Canada to push for global tax fraud crackdown after second release of Panama Papers data

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View of the facade of the building where Panama-based Mossack Fonseca law firm offices are in Panama City.

OTTAWA — Public Safety Canada is taking a lead role in global talks to expand the country’s efforts to address concerns over illegal offshore tax schemes.

Ralph Goodale, the federal minister responsible for the Public Safety department, is representing Canada at an international anti-corruption summit Thursday in London — a gathering that would often include other government departments, such as the Canada Revenue Agency.

Officials from the CRA are not attending the London meeting, which is being hosted by U.K. Prime Minister David Cameron.

“Since the angle (of the London meeting) was more about corruption, Public Safety was going to have the lead on this,” said Chloe Luciani-Girouard, a spokeswoman for national Revenue Minister Diane Lebouthillier, who oversees the CRA.

“Our officials were aware of this (meeting). They had prepared notes for the minister. We’re not going to be actively partaking in this. But we’re going to be following the discussions closely,” Luciani-Girouard said.

The global conference comes after a second online release this week of Panama Papers data, which contain a list of 200,000 names and offshore accounts registered by Panama-based law firm Mossack Fonseca and leaked to journalists.   

The first release of offshore investment data was posted online last month.

The federal government has earmarked more than $444 million to be invested in increased measures and staffing to help the CRA fight illegal tax schemes in Canada and abroad.

“In so far that something is a tax-avoidance mechanism that crosses into illegality, that would default to the CRA,” said J.P. Duval, a spokesman for Goodale, whose department is responsible for the RCMP.

“But once you’re talking about corruption (those offences) would be ones where the RCMP would take the lead.”

The RCMP “are the domestic policing, law enforcement entity — but they also, obviously, collaborate with international partners,” Duval said.

Given the new funding will be used to “really crack down on tax evasion, tax avoidance, both at home and offshore, the (government) definitely had interest in knowing what this meeting was going to conclude,” Luciani-Girouard said about the London summit.

“Because we’re working with our international partners, anything that has to do with international collaboration is definitely very, very key to the (revenue) agency’s work currently,” she added.

“With respect to taxation, in order to protect the revenue base and ensure that the system is fair to everyone, the Government is committed to combatting international tax evasion, including by introducing new measures,” said Jack Aubry, chief spokesman for Finance Canada. “The government is committed to a strong and comprehensive framework that is at the forefront of the global fight against money laundering and terrorist financing.”

Since January 2015, the CRA has required “financial intermediaries” — including banks, credit unions, money transfer outlets and casinos — to report incoming and outgoing international electronic funds transfers of $10,000 or more.

“The CRA is analyzing these international transactions against information it has to identify taxpayers who may not have reported all their assets or income to the CRA,” said agency spokesman David Walters.

“It remains the CRA’s position that all participants in the tax avoidance scheme must be identified and brought into full compliance with their tax obligations,” he said.

Activities by high-profile Canadian firms — such as accounting giant KPMG and the Royal Bank of Canada — have raised questions about the extent of offshore tax-shelter schemes.

CRA officials will use the Panama Papers to “cross-reference this information with the data already obtained through the agency’s existing investigation tools,” Walters said.

But an international watchdog group is calling for stronger measures to limit illegal financial transactions. 

The Panama Papers “highlight a broader issue of the global financial system being abused for illicit purposes such as tax evasion and money laundering,” said Peter Dent, president of Transparency International Canada.

The organization is calling on the federal government to create a mandatory public registry of all Canadian companies in order to trace ownership and locations.  

“There is a pressing need for the government of Canada to take concrete steps to address the ability of some Canadians to shield themselves, and their financial activities, from Canadian authorities,” Dent said in a statement, released ahead of the London meeting.

“That some can rig the system to hide their wealth — whether amassed legally or not — is not merely unjust, it also masks corruption and harms global development by siphoning off revenues that could be directed to education, health care and infrastructure.”

Financial Post

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