Snow washing refers to hiding illegitimate financial transactions often for purposes of tax evasion in Canada.[1] The term is an amalgam of the words snow referring to Canada having cold snowy winters and washing referring to money laundering. It is easy under Canadian law to set up a company, even for a fee as low as C$200, while shielding the identities of the firm's real owners from the eyes of tax authorities.[2] The global elite, as well as criminals and foreigners avoiding economic sanctions, can set up shell companies to "make suspect transactions seem legitimate" under the cover of Canada's reputation for fiscal integrity.[1]
The registration systems for Canadian companies, at both the federal level and the provincial level, are shrouded in secrecy, which means that the real owner of a company or a trust can hire a person as a stand-in substitute to conduct all financial filings and submissions.[1] The practice effectively makes Canada a tax haven along with countries such as the British Virgin Islands, Panama and the Bahamas.[1] The process has been made even easier since the Canadian government has signed tax treaties with 115 countries.[1] With a form of business organization called a Canadian Limited Partnership, the only persons who have to declare themselves to the authorities are the partners, and if they do not live in Canada, they are exempt from filing taxes in Canada.[1][2] For firms whose stocks are not traded publicly, the rules require that only the directors of such companies be identified, and these directors are not required to reveal whether they are acting on behalf of somebody else.[2] There was a report in The Economist suggesting that the overheated market for private property in the Canadian city of Vancouver may be partially the result of purchases by unidentified persons, possibly foreign criminals and corrupt officials, as a way to launder dirty money.[3] One estimate in 2009 by the national police was that 15 billion dollars was being laundered annually in Canada because of the opaque disclosure requirements.[3]
References edit
- ^ a b c d e f Cribb, Robert; Oved, Marco Chown (January 25, 2017). "SNOW WASHING: Canada is the world's newest tax haven". Toronto Star. Retrieved February 14, 2018.
...And the Canadian government has made it easier than ever for criminals and tax cheats to move money in and out by signing tax agreements with 115 countries — the greatest number in the world....
- ^ a b c Kassam, Ashifa (February 14, 2018). "How Canada became an offshore destination for 'snow washing': The country's opaque jurisdictions allow owners of private companies to remain anonymous and the firms to remain in the shadows". The Guardian. Retrieved February 14, 2018.
...While publicly traded firms in Canada are required to disclose major shareholders, private companies need only note their directors, allowing those who own, control or benefit from the firm to remain in the shadows....
- ^ a b "Snow washing: Canada frets about anonymously owned firms -- Identity checks to obtain a library card are more onerous than those to form a private firm". The Economist. January 4, 2018. Retrieved February 14, 2018.
... 2009 the national police force estimated that up to C$15bn ($12bn) was being laundered in the country each year (an estimated annual $2trn is laundered globally). ...