Niamh Leonard is the executive director of Transparency International Canada. She is a lawyer based in Montreal.
This week, Transparency International released the 2023 Corruption Perceptions Index (CPI) – scoring 180 countries and territories around the world on public sector corruption.
On the face of it, Canadians have reason to be positive. We’ve moved up to 12th place from 14th place the previous year.
But before we pat ourselves on our collective back, we need to note a couple of important facts. First, as a country, we’ve declined in the rankings over the years; until 2019, Canada was always in the CPI’s top 10 list of the world’s least corrupt countries – indicating low levels of perceived public sector corruption. Second, as a major player in the globalized economy, we’re also playing a role in the globalization of corruption – and we’re not doing enough to stop it.
The index rates countries on a scale of 0 to 100, from most to least corrupt. It’s calculated using data from 13 external sources, ranging from the World Bank and World Economic Forum to think tanks and private sector consultants. The types of corruption it looks at include bribery, diversion of public funds, effective prosecution of corruption cases, adequate legal frameworks, access to information, and legal protections for whistleblowers, journalists and investigators.
The overall results continue to be devastating: more than 80 per cent of the world’s population lives in countries that score below the already low CPI average of 43 (Canada’s score in the latest index is 76, down from a high of 84 in 2012).
Like other countries in the higher echelons of the index, Canadians benefit from a well-functioning justice system, strong rule of law and political stability. But these advantages don’t insulate us. Far from it. They actually make stable countries such as ours prime targets for corrupt actors from around the world to launder and invest their ill-gotten gains for safekeeping.
They’ve even invented a word for the phenomenon in Canada: “snow washing.” Estimates indicate that $45-billion to $113-billion is laundered in Canada each year. Money launderers use anonymous corporate entities and complex ownership structures to disguise the origin of the funds. This money is both corrupt, and corrupting, because here in Canada it undermines the integrity of our country’s financial system, and it distorts key areas of our own economy, such as real estate markets. Indeed, experts estimate that housing prices in British Columbia are 3.7 per cent to 7.5 per cent higher than they would be in the absence of money laundering.
In recent years, governments have taken some important steps. Notably, the beneficial ownership registry was passed into law by Parliament last year and is currently being implemented. The registry requires federally incorporated companies to reveal the human owners who exert significant control over the company. No more hiding behind numbered companies or purposely misleading ownership names or structures. And the registry will be accessible online, available for everyone to see. The government began collecting the beneficial ownership data last week.
The only downside – and it’s significant – is that less than 20 per cent of companies in Canada are federally registered; most are provincially registered. Quebec and British Columbia have moved ahead with their own registries. The other provinces and territories need to get on board. Dirty money thrives amid loopholes and lacunae. The public needs access to pan-Canadian beneficial ownership information.
And there is much more that we can do.
Just three months ago, for example, the OECD Working Group on Bribery in International Business Transactions characterized Canada’s anti-bribery enforcement rate as “exceedingly low.” It noted the low number of bribery cases that are prosecuted in Canada and said that there is “a general lack of detailed statistics on foreign bribery detection sources, mutual legal assistance, and enforcement, which does not allow the working group, or Canada, to assess the effectiveness of efforts to combat foreign bribery.”
Globalized corruption isn’t just a scourge that consigns people in too many countries to lives of poverty and repression. It stymies effective, collective action on so many of the challenges that the world faces today, from climate change to terrorism to human trafficking. In its own way, it is a virus that infects everything it touches.
Canada, like every other country, is part of the problem. But we also have it in our power to be part of the solution.