Article by Chris Taggart, CEO at OpenCorporates
Significant shifts are happening in the accessibility and scope of company-registry data around the world. In this first of a series of ‘state-of-the-nations’ articles, we explore developments in Canada and how it can lose its reputation for “snow-washing”.
Late last year, the UK passed the Economic Crime And Corporate Transparency Act, which is not just a significant change for the UK register, but will set new benchmarks for registers around the world. Earlier this month, the first of the new powers that Companies House will have to tackle fraud and bad data came into force, and we are already seeing the first changes happening to the register
This year, too, the US and Canada launched their federal Beneficial Ownership registers. And in June, the EU’s Open Directive finally (the directive was passed over 4 years ago!) comes into force, which should mean that all 27 EU member states will have published company register information as open data (though best guess at the moment is only about a third will by the June 9 deadline).
Throughout the world, changes are happening, mostly positive, but some negative, as company registers work to clean up their act, or double down on opacity. Given this, it seemed an appropriate time to do a wider survey of the landscape, and so this is the first in an occasional series on the state of company registers, and what good looks like in 2024.
Legal entities after all, are the fundamental building blocks for commerce of any scale, as well as the primary route for money laundering and all large-scale criminal activity (organised crime, fraud, tax evasion, sanctions busting, etc). Unfortunately, it’s too often the criminals who are at the vanguard of new technology – with the imagination, the resources, the lack of inhibition and the incentives – and so it is with company registers, as they exploit the silos, the opacity and the underinvestment to enable their activities.
We’ll take an in-depth look at the changes to UK Companies House in the next post, but we thought we’d start this series with a brief look at Canada.
We’re starting here in part because despite its friendly and honest reputation, Canada has become a major destination for money laundering – it even has its own localised term “snow-washing”. Things reached such a crisis point in British Columbia that a Royal Commission was appointed to investigate (the Cullen Commission, to which OpenCorporates gave evidence).
Canada has been making some significant strides forwards – as mentioned above, the federal beneficial ownership register has just gone live, requiring the disclosure of the people who ultimately control federal companies.
But Canada has a very strange setup as far as company formation goes, and one that is perfect from a criminal point of view. Federal companies are just part of the story – companies can also be incorporated at the Provincial level – and those registers are just the sort of silos that criminals love. They are disconnected, powered by antiquated systems, and the data is functionally inaccessible, being stuck behind paywalls, in paper-based filing systems, and very much not available as data (still less open data), as our friends at Transparency International Canada and Publish What You Pay Canada showed. In our connected, data-driven world, it’s almost impossible for bad actors to be identified except at the dataset level, and usually it requires connecting multiple datasets together.
To their credit, British Columbia has been making positive moves – there are plans to create a public beneficial ownership register, and there are several interesting initiatives around company data. But still, despite all this, it’s still not possible to get the company register as data. Or at least it is, but you must pay a legislation-mandated C$7 per company.
With 2.5 million companies registered there, that’s over C$17m just for a one-time dump (never mind updates). Not surprisingly, no one is paying that sort of money, and so criminals can breathe easy, knowing that no-one will find them, outside of doing thousands of manual and expensive company by company searches (compare this with the £0 for downloading all the UK companies, either as a bulk dump or via the free API).
There is hope. As part of the drive to tackle dirty money, the British Columbia government announced just last week that the land registry fees would be abolished. We would suggest they take this opportunity to do the same with the company register.
With the other provinces there is much less progress, and it’s not because money laundering and criminal use of companies is not an issue. In fact the Cullen report said that there were four key hubs for Organised Crime in Canada: British Columbia, Ontario, Quebec, and Alberta. The fact that it is so hard to find out if a company exists in Canada, and who are the key people involved with it – and what other companies they are connected with – is, we suggest, fertile ground for such activities.
And so, criminals, if you want a jurisdiction that combines an innocuous and honest sounding jurisdiction with full functional opacity, pick one of the Canadian provinces.
Next instalment: how the UK’s Economic Crime and Corporate Transparency Act is changing the fundamental idea of a company register.
* * * * * *
OpenCorporates has been leading in this field of official legal entity data for many years, working with registers, and collecting, collating and transparently cleaning up the data. Last year, we launched the Legal Entity Data Principles – to set our path forward for the next 5-10 years, and set a benchmark for what good looks like in this area. Talk to us today, if you depend on trusted legal entity data from official sources.
