The Panama Papers: Canadian Bank Begins Closing Client Accounts

March 10th, 2017 by

By: Nicolas Di Nardo

Toronto Tax Lawyer Sabina Mexis discussed a CBC/Toronto Star investigation which looked into Canada’s tax system, specifically the use of Canadian corporations and limited partnerships as part of a complex offshore money laundering and tax evasion scheme.

Known as The Panama Papers, this leak exposed 11.5 million documents detailing global tax avoidance and evasion, and identified customers of Canadian banks that are connected to this scheme.

Recently, the Royal Bank of Canada jumped into action, recently closing a number of accounts. They are the first Canadian bank to publicly confirm it has severed ties with customers who were named in the leak. They closed “about 40” customer accounts. Making matters worse, they also found out from the leak that they had registered at least 429 offshore companies with the Panamanian law firm Mossack Fonseca.

Other financial institutions such as TD, BMO, and CIBC have not provided any information regarding their customers, while National Bank and Scotiabank have investigated and found no links to the Papers, and did not close any accounts.

In total, 85 Canadians are being investigated by the CRA, with 60 being audited.

To learn more about the Panama Papers leak and its connection to Canada, read The Canada Papers series here:

Part 1: Snow Washing

Part 2: 9203-9619 Quebec Inc.

Part 3: Signatures for sale

Part 4: Lessons for Canada

Also read our previous blog by our Tax Lawyer Sabina Mexis, here: Oh Canada, Our Home and “Snow-washed” Tax Haven??

RBC provided The Star with parts of a letter that was sent to one of their clients named in the Panama Papers database, which read:

“Due to the operation of your accounts, we feel that we cannot achieve the requisite level of comfort with you. Therefore, after careful consideration, we must advise you that we are not in a position to continue our banking relationship.”

Additional communication in the letter advised the client that he had 30 days to close his accounts and repay loans, one of which is a mortgage close to one million dollars. Letters were also sent to the children of the client, stating that their “risk profile has changed substantially” and the bank would not maintain their accounts. The children are under the age of 19.

RBC’s spokesperson issued a response to this action, stating that their “decision that an account is outside of their risk parameters or does not meet our own standards does not mean the clients have engaged in inappropriate activity.”

If you are in need of a tax lawyer in Toronto, please contact Sabina Mexis. For any other legal services, please visit our website for more information or call (416) 449-1400.

 

“This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.”

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