money laundering in real estate. That panel estimated that, in B.C. alone, more than $7 billion in dirty money was laundered across the economy in 2018, and that up to $5.3 billion of that money was laundered through the real estate market, raising housing prices by an estimated 5%. It is no secret that housing is exceptionally unaffordable in cities like Vancouver, and criminal activity plays a non-negligible part in aggravating the situation.
The situation is so dire that the number of British Columbians moving to Alberta reached a 20-year high in 2021-22, and for most, the main reason was affordability. Alberta is proud of its strong economy. It is one that welcomes Canadians from across the country with open arms and offers opportunity and affordability to its citizens. However, due to the Liberals' weak approach to money laundering in Canada, the problem that plagued British Columbians is now following them across the Rocky Mountains. Calgary, the city I represent here in Parliament, is now also being used as a hub for the criminal network of money-laundering groups that has grown across Canada under the current government.
I knocked on a lot of doors during elections in Calgary Centre, and I knock on doors between elections. When I go into the large condos that have recently been developed, sometimes I will find a condo where half of the units are empty. Nobody lives there, yet they are all sold. There has been a lot of construction in Calgary, with a lot of vacant suites, yet there is no one living in these buildings. It is quite clear that it was foreign owners who bought those properties. Whether it is legitimate foreign ownership because people are actually moving their money out of where they live and want to make sure they have some safety elsewhere, or whether it is connected with the criminal element that has also increased the illicit activity of drug addiction in Calgary, is another question entirely. It is a mix between the two. That is something we need to address here, going forward.
My constituents are particularly concerned about it because of the effects it has across society, not just on the housing market; housing is only one part of the problem. The broader issue at hand is the fundamental question of who owns what in this country. Are Canadian assets held by hard-working and law-abiding Canadians or by criminals using them as a means to engage in offshore money laundering? As someone who worked in the financial industry for decades, I understand the importance of transparency and accountability, two things that are currently lacking when it comes to the ownership of assets in this country.
In last year’s budget, the government committed to finally implementing a national public registry by the end of 2023, ahead of the previously committed year, 2025, but this acceleration of the timeline in the Liberal agenda was not prompted by the housing affordability crisis and its heart-wrenching impact on Canadians. Rather, it was the public concern about the misuse of nominee and corporate ownership by Russian oligarchs that led to the acceleration of this timeline.
That is why I support this bill, but I also believe that it should be more ambitious in its reach right now, as opposed to when the next international crisis forces the government to act. The fact remains that we are perceived internationally as having weak laws to combat money laundering and the proceeds of crime. Our Five Eyes partners see us as a laggard on corporate transparency. This is why Conservatives not only support the additional measures being introduced by Bill C-42 but also call on the government to do a number of things.
I will interject here and talk about my experience. I acted in the financial industry for years. I actually represented a number of investors who had their money laundered through a bunch of different vehicles. That was a manipulation of the legal process by several parties involved. This happens all the time in Canada. The laws are set out now. I know that since 9/11 in 2001, the government tried to get more transparency through the legal mechanisms, the legal profession, to try to make sure they disclosed when they had transactions of $10,000 or more coming into their accounts. That was overturned by the Supreme Court of Canada in 2015. It ruled that, in fact, lawyers had the right to withhold that information from governments. What I have seen personally is that those lawyers give good advice on how to launder money through accounts in Canada, whether it is offshore accounts or whether it is Canadian “quasi-criminals”. It is hard to call them criminals until they have actually been convicted. That is the direct experience I have had.
There are things we need to do. Of course, we need to change the offences outlined in the bill and the existing offences under the Canada Business Corporations Act from summary convictions to Criminal Code offences, which would then rank money laundering on par with the most serious offences under the Criminal Code in Canada, as it should be. We also need to change the threshold for significant interest at which disclosure is required, from 25% control of shares to 10%. That is a threshold already used by the Ontario Securities Commission for public disclosure requirements. Reducing the currently suggested threshold would further reduce the ability of criminals to hide their activities.
We need to clarify the degree of back-end access to the registry of law enforcement, in relation to the proceeds of crime and money laundering. Under the bill right now, in its current form, law enforcement, as well as the Financial Transactions and Reports Analysis Centre, or FINTRAC, would require an affidavit to access all of the information contained in the registry.