Canada has one of the most secretive financial systems in the world, according to a new report, less transparent than Russia and China, and offshore tax havens like Cyprus, Bermuda, and Barbados.

Financial experts say this is an indication Canada is, effectively, one of the world’s more attractive “onshore tax havens.”

The Tax Justice Network (TJN) — an independent international research and advocacy network focusing on tax evasion and tax havens — released its Financial Secrecy Index on Tuesday.

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The index, produced every two years, measures the extent to which a country’s legal system facilitates global financial crimes such as money laundering and tax evasion.

Canada is No. 21 on the list, slightly higher than its 2016 ranking at No. 23. The higher the ranking, the more financially secret a country is.

“It’s a bad exam grade on the state of the country’s financial secrecy laws,” said Arthur Cockfield, a tax law scholar and policy consultant at Queen’s University. “It means that if you’re a crook or a super rich person who wants privacy, then you can use our corporate laws to hide the identity of the ultimate owner of the shares (of your company).”

The report comes two years after the Panama Papers, and two months after the Paradise Papers — two massive document leaks revealing a pervasive network of offshore tax havens that fuels financial corruption and organized crime, and deprives public coffers of $10 to $15 billion each year in Canada alone.

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An ongoing Star/CBC investigation into corporate ownership secrecy has detailed how Canada has emerged as a popular destination for international companies and individuals seeking to avoid or evade taxes by using this country’s shadowy corporate registration system.

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Both Cockfield and Marwah Rizqy, a tax professor at the Université de Sherbrooke, highlight two main reasons why Canada’s ranking is this high:

1) Lack of transparency: There is no national public registry naming the real people behind Canadian companies, and no obligation on financial institutions to reveal the beneficial owners of a company.

2) Lack of substance: You can create a corporation in Canada which has no substance, said Rizqy, and functions, essentially, as a shell company.

“While we’re seen as a clean image globally, that clean image sometimes overshadows the secrecy that happens in our own corporate sector,” said James Cohen, director of policy and programs for Transparency International Canada.

Rizqy says the problem has yet to be actively addressed by the Canadian government. “I’m not sure if the current government understands the issue, frankly,” she said. “They’ve never introduced any bill to fight strongly tax havens.”

Part of the problem, Cockfield said, is the benefits of this type of illicit financial activity. The Star/CBC investigation showed how corporate secrecy has led some people from countries such as Russia, Mexico and China — countries less financially secret than Canada, according to the index — to use Canada to “snow wash” money that has either been obtained illicitly or not declared to tax authorities.

“The hypocrisy is that Canada is part of the OECD, forcing countries like the Bahamas, like Panama, to change,” Cockfield said. “We use our power to make them change their laws, but that just makes Canada (a) more attractive place for these crooks. We won’t change our laws.”

“Players like Germany and Canada don’t necessarily get the attention from the international community they deserve for being final resting places for dubious money,” said James Henry, an investigative economist with Yale and Columbia Universities and the TJN.

Henry says that Canada has become more attractive over the years as people turn to it as the destination for their financial capital, because “no one wants to hold their money in Cyprus.”

Western countries like the U.S. and Canada, for example, have rule of law and independent courts, which, said Henry, make it possible for wealthy members of third world countries to hold their money anonymously.

According to the Global Financial Secrecy Index, Switzerland, the U.S. and the Cayman Islands are the biggest tax havens in the world.

Countries are assessed by a criterion that measures whether corporations are required to reveal their true owners, whether annual accounts are made available online and the extent to which countries comply with international anti-money laundering standards.

Another factor is the size of a country’s financial system and the size of its offshore activity.

This year’s index shows that “the global haven industry is alive and well,” Henry said.

“Most people have the preconception of corporate secrecy being some far off tropical island,” Cohen said. “It masks the issue that places like Canada are just as bad and according to this index are worse.”

“It’s harder to get a library card here then to open up a business.”