Madam Speaker, I thank the minister for tabling this bill today.
We are here today to debate Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts. The government's stated objective in introducing this legislation is to protect Canadians against money laundering and terrorist financing, deter tax evasion and tax avoidance, and make sure Canada is an attractive place to conduct business.
The Conservatives support the concept of a national public registry of beneficial owners of companies. This is an important tool in the fight against money laundering and terrorist financing. The Cullen commission in British Columbia has also called for the creation of such a registry. Created in 2019 by Premier John Horgan in response to four reports highlighting the alarming number of money laundering cases in my province, the Cullen commission made 101 recommendations. Recommendation 52 called on the province to work with its federal, provincial and territorial partners to ensure that, by the end of 2023, a publicly accessible, pan-Canadian corporate beneficial ownership registry is in place.
However, much can be done to improve this bill and guarantee that it is effective. The Conservatives believe that in order to reach the objectives of this registry, the bill must be amended. First, the government must work with the provinces and territories to ensure that it is a pan‑Canadian registry. Second, there must be harsher sanctions for contravening the Canada Business Corporations Act, or the CBCA. Third, the threshold for significant control must be lowered. Fourth, the functionality of the public registry must be clarified.
In budget 2018, as the minister noted, the government amended the CBCA to introduce requirements for corporations to maintain a registry of individuals with significant control of the corporation. “Significant control” is defined as someone owning or controlling at least 25% of a corporation's shares. Budget 2022 added a requirement that corporations provide their registers to the government every year and to report any new information to the registry within 15 days. This bill would require Corporations Canada to make public some of the information collected under the 2022 reporting requirements.
Conservatives have long called for more action to combat money laundering and terrorist financing, so it is good to see the bill tabled in Parliament today. However, as I noted in French, there are many gaps in the legislation, and it is our objective to see some concrete amendments and considerations brought forward to this bill at the committee stage.
I wanted to take a minute to talk about the impact and history of money laundering. For far too long, Canada has had a reputation as a safe haven for dirty money. Our current laws that in place to combat money laundering and the proceeds of crime are perceived internationally as being weak. This has led to a wave of dirty money being laundered in Canada, particularly in my home province of British Columbia. Casinos, real estate, businesses and more have long been used to launder money in B.C., and the RCMP, local law enforcement and FINTRAC, in some cases, have been almost powerless to stop it.
When the Panama papers were leaked in 2016, it was exposed that international criminals have long exploited the gaps in Canada's corporate beneficial ownership regulatory scheme to engage in corrupt conduct through federally, provincially and territorially administered corporations. Organizations such as Transparency International have been calling on Canada to create a public registry of corporate beneficial ownership for a long time. As I noted in French, the Cullen Commission in B.C. has also called for this registry. Among the recommendations was a pan-Canadian registry to be established in 2023.
The commission's report highlighted how drug dealers utilize numbered corporations to stash death money from the fentanyl trade, then take that drug money and put it into the housing market in British Columbia, which has led, in some cases, to prices being driven up. Had a registry been in place sooner, perhaps less money from drug deals would have been laundered and perhaps it could have prevented lives from being lost. A corporate registry does have a lot of consequences, and that is why our party supports it.
Now I will briefly get into some of the shortcomings we see in this bill. The first is the lack of any requirement of the government to seek information-sharing agreements with the provinces and territories so the registry can be effective. The corporate registry will be only as strong as the provinces and territories that opt into it. Without them on board, this registry would only apply to about 5% of corporations in Canada. Thankfully, some provinces and territories have already taken the lead on this front and have been implementing registries since the changes to the CBCA were announced in last year's budget. Without all of them on board, criminals will just take their dirty money to the jurisdiction with the least strongest regulations.
It is my hope that, at committee, amendments will be adopted to ensure the federal government is required to pursue agreements with the provinces and territories on information sharing to ensure the registry is truly pan-Canadian and interoperable. I can note that, with many of the registries in place, there is a varying degree of information shared. Many do follow the amendments put forward in budget 2022, but I still think there is a lot of work we can do to make sure our registry is comprehensive.
The second is that we need to look at strengthening some of the penalties. Parliament needs to consider the registry in the context of the ability of law enforcement to combat the use of illegal funds. The current penalties under the CBCA, and the new ones proposed in Bill C-42, may be too weak to have the desired effect. We must ensure that corporations are compliant with the rules for the registry to be effective. The government should consider strengthening the penalties and making some offences indictable. Many of the fines could simply now be perceived by some corporations using illicit funds as the cost of doing business.
