44th Parl. 1st Sess.
June 20, 2023 10:00AM
Madam Speaker, what the member does not necessarily indicate is that this a minority situation, so if he was losing votes at committee, that means it was not just the Liberal Party but the majority of the committee membership did not support the Conservative amendments, so it is not fair for him to say that it is the Liberal Party.
What I have witnessed is that this government has no objection to adding strength to legislation if a bill or amendment can add true value to it. It is up to the critics of the parties to work within the committee to maybe do a bit of lobbying with the minister, which never hurts, and if there are things we can do to make the legislation more sound and better in a timely fashion we are always open to those ideas. Keep in mind that one always needs a majority, even at committee, in order to pass an amendment. We do not have a majority, but maybe we will after the next election.
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Madam Speaker, Facebook's decision to block Canadian news targets major media outlets—
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- Jun/20/23 9:04:29 p.m.
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The hon. member for Mission—Matsqui—Fraser Canyon is rising on a point of order.
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Madam Speaker, I rise on a point of order. We are not here to debate Bill C-18; we are here to debate Bill C-42. The member was asking about Facebook.
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- Jun/20/23 9:04:44 p.m.
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We are debating Bill C-42.
I thank the hon. member.
Questions and comments, the hon. member for Charleswood—St. James—Assiniboia—Headingley .
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Madam Speaker, I want to go back to one particular issue that has to do with the significant interest clause, which the member discussed during his speech. He said that it was okay for now, which leads me to think he might think it should be lower. The fact of the matter is it should be lower and is a major hindrance to making this legislation as effective as it could be. I wonder why the committee did not support that.
Your argument earlier made no sense at all. If the Liberals had voted for it, it would have passed with the Conservative votes.
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- Jun/20/23 9:05:28 p.m.
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I want to remind the hon. member that it is not my argument.
The hon. parliamentary secretary.
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Madam Speaker, what I was attempting to say is this. There were some who would have liked to have seen it lower and some who may have wanted to see it higher. I believe 25% is what they agreed to and that is what was passed at committee.
As I indicated to the previous—
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- Jun/20/23 9:05:52 p.m.
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I am sorry, but we have to resume debate.
The hon. member for Mission—Matsqui—Fraser Canyon.
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Madam Speaker, I am going to be speaking on Bill C-42, an act to amend the Canada Business Corporations Act and to make consequential and related amendments to other acts.
Before I begin, I seek unanimous consent from the House to split my time with the hon. member for Charleswood—St. James—Assiniboia—Headingley.
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- Jun/20/23 9:06:19 p.m.
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I have heard from all recognized parties that they are in agreement with this request.
Does the hon. member have the consent of the House to split his time?
Some hon. members: Agreed.
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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 do want to acknowledge the efforts of the standing committees and those who have ultimately had direct input to bring the legislation to the state it is at today, and I think working with provinces, as I indicated in my speech earlier, is so critically important. By building upon the momentum we are adding great value to this evening by the passage of this bill, I think we would be doing a good thing for all Canadians. I just wanted to get the member's thoughts in regard to the provincial participation in or buy-in to the program.
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Madam Speaker, the only assurances committee members have received regarding provincial participation relate to a letter the minister sent. What is problematic for me, as an opposition MP, and I am learning this the more time I spend going through amendments and clause-by-clause, is that the word of a minister is not enough. I need to see concrete action.
The minister did not provide the letter, and he did not provide any indication that any provincial register has so far indicated they are going to participate. That is the reason I spoke to the need to include provincial members in the legislation as a starting point, through amendments to the Criminal Code, as it relates to the penalties in this legislation to ensure provincial participation. My province wants it and so do many others, but we need to see more concrete and transparent action from the government on that front.
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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, I had the honour to serve with the member on the committee that briefly looked at this bill.
One of the most important proposed amendments the government rejected was one that would have taken the level of reporting of who owns what percentage of shares down from 25%, meaning anyone who has 25% or more has to be recorded, down to 10%, and 10% of course is what is used for making public disclosure by the Ontario Securities Commission. When one acquires shares in a company, they have to publicly disclose if they have 10% or more. I would like the member to comment on what value that would have brought and how disappointing it was for us that the government did not consider it.
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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, just to be clear, I am not speaking about Bill C-18, nor am I speaking about any purported amendments to Bill C-42. Rather, I am speaking about Bill C-42, an act to amend the Canada Business Corporations Act.
The bill does a number of things. Its stated goal is protecting Canadians against money laundering and terrorist financing, deterring tax evasion and tax avoidance, and making sure that Canada is an attractive place to do business. Those are all laudable goals.
We know that money laundering in Canada is a serious issue. It is so serious that we have earned our own nickname as the land of snow washing. That is not a badge of honour. In 2022, the Canadian Anti-Fraud Centre reported $530 million in victim losses, a 40% increase over 2021.
These are vulnerable Canadians being preyed upon by fraudsters, who are destroying lives. It is important that, as parliamentarians, we come together to deal with these problems and do our best to protect Canadians and their retirement savings.
In 2016, the Financial Action Task Force said that Canada was completely deficient in many areas. One of its main criticisms, in fact, was our lack of a beneficial ownership registry. That was seven years ago, and we are only getting to it today. Establishing such a registry would be a major step forward, and Conservatives certainly support that. The problem, as always, is that the devil is in the details.
