Industry Reports

Snow Washing Enabling Should Stop in Canada, Cullen Commission Hears

The Cullen Commission of Inquiry into Money Laundering saw Wednesday bring the last hearing of the first phase of this inquiry. In order to listen to as many companies and individuals as possible, the commission insisted on three days of conversations, revelations, and more information shared by leading executives and their representatives. Some of the recommendations it heard related to the companies allowed to operate within the borders of Canada.

The country has been perceived as a safe haven for crime proceeds and money laundering, as the reports focusing on the subject have revealed in the spring of 2019. The revelations triggered more conversation on a money-laundering inquiry, which propelled the process. Ever since this Monday, the money laundering inquiry is in full swing in British Columbia.

Who Enables ‘Snow Washing’?

This Wednesday saw another portion of conversations on the subject, once again drawing the attention to the ways in which the province could prevent criminals from laundering their dirty cash within the local gambling field or the housing market. The luxury vehicles field has also been a topic of discussion in the past, as it also provides opportunities for washing cash.

Transparency International Canada, Canadians for Tax Fairness, and Publish What You Pay Canada are the three tax fairness groups making their way to the money laundering inquiry as a coalition. They wanted to have their concerns heard, as this could potentially change the landscape on a national level and make the country a safer one. They pointed out that the Canadian government should work on the information it demands from corporations.

There should be a public register created in order to collect more information on the owners of those corporations. The less information a company provides, the easier it could facilitate crime proceeds washing and more. The practice of hiding illegitimate financial transactions for the purposes of tax evasion is commonly referred to as ‘snow washing’ in Canada. It is further enabled by the low fee for the company setting.

Public Registry Should Be Created

It amounts to CA$200 and allows anyone the freedom to set a company. This makes it possible for criminals to keep their identity a secret while also washing cash. Shell companies enable suspicious transactions to seem legitimate to the tax authorities. Canada is often ranked with other tax havens such as the British Virgin Islands, Panama, as well as the Bahamas. According to the currently existing regulations, partners are the only individuals that should declare themselves.

If the company teams up with foreigners, they should not file taxes in Canada. Vancouver’s housing market has experienced first-hand the true impact of snow washing, according to a report that had been published in The Economist. James Cohen, representing the coalition, stated that now is the time for action against shell companies. A recommendation on the subject was made, pointing the government towards the creation of a public registry for companies.

Such a move would make it harder for criminals to set companies and launder dirty cash through the local real estate field, as well as the luxury vehicles one. Wednesday saw the third day of conversation on money laundering, inviting gaming corporations and their executives. May is about to see the inquiry reconvene for its second phase seeking more answers regarding the true scale of the criminal practice in Canada.