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Dirty money has warped the economy, B.C. government says as laundering inquiry starts – National Post

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VANCOUVER — Money laundering has distorted British Columbia’s economy, fuelled the opioid crisis and overheated the real estate market, the province argued at the start of an inquiry into the criminal activity on Monday.

Jacqueline Hughes, a lawyer for the B.C., said in her opening remarks that money laundering is not a victimless crime and has significantly affected ordinary residents over the past decade.

“The Lower Mainland has, unfortunately, earned an international reputation as a haven for money laundering. This did not happen overnight or without warning signs,” she said.

“The past cannot be undone. But what government can do going forward is learn from the past and take proactive steps to make British Columbia the most difficult jurisdiction in which to launder money.”

B.C.’s NDP government called the independent provincial inquiry last year after three reports revealed that casinos and horse racing as well as the real estate and luxury car markets had become laundromats for the proceeds of crime.

Commissioner Austin Cullen is hearing opening statements this week, with Hughes the first to speak on behalf of the province’s Finance Ministry and gaming policy enforcement branch.

Hughes said the accounts of millions of dollars flowing through B.C.’s casinos in shopping bags have become well-known and the public deserves answers to its questions.

“Was there wilful blindness to what was going on in favour of income generated for public or private persons? Are there legislative barriers that prevent prosecution?” she asked.

“Most importantly, what is the true extent of money laundering in the province and what steps can we take to stop it?”

She said the government has taken steps including creating a beneficial ownership registry to prevent real estate buyers from hiding behind corporations and requiring those spending $10,000 or more at casinos to verify their source of funds.

But Hughes said there is still more work to be done and B.C. is looking forward to the inquiry’s findings.

Was there wilful blindness to what was going on?

The Canadian government is also participating in the inquiry as federal organizations, including the RCMP and the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, bear significant responsibility for fighting money laundering.

B.C. Attorney General David Eby has said federal resources remain too low to address the problem and has called on Ottawa to provide more funding for intelligence gathering and enforcement.

Judith Hoffman, a lawyer for the federal government, focused her opening remarks on Canada’s efforts to stop money laundering and the complex national regime that exists to oversee the issue.

While B.C. has received much of the attention, money laundering is a national concern, she said.

“Throughout Canada, there is widespread recognition that more must be done to combat this threat. Alongside the federal government, provincial and territorial governments have an important role to play,” she said.

The government committed more than $170 million to Fintrac, the RCMP and the Canada Revenue Agency in the 2019 budget and met with provincial officials at a summit on money laundering last June, Hoffman said.

Throughout Canada, there is widespread recognition that more must be done to combat this threat

There is “no doubt” that criminals will continue to attempt to exploit the cracks in the system but the government is working to improve the exchange of information and co-ordination among public and private entities, she said.

Fintrac is not an investigative body but instead collects intelligence and turns over leads to law enforcement, she noted.

Cullen said Fintrac has an “enormous” mandate with thousands of entities reporting to it. He asked the federal government to turn its attention, as the inquiry proceeds, to whether the agency is capable of responding to British Columbia’s concerns.

Counsel for the Law Society of B.C., which regulates lawyers in the province, told the commissioner that the body can help in the fight against money laundering.

Ludmila Herbst said lawyers may be at risk of being involved in money laundering when creating corporations, charities and trusts, and helping clients buy real estate and other assets. However, she said the law society has rules to mitigate the risk and address misconduct.

She argued it’s important to ensure that the legal profession remains independent from government. The right to solicitor-client privilege and the duty of lawyers to protect their clients’ interests must be preserved, Herbst said.

Cullen asked Hoffman about the inclusion of lawyers in the anti-money laundering regime and she said the government has created a working group with the Federation of Law Societies of Canada to address that issue.

Opening arguments are scheduled to continue through Wednesday with statements from more than a dozen participants including the B.C. Lottery Corp. and B.C. Real Estate Association.

The inquiry will reconvene in May for a money laundering overview and to quantify the extent of the problem in B.C., before main hearings are held from September through December to dig into specific industries.

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What Olaf Scholz means for the world economy – BBC News

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Olaf Scholz

EPA

It is an important moment for Europe. A new German chancellor. And what happens in the German economy affects us all.

It also happens to be the elevation of an incumbent finance minister to the most powerful position in European politics.

I did the last lengthy English-language interview with Olaf Scholz, when he was visiting London in summer to seal a deal on global multinational taxation, before he became favourite for the German chancellorship.

He was almost tearful with joy at the G7 agreement, on a topic he had suggested years before. The agreement “will really change the world”, he told me, of a move impossible a year before with President Trump.

A political rival once likened his grin to that of the Smurf cartoon characters. He retorted that they are “small, crafty and always win”.

Signature policies

There are three signature economic policies he has been associated with that are of ongoing significance.

For one, he told me of his pride that the short-time working schemes, whose use was promoted in Germany by his ministry in the aftermath of the global financial crisis, were now being used around Europe, including the UK, in the guise of the furlough scheme.

“It was right that we gave very strong fiscal answers to fight against the pandemic,” he told me.

“We supported the health of our people with the money we spent, but also the economy and many jobs.

