Canada needs action to stop shell companies laundering cash
Credit to Author: Kim Bolan| Date: Thu, 19 Sep 2019 01:14:19 +0000
B.C. needs to work with other provinces to stop money laundering through shell companies registered in their jurisdiction, an anti-corruption advocate said Wednesday.
James Cohen, executive director of the non-profit Transparency International Canada, was reacting to a Postmedia story earlier this week about a B.C. shell company set up by Mexican businessmen to allegedly launder money.
The company, Kross Investments, was used to send millions of dollars from Mexico to Swiss banks, the Canada Border Services Agency alleged in court documents.
Cohen said Canada should follow European countries and establish a national searchable corporate registry that would have more information about the beneficial owners of companies.
“That way all parties would have to be listed and a good registry would have verification requirements,” he said, adding that the public documentation has proven to deter criminals from setting up shell companies in other jurisdictions.
“Canada is proud of its ‘ease of doing business score’ with the World Bank, especially setting up a business. But we can’t let that be a welcome mat for crooks of the world.”
Lawyers for one of the men linked to Kross, Sergio Antonio Reyes Garcia, were in Federal Court on Wednesday trying to get a judge to reinstate a travel document revoked when he arrived at Vancouver Airport last March with some undeclared cash.
They argued that their client, who voluntarily returned to Mexico, was denied due process and not properly informed about the long-term impact of agreeing to leave the country.
Federal Court Justice Shirzad Ahmed reserved his decision in the case.
A Canada Border Services Agency official grilled Reyes Garcia when he landed March 3, alleging that he and his business partner Manuel Barreiro were using the B.C. company founded in 2017 only to launder illicit cash.
Reyes Garcia denied he was linked to the company, although the CBSA found documentation of millions in transactions between Kross and other companies on his cellphone.
The corporate documents filed in Victoria for Kross list a West Broadway address belonging to an office leasing company that confirmed it has never rented space to the company.
The CBSA agent alleged in his interview with Reyes Garcia that Kross was set up solely to launder money.
“It is a business which is registered on paper, but doesn’t exist. When someone opens a business, it should be visible. There should be bricks, walls,” he said. “These sorts of transactions are confined to money laundering — money leaving Mexico, going through Canada and various other parts of the world. Once the money has left Mexico, it is difficult to trace. Money launderers are aware of this and try their best to hide the trade because they don’t want anything to come back to them. This is done because the money is earned through illegitimate means, including drug trafficking, embezzlement, misappropriation of funds etc.”
Cohen said the CBSA agent who flagged the suspicious transactions was asking all the right questions.
“It’s frustrating in that we have officials who can read the signs — if only we could give them the proper tools to vastly reduce this problem,” Cohen said. “Law enforcement is frustrated that they don’t have the tools.”
He said there have been discussions between federal and provincial finance ministers about setting up a comprehensive national registry that would make private corporations’ information more public.
“We hope to see those consultations take place regardless of which party comes into power,” Cohen said.