Prospective home buyers in this country's hottest housing markets have been frustrated by skyrocketing prices. But they're not always bidding against other potential homeowners. Sometimes, they're bidding against criminals looking to stash money in real estate.
That's been the case in British Columbia, where a government-commissioned report estimated money launderers parked $5.3 billion in real estate in 2018 alone — enough that it drove up housing prices by five per cent.
The true buyers behind most of those transactions are hard to determine, thanks to lax financial reporting laws in Canada that allow people to hide their identities behind numbered or shell companies.
And now Ottawa, too, is taking aim at money laundering and other financial crimes.
Finance Minister Chrystia Freeland committed in last week's budget to do something anti-corruption crusaders and experts on white-collar crime have been urging for years: create a publicly accessible database of the "beneficial" owners of companies.
"To ensure our system is fair, this budget will invest in the fight against tax evasion, shine a light on beneficial ownership arrangements, and ensure that multinational corporations pay their fair share of tax in Canada," Freeland said in French in the House of Commons.
But some transparency experts say the change will be toothless without the support of the provinces and territories, which all have their own laws for incorporating and regulating companies. CBC News found they were largely caught by surprise at the federal government's announcement; most haven't committed to taking part.
Provinces could be stumbling block
Sasha Caldera of Publish What You Pay Canada, a group that advocates for greater transparency among resource companies, says all 10 provinces and three territories would have to commit to the same principles as the federal government.
"If you're a criminal, then you'll just pick a jurisdiction with the least amount of regulation and you'll just park your money there," Caldera told CBC News. "You end up with the same problem."
James Cohen, executive director of Transparency International Canada, said harmonized legislation across all jurisdictions is "extremely important."
"We don't want people to be gaming between provinces," he said in an interview.
The federal, provincial and territorial governments have been discussing whether and how best to track beneficial ownership in 2016. Their last meeting was in April 2020, and the federal government published a report summarizing public consultations earlier this month.
In the report, the federal government was cautious about the beneficial ownership registry being public, as opposed to only being accessible to enforcement bodies, such as police and tax agencies.
"Public access was not considered by the majority of stakeholders as essential to achieving the policy objectives," the report said.
Then, without further explanation, the Liberals committed to a public registry in last week's budget, puzzling transparency advocates who had previously criticized the recent report.
"Your guess is as good as mine," Caldera said of the government's motive. "There are some upcoming deadlines like the G7 in June and some pressure from the G20. We know that some countries were getting ready to ask Canada to make a commitment on this issue."
Cohen said it may have been the first time that most provincial governments were hearing that the federal registry would be publicly accessible.
CBC News asked the federal Finance Department whether it coordinated with the provinces at all before making that decision. The government did not reply by Tuesday evening.
Most provinces non-committal
CBC News canvassed each province and territory for their stance on the federal government's plans. They said they're committed to corporate transparency, but only two have concrete plans to mirror Ottawa's move.
Quebec's Coalition Avenir Québec government is already moving forward with a law to create a public registry of beneficial corporate ownership.
In New Brunswick, the Progressive Conservativeswere the only provincial or territorial government to commit to harmonize business legislation with whatever the federal government does. The province "remains committed to the values of corporate transparency as a vehicle to reduce illegal activities in Canada," a Service New Brunswick spokesperson said.
B.C., where the NDP government established its first-out-of-the-gate registry for land ownership, said it's looking at bringing the concept to the province's private corporations too. A spokesperson for the provincial Finance Ministry said "the establishment of this type of registry is a key tool for combatting financial crime."
And P.E.I., noting it's one of the few jurisdictions in Canada that includes shareholder information in its corporate registry, said it's committed to a "co-ordinated approach" between governments to strengthen transparency.
But that's where the eagerness ends.
Ontario, Alberta, Manitoba, Saskatchewan and Yukon said they're weighing their options but wouldn't commit to any further steps to lift the cloak of secrecy on anonymous companies.
"The [Ontario] government will continue to review and evaluate the best approach to enhancing transparency while not creating unnecessary burdens for Ontario businesses," a Finance Ministry spokesperson told CBC News.
The remaining provinces and territories either said they're waiting on more from Ottawa, or have no immediate plans to implement beneficial ownership registries at all.
"There are too few details right now," wrote Cate Macleod, press secretary to Nunavut Premier Joe Savikataaq.
'Less worried than I would be in the States'
Drago Kos, chair of the working group on bribery at the Organization for Economic Co-operation and Development, the Paris-based association of 37 countries, said the need to harmonize rules like this between jurisdictions is always a problem with federal systems of government. But he said he's "less worried than I would be in the [United] States" because Canada has so many fewer governments that need to agree.
If some provinces don't initially sign on to greater transparency, they'll feel compelled to eventually, Kos said.
"I'm sure those provinces would soon realize they are tuning into a hiding spot or safe haven for all types of criminals, people who are hiding their money and so on," he said.
"And I don't see any reasonable province which would like to continue to be a haven for these kinds of people who want to hide their money."
Credit belongs to : www.cbc.ca