Madam Speaker, I too rise this evening to speak on Bill C-42, an act to amend the Canada Business Corporations Act.
The bill was tabled about two and half months ago and would create what is known colloquially as beneficial corporate ownership registry. The purpose of that is to make transparent the true and beneficial owners of every federally registered company. A legal owner of a company holds the legal title to that company while the beneficial owner holds certain benefits and rights to company assets, even though the beneficial owner's name may not appear in the legal title.
Corporations in Canada need only register information such as names of directors. They do not have to register who their shareholders are. The current law only requires that lawyers maintain a registry of beneficial owners, so there is no government registry. The lawyers and the companies have to maintain their own sort of self-regulated registry. It is not transparent, it is not visible and it is not even visible to governments unless asked. When police need to find out who the beneficial owner of a company is, they have to contact that company's lawyers, say they are calling from the RCMP and would like to know who the beneficial owner of the company is. The lawyer may say he will get back to the officer and then call the client to say the RCMP is doing an investigation into it.
These are the things that exist now and why we need beneficial ownership registries on who the individuals are, not the corporations, who actually benefit from the ownership of corporations, whether they are federally or provincially incorporated. A beneficiary is the individual or entity, as I said, that will benefit from the transactions or the profits of the remittances of the activities of that corporation.
This bill is a good start, finally, after years and years of discussing it. I think there was a joint press release with the provinces almost six years ago that said we should maybe think about doing this. It has taken the government quite a bit of time to get to this important issue.
The government sets that any individual who owns 25% or more of the shares of a federally incorporated company must provide the information to the registry. What does this mean? There are 4.3 million incorporated companies in Canada and only about 10% of them are incorporated federally. Most corporations are incorporated provincially. Therefore, this bill would have no direct impact on 90% of companies.
With regard to the question earlier from the leader of the Green Party, when 90% of the companies in this country are not included or not brought under the umbrella of a national beneficial ownership registry, it is pretty clear that we are going to still have a significant money-laundering problem.
That is the primary reason, as the minister claimed, the government claims and most interest groups have claimed, we need to have this registry: to deal with money laundering. Other members have mentioned, and I will too, that Canada does not have a very nice nickname around money laundering that has been coined and used internationally to describe Canada, and that is snow washing. We are the place where money goes to get laundered and cleaned up from illegal activities. It describes the flow of dirty money entering Canada.
The registration system for Canada at both the federal and provincial levels is totally shrouded in secrecy, which means that the real owner of a company or a trust can hire a person as a stand-in or substitute to conduct all financial filings and submissions for that company. The practice effectively makes Canada a tax haven, along with countries such as the British Virgin Islands, Panama and the Bahamas. The process has been made even easier since the Canadian government signed tax treaties with 115 countries.
With a form of business organization called a Canadian limited partnership, the only persons who have to declare themselves to authorities are the partners, and if they do not live in Canada, they are exempt from filing taxes in Canada. If stocks of a firm are not traded publicly, the rules require that only the directors of such companies be identified, and these directors are not required to reveal whether they are acting on behalf of someone else or whether they actually own any shares in the company.
How bad is it? Recent estimates have put money laundering in Canada at $133 billion a year. Now, that is a big number. It is 5% of our GDP. It is a huge amount of money from illegal gains that is being cleared through our system in Canada.
Money laundering has its origin in crimes that destroy communities, such as drug trafficking, human trafficking and fraud. These crimes victimize the most vulnerable members of society. Money laundering is also an affront to law-abiding citizens who earn their money honestly and pay their fair share of the cost of living in the communities where they choose to live.
There can be few things more destructive to a community's sense of well-being than a governing regime that fails to resist those whose opportunities were unfairly gained at the expense of others. If one jurisdiction, such as Ottawa, or even Ottawa and a few of the provinces, as I mentioned earlier, create a corporate beneficial registry that is publicly available but others do not, then money launderers will gravitate towards those jurisdictions within Canada in order to hide their ownership and enable their money laundering.
We have talked a lot in this debate in the few moments that we have had about the issue of money laundering, and I will give another example of a problem that is caused by not having a beneficial corporate registry.
