Russian assets in Canada | Ottawa won’t say if it froze Russian assets

While European countries seize the yachts of Russian oligarchs, Canada won’t say whether it has frozen Russian assets in Canada. To justify this refusal, Ottawa invokes “confidentiality” on “commercial activities”.

Vincent Brousseau-Pouliot
The Press

Maxime Bergeron
The Press

Three weeks into the war in Ukraine, about 700 Russians and Russian businesses, including oligarchs, are under economic sanctions in Canada. These people and companies cannot in theory make transactions in Canada and if they have assets in the country, these must be frozen. But Ottawa refuses to say whether it has frozen Russian assets since the start of the war in Ukraine. We also do not know the extent of the efforts made by the federal authorities in this regard.

“Due to the Government of Canada’s obligation to protect confidential information about the business activities of individual companies, we cannot provide further comment on this matter,” Global Affairs Canada said by email.

“Canada is taking this series of measures in close coordination with its allies and international partners,” said Foreign Minister Mélanie Joly’s office by email.

The Royal Canadian Mounted Police (RCMP) and the Canada Border Services Agency (CBSA) are responsible for enforcing economic sanctions. Global Affairs Canada said the two agencies “investigate potential violations and enforce” sanctions. The RCMP did not respond to The Press and CBSA directed our questions to Global Affairs Canada.

Visible sanctions in Great Britain and Europe

Canada’s discreet approach contrasts with that of some of its allies.

Last week Britain, where Russian oligarchs have had a strong presence in the economy for decades, froze around £15 billion ($25 billion) in assets of seven Russian oligarchs.

The UK notably froze some of the assets of billionaire Roman Abramovich, owner of Chelsea football club. Roman Abramovich is subject to sanctions in Canada and the United Kingdom, but not the steel manufacturer Evraz, of which he is the largest shareholder with 28% of the shares. Evraz has facilities in Western Canada and was one of the suppliers for the TransMountain Pipeline.

The G7 countries and the European Union have just launched a task force that aims to track down the assets of Russian oligarchs under sanctions.

The United States has provided information to its allies for three weeks that led to the seizure in Europe of yachts worth several hundred million dollars, according to the United States Department of the Treasury. Spain seized three yachts this week.

“Snow Bleaching”

This lack of concrete information on the assets held by Russian oligarchs brings us back to a recurring problem: the difficulty of knowing who is really behind the front companies registered in Canada. This situation was highlighted in a damning report published Tuesday by the organization Transparency International Canada (TIC).

The document, titled Snow-washing, Inc., details how Canada has carved out an unenviable place for itself on the world stage in recent years as a haven for hiding assets. Some have dubbed this phenomenon “snow whitening”, referring to our northern climate.

The heart of the problem lies in the possibility for wealthy individuals – notably Russian oligarchs – to register shell companies here without having to disclose the true identity of their “ultimate beneficiaries”. This veil of secrecy has made Canada an ideal place to launder money derived from illegal activities or to hide funds safe from the tax authorities, among others in real estate.

This reputation for laxity is spreading more and more abroad. In its report, TIC gives several examples of advertisements made by international consulting firms, particularly Russian ones, which encourage their wealthy clients to incorporate “limited partnership companies” in Canada.

One of these boxes boasts that there is no need to “disclose the ultimate beneficiary to the authorities”. Another points out that Canada offers “a high degree of anonymity”. Some of these announcements remind us that Canada enjoys an enviable reputation that will further confuse the issue.

The federal government announced in April 2021 its intention to create a “public registry of beneficial ownership of companies” that will require all companies registered in the country to publicly disclose the true identity of their owners and directors.

The problem? Ottawa only intends to implement this register… in 2025. An eternity, which could give many Russian oligarchs time to move their assets out of Canada before they are identified by the authorities, denounces James Cohen. “There is certainly a way to do it much faster rather than waiting for 2025,” he says.

The government has taken very slow steps in the right direction, but it’s time to pick up the pace,” said DT Cochrane, an economist with Canadians for Tax Fairness, who helped design of the report, in an interview with The Press.

If it asks Ottawa to hurry up, the TIC report also welcomes the decision of Quebec, which will set up its own provincial register of ultimate beneficiaries by 1^er October 2022.

With Agence France-Presse and The Guardian