In committee, Conservatives tried to strengthen the bill in a number of ways. One glaring problem with the bill is that the corporate and personal fines for failure to provide required information were too low under the CBSA. The fine was only $5,000 for corporations and only $200,000 plus six months' imprisonment for individuals. I was happy to see the INDU committee increase personal fines for individuals to $1 million plus five years' imprisonment, as well as fines for corporations to $200,000. Of course, Conservatives supported those amendments, as did Liberals on the committee. We can see that when Conservatives and Liberals vote together, amendments actually pass at committee.
There were, however, a number of other Conservative amendments related to thresholds, real estate, interoperability, law enforcement, access, searchability and the use of post office boxes, of all things, which would have made the bill more effective. They were all voted down by Liberal committee members.
I want to touch on a few of them now. Currently, under the CBSA, the threshold for what is called a “significant interest” is 25%. This means that corporations only have to disclose those shareholders who have at least a 25% interest in the outstanding shares of a corporation. This poses a problem, because if we really want to crack down on money launderers and terrorist financiers, the threshold should be lower. For instance, the Ontario Securities Commission threshold is 10%.
At committee, Conservatives proposed this amendment. However, it was rejected, even though the RCMP felt it was necessary. It was rejected by Liberal members of the committee, who purport to want this legislation to be effective. It is hard to understand why they would not want to lower the threshold. James Cohen, executive director of Transparency International Canada, said that it should go down as well.
Conservatives proposed another amendment that would have brought real estate holdings into the registry. In 2018, money laundering funded $5.3 billion in British Columbia real estate purchases alone, further driving up the cost of homes in that province. The amendment said, “The corporation shall prepare and maintain...a register of individuals with control over the corporation and its real property”; it was a very important amendment that would have gone a long way in helping to control money laundering in Canada through real estate acquisitions. This amendment would have expanded the scope of the registry to make it similar to British Columbia's land ownership transparency register.
Another amendment called for interoperability with provincial registries. The fact of the matter is that most corporations in Canada are provincial. As this bill only governs federally incorporated companies, it misses out on bringing in the provinces, which would make it far more effective.
Another amendment that was defeated had to do with law enforcement access. This amendment would have added specific language to the bill to ensure that law enforcement and organizations like FINTRAC could access information from the director rather than having to go to the corporations directly. It would also have removed reference to prescribed circumstances, ensuring that only minors would be automatically exempted.
Another amendment defeated by Liberal members had to do with using post office boxes, of all things. It would have barred individuals from using post office boxes as their address in the registry. This was a specific request of the End Snow-Washing campaign.
On a cautionary note, it is always important to give consideration to stakeholders and their concerns. Small business is the backbone of this country's economy. The Canadian Federation of Independent Business raised a number of concerns, and I want to talk about some of them here.
It raised the issue of privacy and personal security. It said many small business owners are concerned about having their information available to the general public, such as name, place of residence, date of birth, citizenship, telephone number, etc. In fact, individuals in small towns may not want neighbours or acquaintances to know they have a controlling interest in a company. The CFIB talked about fraud and crime risks and how making beneficial ownership registries public could make it easier for criminals to target wealthy individuals or SMEs. Small business owners are often the targets of fraud and could be even more vulnerable than consumers, as they do not have consumer protection acts to help them manage those who want to take advantage of them.
It talked about competitive disadvantage and that requiring SMEs to disclose detailed ownership information publicly might give their competitors a strategic advantage. Rival businesses could gain insight into their ownership structure, investments and so forth. It talked about inaccurate or outdated information and how public registries may not always provide accurate or up-to-date information due to delays in reporting areas or deliberate misrepresentations. It talked about how requiring small businesses to disclose their beneficial ownership information publicly could impose an additional administrative burden and compliance costs, and that this burden might disproportionately affect smaller companies with limited resources.
Also, I want to touch on the Canadian Bar Association, which raised concerns about the risk of identity theft from the registry, potentially undermining its anti-fraud rationale.
I raise these concerns not to say that we should not make this legislation effective but to say that as parliamentarians, it is incumbent on us to listen to the stakeholders and their concerns as we try to craft and fashion legislation that addresses those concerns but still accomplishes the ultimate goal of the legislation.
The reality is that money laundering is a very serious problem. We know from our friend Bill Browder that Canada has been fertile ground for Russian oligarchs to clean their ill-gotten cash.
I mentioned earlier how money laundering has driven up the cost of housing. This is at a time in this country, after eight years of this Prime Minister, that the dream of home ownership is in critical condition. The average mortgage payment has doubled. The average family now needs to spend 62% of its monthly income to own the average home.
The cause is clear: Inflation fuelled by wasteful government spending has fuelled the inflationary fire. Just today, the International Money Fund cautioned that Canada needs to bring back a debt anchor and keep fiscal policy tight. Money laundering makes things even worse.
Finally, I must reiterate how important it is to bring provinces on board. It is a matter of basic federalism. The government will need information-sharing agreements with the provinces if this registry is going to work. It will only be as strong as the provinces willing to co-operate with it, and that means all the provinces, because if one jurisdiction is left out, it will become a hotbed for money laundering.
I will wrap up by saying that although Bill C-42 is far from a perfect bill and has key shortcomings, including leaving in place a high threshold for significant control, failing to bring into force a clause allowing law enforcement back-end access to the registry and failing to ensure interoperability with the provinces, it is clear that it is a step in the right direction, and Conservatives will support it on third reading.
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Madam Speaker, I appreciate the comments from the member opposite. Again, I would reinforce the fact that having this searchable data bank is going to be beneficial. We recognize that.
We also recognize that it is important to reach out to other jurisdictions. This is all about restoring the confidence of the public and business, as it is healthier for the economy to do so.
We appreciate the support the Conservative Party is giving the legislation. I guess this is more of a comment than it is a question.
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