"Canada is actually becoming more attractive as a place to stash secret funds because we’re seen as such a clean place to be .... There’s actually a term for it. It’s called snow-washing."

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Another of those international rankings came out last month, this time courtesy of U.S. News and World Report. It purports to list the Best Countries in the World.

Canada did great. We were No. 2, just behind Switzerland. And to top it off, Prime Minister Justin Trudeau was viewed as the most respected world leader, along with Germany’s Angela Merkel. Canada scored particularly well on quality of life and citizenship.

We’re getting used to this. We’re No. 7 on the World Happiness Index. Three of the world’s most liveable cities in the Global Liveability Report are Canadian. It’s a consistent pattern, one that’s been exaggerated by the frightening inward turn that the U.S. is taking under Donald Trump.

Canada has never looked so good.

But before we become too complacent about what a world-beating place we live in, how about a look at other rankings, where we consistently score poorly. When it comes to financial transparency, especially when it comes to tracking flows of money, Canada is a real laggard. It’s consistent and it’s disturbing.

This week, the UK-based Tax Justice Network published its Financial Secrecy Index. The index, which comes out every two years, is designed to measure secrecy measures that facilitate similar unsavoury practices and attract illicit financial flows of money.

Canada was no. 21 in the list, with a financial system even less transparent than those in places like Russia and China, and tax havens like Cyprus and Barbados. Yikes.

The problems are many. Above all, there is no national public registry that identifies the actual individuals behind Canadian-registered companies and no obligation on the part of financial institutions to reveal the beneficial ownership of companies. Combine that with a half-hearted government commitment to fighting money laundering and Canada is getting a reputation as a convenient place to stash questionable cash.

Canada is not the only place that scores poorly in the rankings. So do the U.S., Switzerland and Germany. According to James Henry, an economist working with the group: “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.”

As Henry notes, Canada is actually becoming more attractive as a place to stash secret funds because we’re seen as such a clean place to be. “No one wants to hold their money in Cyprus.”

So we’ve become a British Virgin Islands without the tropical weather and the hurricanes. There’s actually a term for it. It’s called snow-washing.

For a time, I used to think that Canadians were simply boy scouts, innocents who were so naïve about the ways of the world that we couldn’t imagine that kleptocrats, drug traffickers and corrupt businessmen even existed, let alone interested in taking advantage of our institutions to hide their dirty money.

It’s actually much more pernicious that that. We’ve developed an approach to business that openly attracts foreign investment, and we don’t really care where it comes from. How long did it take governments to even start asking questions about the huge flows of funds from China into the real estate markets in Vancouver and Toronto? Nobody, from real estate agents to banks, builders and Canadian homeowners profiting from the run-up in prices, have ever really cared where the money came from, as long as the great condo party continued.

Yes, we have Fintrac, the agency tasked to root out money laundering and terrorist financing, but it has been hobbled by poor leadership and a culture of not really wanting to rock the boat, especially when it comes to naming and shaming Canada’s powerful financial institutions when they break the law.

This week, Fintrac lost an appeals court case, in effect enshrining an earlier ruling that has stopped the agency from imposing fines for almost two years. The court has ruled that Fintrac’s penalty program is opaque and needs more transparency.

You would think that fixing the policy that has neutered a key protection of Canada’s reputation as a clean place to do business would be of the utmost urgency. But Fintrac still is conducting a “review” of its penalties and claims that review won’t be ready until next summer. The Finance Department can write a budget in six weeks and Fintrac can’t complete review of its penalty system in two years?

But nobody seems too worried, including Fintrac which says it can still monitor compliance of the law through measures like sending “observation letters.” I’m sure money launderers the world over are quaking in their boots, fearful of receiving a Fintrac observation letter.

And meantime at the Canada Revenue Agency, they continue their open-door policy to any international business that wants to put up a shingle in Canada and use a Canadian presence to reduce taxes, even if the company provides marginal benefit to the Canadian economy.

According to a report from a Dutch non-profit, the Centre for Research on Multinational Corporations, the Canada Revenue Agency has given its Good Housekeeping Seal of Approval to a tax arrangement that allows Turquoise Hill Resources Ltd., a Vancouver-based subsidiary of Rio Tinto to funnel profits from its huge copper mine in Mongolia through subsidiaries in the Netherlands and Luxembourg, thereby avoiding hundreds of millions of dollars in Canadian taxes.

The Dutch non-profit says that this kind of use of mailbox companies essentially allows Turquoise Hill access to tax treaty benefits that the OECD would consider as treaty abuse. Rio Tinto says it’s simply taking advantage of tax rules as they exist and that Canada and Mongolia approved of the deal in advance.

Which is precisely the problem.

If government agencies like the CRA see their role as facilitating multinationals in their search to avoid taxes, we simultaneously deprive governments — ours and others — of money they need to provide the kind of services we expect, and at the same tell the world that we’re open to business … any business.

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