“Short-term allowances, Kurzarbeit – the method which I used when I was the minister of labour in Germany 10 years ago with the last crisis – are now something that is used, not just in Germany, but all over the EU and many other countries of the world. And this shows that it is right to do something against a crisis like this.”

He was also responsible for the Agenda 2010 reforms of the last centre-left Chancellor Gerhard Schröder. Those reforms saw significant reductions in labour costs in Germany, the establishment of low-paid “mini jobs” and also a rapid rise in German export competitiveness, as well as the revival of its economy.

The inability of southern Europe to compete helped lead to the profound eurozone crisis. The view in Germany, that the rest of Europe had to go through the same “internal devaluation” before Germany would sign off on bailouts of bankrupt eurozone nations, prolonged that crisis.

Amid that fearful moment, he also signed off on the “debt brake” policy that meant in normal times, Germany would not invest. It has been suspended during the Covid pandemic for obvious reasons.

The brake will return under the coalition agreement just struck with the Greens and Liberals, but not before a splurge in investment spending. The challenge is how to square ongoing spending plans with no tax rises and controls on borrowing.

Germany’s long history of state-backed investment lending institutions such as KfW will help bridge this gap. But this will be a source of tension in this untested three-party coalition.

But lessons have been learnt from the eurozone crisis. Mr Scholz now backs non “mini-jobs”, but a €12 minimum wage. As finance minister, he helped Brussels sign off its own centralised capacity to borrow money to help growth and deal with crises.

Climate club

Chancellor Scholz is very focused on climate change, in the home of the European automotive industry. His concept is massive investment to further green Germany’s industrial base. And internationally, the establishment of a “climate club” of like-minded nations to manage frictions over trade.

“Success in fighting against climate change will only be feasible if we include all the nations and if everyone understands why it’s good for himself and for his people. We are now discussing the question of co-operation,” he told me.

How German industry deals with, for example, the EU-proposed border tax on carbon emissions will be a crunch point on the path to net-zero.

All this comes at a time when inflation has spiked up to 6% in the famously inflation-averse nation. And German industry has been hit for six by the supply chain constraints on microchips and other parts in the post pandemic rebound.

Pre-Omicron, most forecasts suggest the German economy will avoid the feared “bottleneck recession”, but the situation is definitely more challenging than at the time of the election in September.

And then there is Brexit and fears over a trade war. Will the famous German carmakers force a new chancellor to fold over Article 16 to protect their exports to the UK? It is not a priority in the Bundeskanzleramt, the washing-machine-like version of the White House in Berlin.

There will be continuity with the policies of the Merkel administration. When I asked about frictions with the UK, Olaf Scholz was diplomatic but pointed.

“I’m always optimistic and happy that we got a deal in the end on the relationship between the European Union and the UK, and I hope that everyone will follow the deal and that everything will be exactly to what we have just written down,” he told me.

“And if this is the case, I think we can be assured that we will have good trade relations also in the future, which would be good for the people of the UK as well as for the European Union.”

So some reason for optimism, as long as the deal is followed. For now, Chancellor Scholz has his own economic challenges closer to home.

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Economy

French Economy Shows Little Sign of Succumbing to Omicron Angst – BNN

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(Bloomberg) — French economic activity will continue to rise in December, despite another wave of the Covid-19 pandemic and fresh uncertainty over the omicron variant, according the Bank of France.

Completed at the end of last week, the central bank’s monthly survey of 8,500 firms is the first indicator of how businesses in the euro area’s second-largest economy are faring since the new coronavirus strain emerged.

Based on their responses, the bank estimates economic activity was 0.5% above pre-crisis levels in November and will be 0.75% higher this month. That means output for the whole fourth quarter will also expand by almost 0.75%.

The report provides some reassurance on the capacity of European economies to weather the latest virus surge. It follows bullish remarks last week by Bank of France Governor Francois Villeroy de Galhau, who said omicron wouldn’t change the outlook “too much.”

While France late Monday introduced further restrictions — including closing nightclubs — to slow the spread of the disease, the moves are designed to have limited economic impact and the government has pledged to compensate those affected.  

Even so, the central bank’s survey found that some companies “indicated difficulties in giving a short-term outlook” because of the uncertainties — particularly in industries like hospitality and air travel.

In addition, hiring difficulties and supply disruptions persist. About half of firms polled said they’re struggling to find staff and 57% of industrial companies said supply snarls have dented activity, according to the Bank of France.

©2021 Bloomberg L.P.

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Japan economy contracts 3.6% in Q3 on weaker consumer spending, trade – Business Standard

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Japan’s contracted at a 3.6% annual rate in July-September, according to a revised estimate released Wednesday.

The downgraded growth estimate for the last quarter, down from an earlier report of a 3.0% contraction, reflected weaker consumer spending and trade, the government said.

The world’s third-largest has been mired in recession and struggling to recover from the impact of waves of coronavirus infections.

The latest outbreak, in the late summer, has receded for now with a sharp drop in cases. But it hit during the usually busy summer travel season, with calls for restricted business activity and travel hurting restaurants, hotels and other service sector industries.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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