“Self-righteous Liberals have done more to enhance 'snow washing' than any other government”
Since 2015, the Liberals have done nothing to crack down on money laundering in this country, despite international criticism from abroad and negative effects here at home.
Now, the global term “snow washing” has been coined to describe how easily dirty money can be washed clean, like the snow, in Canadian real estate. Ottawa’s intransigence is strange considering that international anti-corruption watchdogs have condemned Canada for this.
Most recently, the United Kingdom-based Tax Justice Network’s 2020 report concluded that, “Canada has a long history in the development of tax havens, but today it is becoming known as a destination for money laundering due to weak rules over corporate transparency and beneficial ownership. The country’s weaker anti-money-laundering laws provide criminals with the anonymity to not get caught and likely not be prosecuted if they are caught.”
Transparency International has ranked Canada at the bottom of the pack of all G20 countries due to its failure to meet G20 anti-money laundering commitments. In 2016, Canada was first outed as a laggard by the Financial Action Task Force, an intergovernmental organization that evaluates compliance. At that time, the task force stated that the Canadian legal profession was a serious problem: “All high-risk areas (in Canada) are covered by … measures, except legal counsels, legal firms and Quebec notaries. This constitutes a significant loophole in Canada’s framework.”
Canadian lawyers were let off the hook in 2015 when the Supreme Court of Canada exempted lawyers from being subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This decision followed arguments by the Federation of Law Societies of Canada that laws violated solicitor-client privilege and that the legal profession alone had the responsibility for policing itself.
By contrast, in Britain and Australia, lawyers must report suspicious clients and transactions to authorities.
The ruling opened the floodgates because Canada’s lawyers are above the law compared to other self-regulating professionals such as bankers, accountants, doctors, nurses, social workers and teachers, all of whom are legally required to report abuse or criminality.
In 2019, Canada was embarrassingly outed again by the U.S. State Department, which described Canada as a major global money laundering problem, alongside Afghanistan, the British Virgin Islands, China, Macau and Colombia. On the heels of that, the Liberal budget said the government would spend $200 million to create a special police task force over five years. But nothing has changed so far.
No one knows the true extent of the illicit money flow, but in 2018, a study out of British Columbia estimated that the total is around $50 billion a year, while Kevin Comeau, a lawyer who works with Transparency International, estimated the total was at least double, or $100 billion annually.
Anecdotally, the evidence is everywhere. Condo towers sprout up in Canadian cities that are built or bought by shadowy corporations from China, Kazakhstan or Iran. This “hot money” has single-handedly driven up the cost of housing, mortgages and rents for ordinary Canadians to a level that’s above what most Americans pay.
By contrast, foreign buyers in the United States are denied mortgages and are heavily scrutinized under the Patriot Act. In hot markets like New York and Miami, condo builders must disclose their buyers to officials. This repels bad actors.
In 2020, B.C. created a public registry of beneficial owners of real estate, but other governments have not.
Most embarrassing in the Tax Justice Network report is a leak from the Panama Papers showing that the notorious law firm Mossack Fonseca advised clients that, “Canada is a good place to create tax planning structures to minimize taxes on interest, dividends, capital gains, retirement income and rental income.”
It’s ironic that these self-righteous Liberals have done more to enhance “snow washing” than any other government. But it’s hardly surprising.
Chronicles of Monte Friesner - Financial Crime Analyst (
Contributed by Financial Post (Canada)