Tax evasion, money laundering, British Columbia real estate and landowner transparency bill

The recent attention of the Government of British Columbia to tax evasion and money laundering in the real estate market has resulted in a bill, the Law on the transparency of landowners (Bill 23 – 2019), which will impose potentially onerous disclosure obligations on those who own real estate through corporations, trusts and partnerships. As discussed below, disclosures may be made available to government authorities for the investigation of tax offenses or other criminal offenses in Canada and abroad. .

A recent report of the Expert Panel on Real Estate Money Laundering in British Columbia (the "Report") discusses the importance of what is known as "Superposition" of money laundering. "Overlay" is "using a series of transactions that conceal beneficial ownership" to outpace the proceeds of the underlying offense. The report states that trusts, corporations and the use of nominees to disguise beneficial ownership are important tools for layering.

One of the report's conclusions is that data sharing should be intensified to combat these offenses. In particular, the report concludes that "[d]the closing of the effective property is the most important measure can be used to fight against money laundering but is unfortunately underutilized both internationally and in Canada "and that British Columbia Law on the transparency of landowners will be the first register to comply "fully with best practices" in the fight against money laundering via real estate.

Proposal Law on the transparency of landowners Information about the property that they would be required to disclose, the mechanisms it plans to enforce disclosure obligations, the administrative penalties and offense provisions it includes, and the sharing of information that it specifically provides are very broad.

The proposed legislation is detailed but, in summary, the "relevant companies", the "relevant partnership" partners and the trustees of a "relevant trust" become "reporting bodies" required to file "transparency reports" Concerning their registered companies. interests in real estate. The "Transparency Report" is a certified statement containing information about individuals who have an interest in the company, partnership or trust. This information includes the main identification information, the date of birth, the address and the social insurance number of each interest holder, as well as a description of how the nobody is an interest holder ".

Not only are the information to be disclosed extremely detailed, but the mechanisms of enforcement are important:

• Without a signed and certified transparency report, the registrar of land titles must refuse to accept an application for registration of an interest in land.
• Existing owners must file a transparency report within the prescribed timeframes after the law comes into force.
• If a reporting organization finds or "should reasonably have known" that a transparency report no longer reveals the current holders, a new report must be filed.
• There is a positive obligation to obtain and confirm the accuracy of information regarding interest holders and constituents.
• Interest bearers and constituents have the corresponding obligation to provide the required information.
• The transparency reports will be made available to inspectors for "tax and related" purposes, including the application of tax laws in the province, in Canada and in jurisdictions outside Canada.
• Transparency reports will be made available to law enforcement agencies in Canada and organizations outside of Canada. "Enforcement" includes "law enforcement or criminal intelligence operations in Canada". In other words, it seems that transparency reports can be made available to law enforcement agencies for the purpose of investigation, but also for the collection of information.
• For the purposes of the verification of compliance, "enforcement officers" are authorized to enter a place where a reporting organization carries on business or in which records relating to the reporting organization are kept.
• There is an obligation to cooperate with the agent of the authority and this obligation includes providing information to the agent.
• The powers of the enforcement officer may be used to inspect the records of a law firm, unless solicitor-client privilege is claimed.
• An officer of the authority may require a written statement on specific points, as well as evidence that a transparency report is accurate and complete.
• Non-compliance may result in an administrative penalty or prosecution for an offense.
  • The administrative penalty is a maximum of 5% of badessed property value or $ 50,000, whichever is greater.
  • The offense provisions include fines of up to 15% of badessed property value or $ 50,000, whichever is greater.
• It is prohibited to provide false or misleading information in a transparency report and to obstruct an officer of the authority or to withhold or conceal information or records from the agent.
• If required by law, an officer may be required to provide information, documents or records.
• Officers, directors, officers and agents who have authorized, permitted or participated in an offense may be held personally liable.

It is clear that the proposed bill, if pbaded, will impose very important compliance obligations on those who are subject to its reporting obligations. In addition, this can sometimes be complicated and previously private ownership structures will be scrutinized by tax and law enforcement officials in Canada and abroad. Finally, failure to comply with the law can lead to prosecution. This bill deserves special attention.