Another issue with the penalties is that they do not punish corporations that violate the act nearly as strongly as they do individuals. All of the offences that currently exist, and those proposed in this bill that apply to corporations, are punishable by a fine of I believe $5,000. However, the strongest penalty applying to individuals is found under section 21.4 of the CBCA, which has a fine not exceeding $200,000 and a term of imprisonment of six months, as the minister also mentioned. We must ensure that corporations that do not comply with these regulations are held just as accountable as the individuals involved. A $5,000 fine would be chump change for some people who would be affected under this proposed bill.
We need to also look at the threshold for disclosure. The CBCA currently defines significant control under section 2.1 as an individual who owns or controls a significant number of shares in a corporation, which is defined as 25% or more. This is quite a high threshold. Currently, security regulators in Canada, for example, Ontario Securities Commission, have a set threshold of just 10% for public disclosure requirements. Regardless of where we set the threshold, people will try to avoid reporting by ensuring their ownership or control is slightly below it. There are lots of ways for individuals with significant control to pass by the threshold. However, a lower threshold means fewer opportunities for criminals to simply slip under the radar.
We also need to be cognizant of how this will apply in the context of stacked ownership structures and trusts. It would be wise of the House to consider aligning these regulations with those currently imposed on publicly traded companies by amending this bill to change the threshold to 10% and look at the impact of trusts in very close detail at the committee stage.
We also need to look at the functionality of the registry. When it comes to how this registry will work and what information will be made available to the public, this bill is concerningly quiet. It does outline in section 21.303:
(1) The Director shall make available to the public the following information sent to the Director under section 21.21 for each individual with significant control:
(a) their name;
(b) their address for service, if it has been provided to the corporation;
(c) their residential address, if their address for service has not been provided to the corporation;
(d) the information referred to in paragraphs 21.1(1)(c) and (d); and
(e) any other prescribed information.
The first issue here lies in paragraph (e). What exactly does it mean by “prescribed information”? This needs clarification, as the information made publicly available must keep in mind privacy interests. I will note the minister did partially answer my question during his debate when he said citizenship would not be required in the registry. I will take a moment to comment on that.
What if an individual in another country who does not reside in Canada has a corporation in Canada? Should citizenship information in the context of a foreign owner of a Canadian corporation apply or, as another member in the House of Commons mentioned, in the case of a stacked corporation where certain shares of the company are owned by an individual in another country, should citizenship information be applied in that context? In the context of terrorism and money laundering, perhaps it would be to our benefit in some cases where citizenship is, indeed, known.
I look forward at the committee stage to really delve into this in detail because I think everyone in Canada wants to get this registry right. Everyone in Canada wants to give our law enforcement the tools it needs to finally begin combatting money laundering. We have seen the impact of it in British Columbia. We have seen the empty condos and the illicit funds from the drug trade being used, through corporations, to launder that money. We need to move away from what many people call the “Vancouver model” to take action right now. The commitment of the Conservative Party is to work with the government to ensure that our laws are strengthened, and that fewer lives are lost because of the drug trade, by establishing some form of a beneficial ownership registry.
Finally, I would like to touch upon how the registry would function. The bill is very vague in what prescribed circumstances would be. Will law enforcement still be able to access the information of those exempted for the purposes of an investigation? Another issue with the guidelines for the registry are the exemptions that have been put in place. We do know, as the minister mentioned after my question, that it would not apply to people 18 years of age or younger, but we need to strengthen the language around exemptions.
In closing, this bill is a good first step. That is why the Conservatives will be supporting it at second reading. However, key oversights must be addressed during the committee process. We must ensure that the penalties for violating the act are strong enough, and I am not certain that summary convictions are strong enough. We must ensure that law enforcement and FINTRAC have the ability to easily access the information they need to track down those laundering money and financing terrorism. We must ensure that corporations involved in criminal activities are held just as accountable as individuals, and for the registry to be effective, we must make the participation of provinces and territories a key priority.
I look forward to working with my colleagues on the industry committee to strengthen this bill and ensure it truly provides transparency to the public and gives law enforcement the tools necessary to track down money launderers and those funding terrorism. More must be done to reduce the risk of corporations being misused for illicit activities such as money laundering and tax evasion.