Canada's privacy laws shelter money launderers
Canada is apparently luring hundreds of mafiosi, kleptocrats, cartel chiefs and corrupt exiles to this country thanks to its failure to tackle money laundering.
It's seemingly one of the most financially secret countries in the world and a large part of the supposed cure — more intrusive and wider law-enforcement surveillance powers — will require a radical rethink of privacy rights.
The panel commissioned by the Cullen inquiry into money laundering described the situation as akin to the frustration police felt when fettered from responding to a domestic abuse complaint because a man's home was his castle.
Back then, the victims were women and children; now it's the public who are being harmed by wrongly held privacy concerns, according to the experts — Christian Leuprecht, professor at Queen's University and the Royal Military College of Canada; Garry Clement, former national director of the RCMP proceedsof-crime section; Arthur Cockfield of Queen's University; and Jeffrey Simser, co-author of Civil Asset Forfeiture in Canada.
“It's a similar thing with the offshore world and global financial crime,” Cockfield told the commission.
“We have very strict privacy protections. They greatly inhibit federal government agencies with sharing information, metadata information or personal information with provincial authorities or other federal agencies, and again the outcome of this regime is the beneficiaries are crooks and sometimes, well, crooks who happen to be — have legitimate income, they're millionaires or billionaires and are moving their money offshore and hiding it and they have been for generations,” Cockfield continued.
It's a common theme — not surprising given the commission's witness list is top-heavy with cops, former cops, cops-turned-regulators, cops-turned-politicians, cops-turned-academics, cops-turned-consultants, academics that work with cops ... They're almost entirely middle age or elderly white men with a collective view skewed to suspecting dirty cash under every bed waiting to be washed.
The panel that produced “Detect, Disrupt and Deter: Domestic and Global Financial Crime — a Roadmap for B.C.” was representative and sang the same, sad hymn: Canada is a heavenly laundromat.
“It has consequences for community safety,” Leuprecht went on.
“It has consequences for the housing prices and the escalated costs that are involved here for individuals. It has consequences for Canada's international obligations. It has consequences for lost tax revenue, which of course in this day and age is quite critical.”
People just don't associate financial crime or tax evasion with harm to communities, Leuprecht added.
“They don't realize that the gang shooting in a neighbourhood a few streets down or that the house that they can no longer afford because the prices keep on rising are directly related to criminal activity and to criminal activity on a very large scale, and that in Canada we've taken this really to the next level by having created in many ways near-optimal circumstances to engage in money laundering and to park your illicit gains.”
Cockfield emphasized the panel was sensitive to privacy rights: “But currently, for instance, in B.C. you have unlicensed money-services businesses, dozens, possibly hundreds throughout your province. If we can't even regulate things properly ... that's where we need to get our house in order … If we can't catch tax cheats we're losing billions of dollars a year in revenue … And so the privacy regime, if it's too strict, is harming the interest of average Canadians and needs to be modified, at least in our judgment.”
There has never been a society with an unfettered right to privacy and, in the panel's opinion, from “a distributive justice perspective we have not struck the right balance in this country … this can be done sensibly.”
“They come from China and Russia and all over the place,” Cockfield insisted. “We're a wonderful place to engage in this crime.”
The group estimated there's between $43 billion and $147 billion lost annually to money laundering and other forms of illicit gains not being taxed in Canada.
But that argument sounds exaggerated.
The commission has been told that the RCMP in 2011 estimated money laundering at between $5 billion and $11 billion, and other recent guesstimates have put it at between two and five per cent of GDP, about $35 billion to $105 billion nationally, and $5 billion to $12.5 billion in B.C.
The panel's solution — a two-headed fusion centre housing an enforcement agency and an intelligence hub devoted to collating and analyzing information in government, health, police and regulatory silos that now can rarely be shared.
Still, there are good reasons to be hesitant about giving a government the ability to turn AI programs loose on the massive health, tax, corporate, property and other-domestic-plus-foreign personal data it could access — especially when it might or mistakenly pass it on to less civil-rights-minded law enforcement partners.
Anti-money-laundering measures don't just affect the bad guys, there are social impacts and costs to the community that unfortunately aren't the primary focus of the inquiry.
Still, imagine how Jewish, Armenian, Tutsi, Uyghur, Rohingya or other minorities feel about giving a government the authority to trace and track relatives, friends and personal networks.
The inquiry continues.