The impact of the beneficial ownership regulatory amendments under the Canadian AML regime to combat money laundering through shell companies in Canada

Abstract

Canada’s legitimate economy has fallen victim to money laundering for decades, especially through shell companies used by criminal organisations. More recently, the FATF has recognised Canada as having poor corporate transparency because of the frail federal AML framework that afforded beneficial ownership opacity. In response, lawyers and legal scholars have argued for greater transparency to combat money laundering nationally and prevent Canada from being an attractive destination globally for criminal enterprises to launder their dirty money. In June 2021, amendments to the Regulations under the PCMLTFA came into force, aiming to strengthen beneficial ownership transparency.

This thesis concerns the impact of the amended legislation and explores the relevant regulatory amendments through doctrinal and socio-legal analysis. It also compares the amendments with the UK’s robust AML framework using a comparative methodology to assess the strength of Canada’s amendments and identify scope for further reform. There are three research questions addressed within this thesis: Will the amendments to the Canadian AML regulations create a more robust framework for reporting entities to obtain  beneficial ownership information of legal entities to reduce money laundering through shell companies in Canada? If so, to what extent? Will such amendments reduce Canada’s attractiveness as an offshore destination for money laundering?

The findings conclude that while the amendments to the beneficial ownership provisions do bolster corporate transparency and thus diminish the efficacy of using shell companies for nefarious means, they do not render the Canadian AML regime as being robust. Further improvements are suggested by integrating several elements of the UK’s framework. This thesis aims to contribute to criminal law in the corporate regulatory context by assessing Canada’s current position concerning beneficial ownership transparency and the prevention of shell company exploitation by criminal organisations and recommending solutions to the legislative shortcomings with the help of a UK perspective.