Thursday, October 6, 2016

Lax Canadian regulations sheltering corporate shell games

The Panama Papers leak earlier this year unleashed a flood of revelations about offshore shell companies being used as tools for tax evasion and money laundering, but the U.S. Treasury Department’s recent allegations that Vancouver-based PacNet Services is a “transnational criminal organization” highlight how those activities can thrive under the nose of Canadian law enforcement.

Fraudsters in Canada and abroad have multiple ways to mask and hide ill-gotten gains, partly enabled by lack of uniform regulations, especially surrounding the collection of beneficial ownership information on registered companies.

“They have to distance themselves ostensibly from the wealth they can control,” said Martin Kenney, a Canadian lawyer based in the British Virgin Islands, told Business in Vancouver in a phone interview, “so they use a whole bunch of  techniques, whether it’s P.O. [post office] box numbers, mail drop boxes, 75 layers deep of companies in 20 different jurisdictions, it’s all just a question of cost, proportionality, risk – they’re risk managers. They’re going to spend a lot of money and time devising strategies to cover their tracks, cover the tracks of the money. That’s all the game is about.”

Vancouver has had many players in that game over the years, taken down not by the Vancouver Police Department or the RCMP, but often U.S. regulators.  (more...)


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