March 21, 2022
Financial consultants outside of Canada are guiding their clients to our shores, citing the country as a favoured location for their financial assets because Canadian federal authorities can’t so easily unmask foreign investors.
Canada is being promoted as a strong candidate for money laundering and the location for shell companies.
The report, titled Snow-washing, Inc: How Canada is marketed abroad as a secrecy jurisdiction, has been published by Transparency International Canada (TIC).
“Snow-washing” is a euphemism referring to the abuse of Canadian legal entities to commit financial wrong-doing, by hiding questionable transactions under the cover of Canada’s reputation for financial system integrity.
“Canada is known as an easy place to launder dirty money, or ‘snow-wash.’ It’s not just the experts who know this, though. International corporate service providers actively promote incorporating companies in Canada to clients who wish to take advantage of lax secrecy laws and low financial crime (law) enforcement,” the TIC said in its press release.
The TIC quoted several examples of advice from international consultants they had curated and encouraged investors to Canada on the basis of Canada’s alleged status as a financially opaque jurisdiction:
“Canada, as a high taxation country, is not a bad front at all, it is actually a very useful cover for almost all types of offshore companies.”
“Canada offers a high level of anonymity and privacy.”
“Canada will not be considered as an offshore company… No disclosure of beneficial ownership to authorities.”
“If you have previously used UK partnership structures in business which were distinguished by a high level of confidentiality, then given today’s realities, many factors have changed and a Canadian LP would be the best choice.”
The TIC reports many offshore financial consultants promote Canadian entities as ‘flow-throughs’ whose appeal lies in their domain and serves as a hide-all for offshore structures. These shell companies are unlikely to contribute anything significant in terms of tax revenue or employment opportunities to the country. Canada is not likely to benefit much beyond the minimal fees charged by the government to incorporate these businesses and renew registrations.