Donald Trump has offered up a litany of excuses for his trade war with Canada, from fentanyl and drug flows across the border to restrictions on American banks operating north of the border. A major reason is the long-held American sore point of Canada’s lax attitude towards money laundering and organized crime.
While Trump’s focus on these issues may be nothing more than a pretense for imposing tariffs, he is nonetheless sticking his finger in a sore open wound: Canada really does have a dirty money problem, which is driving the proliferation of organized crime and fueling human trafficking and sexual exploitation.
Each year, the Criminal Intelligence Service of Canada estimates that between $45 to $113 billion are laundered through Canada. For the sake of comparison, Canada’s structural deficit is projected to be $42.2 billion in 2025-26, while $113 billion is the total amount of direct government spending. In other words, these are massive illicit financial flows that amount to about 3 to 6 percent of Canada’s GDP.
Casinos have received a lot of attention for their role in laundering money, but there is only so much you can launder by filling hockey bags with cash. It turns out that billions are being laundered into our economy by organized criminals using large networks of anonymous shell companies. Secret companies are being used to hide the true ownership of assets, through opaque structures that obfuscate the actual owners that benefit from those flows of money.
Meanwhile, Canada’s lack of mechanisms to unveil beneficial ownership information is flawed by design. As a result, the RCMP reports that 2,000 organized criminal syndicates now operate in Canada, with nearly all of them engaged in financial crimes that capitalize on exploiting vulnerable people.
The victims
The International Labour Organization and Walk Free Foundation estimate that 24.9 million people worldwide are victims of trafficking, 4.8 million of whom are subjected to sexual exploitation. In Canada, police received 3,996 reported cases of sex and labour trafficking between 2012 and 2022. But the actual number is likely much higher due to underreporting.
Take massage parlours for example. They can be perfectly legitimate, and sex work is a genuinely consensual manifestation of human agency. Yet they are also handling large amounts of cash, which has made them a breeding ground for money laundering. Under the guise of a legitimate appearance, an estimated 700 massage businesses across Canada conceal illicit financial flows, are involved in human trafficking for purposes of sexual exploitation, or both.
Going in blind
The ability to obfuscate the personal data of individuals who actually own these companies emboldens criminals. The Financial Action Task Force (FATF)—an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction—has repeatedly identified minimal government access to beneficial ownership information as a major obstacle in discouraging money laundering through corporate entities. In response, Canada is among the countries that have implemented beneficial ownership transparency laws.
As of November 2023, Canadian law mandates access to corporate beneficial ownership data under Bill C-42, that is, the personal data of the individuals who actually own the corporation. However, this law imposes a significant threshold for a company to have to register and applies only to federally incorporated companies. That leaves most Canadian businesses, which are provincially regulated, outside of its scope. Only Quebec and British Columbia have introduced provincial beneficial ownership registries aligning with federal legislation. Criminals are exploiting this gap. With more private companies than any other province, Ontario bears disproportionate risk.
Beneficial ownership registers alone are no silver bullet, but they make it much easier for law enforcement to uncover and disrupt criminal networks, and thereby help protect vulnerable people. Rather than the current fragmented system of separated provincial and federal records, Canada needs a centralized register that collects, stores, and exchanges high-quality data on beneficial ownership that covers all jurisdictions. A unified pan-Canadian approach would empower authorities to detect, investigate, and prevent financial crimes more effectively and efficiently.
All the data should be accessible to law enforcement, but some of it should be accessible to the general public as well. Canada’s Department of Justice has already concluded that certain information can be made available to the public while being compliant with Charter protections. Making some information publicly accessible, searchable, and free of cost would create a deterrent: criminals loathe having their names listed on a public registry.
Access to select pan-Canadian beneficial ownership data would provide regulators and financial institutions with visibility on demarket clients who may be profiting from crime, contain illicit financial flows, and ways by which it is laundered—whether through real estate, offshore transfers, or casinos. The International Consortium of Investigative Journalism, the End-Snow-Washing Coalition, and the Canadian Centre to End Human Trafficking have been advocating for more transparent beneficial ownership data. A recent judgment by the European Court of Justice reinforces the need to strike a better balance between privacy and the public interest.
Money laundering is the financial backbone of organized crime. Canada’s opaque corporate ownership structures make it easy to obscure illicit profits. Enhancing beneficial ownership transparency is a crucial step to curtail criminal financial networks. A world-class, pan-Canadian ownership registry would go a long way to curb illicit financial flows, while protecting vulnerable people, especially women and girls, from exploitation.
