Peter Dent: Access to data is key to early wins for anti-money laundering efforts in B.C. and across Canada
Credit to Author: Hardip Johal| Date: Wed, 18 Dec 2019 02:00:28 +0000
The house of cards hasn’t toppled yet when it comes to money-laundering activities in B.C. and across Canada. But the recent federal election marked a turning point in taking a step toward improving the safety and security of all Canadians. This was a first for a federal election campaign, where leaders not only talked about the far-reaching consequences of money laundering to housing affordability, income inequality, the opioid epidemic, etc. It became a part of their platforms.
Right here in B.C., there has been provincial leadership — driving the conversation from coast to coast. The ongoing B.C. commission of inquiry into money laundering — the first of its kind on the topic in Canada — sets the table for B.C. to blaze a trail for other provinces to follow. We can now look ahead to 2020 and the continuation of public hearings. While the inquiry is not set to release an interim report until next November and its final report in May 2021, meaningful early wins are within reach today.
Data is a common denominator in tackling money laundering in Canada. Taking aim at the criminal organizations engaging in these illicit activities and threatening public safety is going to require collaboration and commitment from the private sector and all levels of government. While money launderers work across broad regional and global networks and go to great lengths to hide their activities, government enforcement agencies are often hamstrung, because key data elements are housed in silos across a variety of industry, regulatory and government agencies in Canada. A plan to enable the secure and legal sharing of key data is not an insurmountable ask of our business and political leaders, and would become a meaningful tool to ensure the success of the inquiry.
Considering global best practices will support our fight against money laundering. The United Kingdom created an open registry that makes all corporate registry data publicly accessible, and provides the opportunity to analyze the data as a whole, rather than assessing company records individually. But there are also lessons learned; mainly that a data verification process is critically important, which is missing in action within their legislative framework. Verifying data is required for the accuracy of any information reported and maintained within a publicly accessible registry. Global Witness, an anticorruption NGO, completed a study earlier this year of the U.K.’s open registry and found that over 6,700 companies were controlled by a beneficial owner who themselves control over 100 companies, suggesting that these were likely nominees of the true beneficial owners. The lesson here is that if one has something to hide, they will not disclose it and without any way of verifying what is disclosed, then the benefit of any open registry is diminished.
All is not necessarily lost. This Global Witness study demonstrated that there is still valuable information to be derived from the data. For example, layering publicly available data with the open registry data can provide powerful insights. The ability to link B.C.’s registry data with publicly available corporate data globally could shine a light on the use of nominees as outlined above. An example of these potential insights is identifying shell companies globally that are linked to an alleged money launderer in Canada and then, in turn, identifying all other property owned in our country by this same network of shell companies that are controlled by the same alleged money launderer.
The launch of a public inquiry was a watershed moment and a message to British Columbians that their safety and wellbeing is a priority. However, we collectively need data and effective analysis of that data to truly understand how devastating money laundering has been. With these pieces in place, we can look to securing the collective prosperity and safety of Canadians. Providing our law enforcement organizations with more access to better quality data would equip them to pursue these crime syndicates and put them behind bars. The early wins are in plain sight. As a province and a country, let’s continue our work to bring down the money-laundering house of cards.
Peter Dent is a partner in the financial crime group at Deloitte Canada, and the director of operations for the firm’s financial advisory practice in British Columbia.