All politics are local. I have 7,000 commercial fishermen in my riding. There are 16,243 fishing licences in Atlantic Canada and in the gulf region of Quebec. There are 5,727 fishing licences in British Columbia. That is a total of about 22,000 commercial fishing licences that have been issued by DFO in Canada. However, do members know that DFO does not know who owns them? DFO does not know who owns them because there is no beneficial corporate registry.
In fact, 17 months ago, DFO went out for the first time to do a survey of the licence holders. They are not necessarily the licence owners, because in British Columbia, the licences can be leased out to someone, who would then be called the licence holder. Do members know what the result is? The result is that DFO now has to hire a forensic auditor to come in and try to figure out what happened with the information they got.
After more than 150 years of the Government of Canada handing out fishing licences, DFO still does not know who owns them, and that is a problem. It is a problem because DFO has policies around who can control a particular fish species or an area of fishing, and we cannot have an uncompetitive situation. We have had evidence in our study in the House of Commons fisheries committee on corporate concentration and foreign ownership in the fishery that there is one particular company that may own up to 50% of all commercial licences in British Columbia. This is way above what the Competition Bureau says is an acceptable concentration for any business, which is about 30% maximum in any industry. One company in B.C. may own half the licences, but we do not know because we do not have an ongoing federal or provincial beneficial registry that can provide that transparency.
It should not be up to a government department to do a survey once every 150 years in hopes of trying to figure this out. This should be something we could search regularly.
This is an issue in industries like the lobster industry. In southwest Nova Scotia, in my riding and in the riding of the member for West Nova, we all know that there was a lot of organized crime and cash. Whenever there is cash flowing and there are untraceable products like seafood, there is the opportunity for money laundering. This is a huge issue in Canada, and even those numbers are probably not included in the $133 billion I talked about earlier.
The bill is a good first step, but it really just plays at the edges when so many corporations provincially are not included in it.
We mentioned earlier that we tried to make a few improvements with the help of the government on this, in a genuine effort, as we are very collegial in the industry committee, to try to get things done. However, we only had two meetings, one hour of outside witnesses, officials for the other one, and then straight into clause-by-clause.
I will give a couple of outlines. In that time, we tried to bring that threshold from 25% down to 10%. That is not uncommon. The government said that this is some sort of international standard. In other areas, the government likes to be the leader around the world, in saying that it is leading everybody on trying to have more NPAs than anybody else in the world, that it is trying to push the envelope. On this one, it would not push the envelope. Moreover, it is not really pushing the envelope, because the Ontario Securities Commission requires that when someone buys 10% or more of a publicly traded company, they have to put out a news release and tell the market that they are doing that.
When they want to go below 10%, once they own those shares, the Ontario Securities Commission actually requires them to put out a news release before they sell the shares. They must actually notify the markets that they are going to sell their shares to below 10%. However, apparently, when it comes to money laundering, 10% is too aggressive for the government. It wanted to keep it at 25%.
When it comes to owners getting influence in a widely held company, if someone holds 20% of the shares of that company and the rest of the shares are widely held, then they are essentially the one that is controlling what happens in that company. The inability of the government to see that was greatly disappointing.
We want, as we have said, to expand it to real property, which is not that difficult. It is just connecting in the registries for property registration. We know that, in Vancouver and Toronto in particular, huge amounts of money laundering have happened around the purchase of residential properties. However, that has been rejected by the Liberals.
Finally, let us say that we have the provinces that, all on their own, go on and do provincial registries. Would that not be great? We put in an amendment saying that if there is a provincial registry, the federal government should go and get an agreement with the province to share the data back and forth, so that they are both searchable on all the data. It should not do it on its own, but it should do it under a federal-provincial agreement with the province. Again, the Liberals, and, I might say in answer to the parliamentary secretary's question, the Bloc Québécois voted against those amendments. The NDP supported them.
I think it is too bad that we have had so little debate, just five hours in the House, and six outside witnesses. This is such an important bill, but it has been rushed through; so much more could have been done for this. Hopefully, in the not too distant future, after the next election, with a change in government, there will be an opportunity to improve this bill much more than the Liberals are willing to do at this location.