CBC News Exposure: Ex-Revenue Canada lawyer advised how to hide money offshore [BVI/Cayman]
“You wire money from your account to an account at CIBC. Through CIBC head office, so it goes through your bank to CIBC Toronto, CIBC Toronto to CIBC Cayman. And then Cayman holds it on our behalf. So that’s how it works,”
By Timothy Sawa, CBC News
An exclusive CBC News hidden camera investigation into the world of offshore banking uncovered a former executive with the Royal Bank of Canada and a former lawyer with the Canada Revenue Agency offering advice on how to hide money from Canadian tax authorities.
As part of the joint investigation with Enquête, the CBC’S French-language investigative program, CBC News hired a private investigator, who is also a restaurant and bar owner in Toronto, to test 15 different offshore service providers in Canada and abroad.
The investigator was given a story: over the years he had squirrelled away as much as a million dollars that he hadn’t declared, and wanted to hide it offshore to avoid paying taxes.
More than half of the offshore service providers tested with hidden cameras by the CBC in Canada and Barbados provided advice that wouldn’t stand up to scrutiny, according to CBC experts.
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Among those tested during the CBC investigation was Gilles Gosselin, who practised law in Canada and used to work for the Canadian Revenue Agency before moving to Barbados.
His company’s website says it specializes in helping Canadian companies with international business structure their company in Barbados — a perfectly legal activity.
The businessman travelled to Barbados to meet with Gosselin.
Gosselin told the businessman he wanted nothing to do with his plan. But when he was asked if there’s anything preventing someone from opening an account at a bank somewhere and wiring the funds there, Gosselin was recorded on hidden cameras saying: “I just told you how the law works. And if you don’t report the income in Canada, that’s your business.”
He later told the undercover businessman not to use Barbados because it’s too expensive, there are too many reporting requirements and the stamp they put on his passport when he made this trip could get him caught.
Gosselin said if the businessman was audited, they would ask him why he was in the Barbados.
He also advised that if the businessman said he was there for vacation, “now you’re in a position where you’re lying right,” Gosselin said.
Recommended British Virgin Islands
Gosselin recommended the businessman use the British Virgin Islands to hide his million dollars and to avoid Canadian-owned banks offshore.
“You might not want to have a bank with a Canadian connection. There’s other banks — Bank of Butterfield, which is a U.K. bank. So yeah I mean, it could be done,” Gosselin said.
He sent an email introducing the businessman to the British Virgin Island service provider. He explained the businessman needed an account there and that it should be “preferably with a non-Canadian bank.”
But two hours later Gosselin sent a second email reminding the undercover businessman that he should follow all Canadian laws and report all Canadian income.
Andre Lareau, a professor at Laval University in Quebec, who teaches tax law, said that Gosselin, with his background at the Canada Revenue Agency, knows all the mechanisms for people who want to commit tax fraud. He said the plan involving the British Virgin Islands would be tax evasion.
Lareau added that the second email Gosselin sent is the right one and it’s the information that he should have been giving from the beginning.
“It’s kind of depressing that someone would go over, as we say, to the dark side so completely,” said Jack Blum, an expert on white-collar financial crime in Washington.
Asked by CBC News why he helped the undercover businessman with his plan, Gosselin said that he told the man what he was contemplating was against the law in Canada.
“But if he wants to go ahead and open a BVI company and manage his assets with the BVI company, until he’s actually gone there and done that, he hasn’t done anything wrong,” he said.
“This person told me that he was coming here, that he had a million dollars in a safety deposit box and he was looking to invest it outside of Canada, and that he wasn’t — and I told him specifically that that was against the law. And my last communication with him says specifically that.”
Gosselin later explained that his clients are usually legitimate Canadian-based businesses looking to take advantage of the legal tax benefits in Barbados.
He added that that he “probably entertained” the undercover businessman “more than I should have.”
Banking executive among those tested
During the course of the CBC investigation, Lynn Garner, a vice-president with DGM, a private Barbados bank, was also among those tested.
Garner worked as an executive at several money management firms and banks and as the trust manager for the Royal Bank of Canada in Barbados.
At first, Garner was adamant that her bank would never get involved with someone like CBC’s undercover businessman.
“We don’t take clients who aren’t reporting,” she was recorded on hidden cameras saying. “So we don’t — you know, our book is clean.”
But then she went on to tell the undercover businessman how he could hide cash offshore, by setting up an anonymous paper company, moving the cash offshore and opening an account at her bank to hold the cash.
“You wire money from your account to an account at CIBC. Through CIBC head office, so it goes through your bank to CIBC Toronto, CIBC Toronto to CIBC Cayman. And then Cayman holds it on our behalf. So that’s how it works,” she said.
And she offered advice for avoiding detection by authorities when depositing the money.
“Depositing the money into the bank account in Canada, you’d have to do a little bit. It would take a long time.”
She said if the cash is coming from Canada, he won’t have to worry about a lot scrutiny from her about where he got it.
“If it’s coming from a Canadian financial institution … we have to understand how you earned the money but we won’t ask for proof as much except for a statement from the bank.”
Garner then found someone in Barbados within a couple weeks who she said could help the undercover businessman create the offshore company to hold the cash at her bank.
But Lareau said Garner’s plan constituted fraud and that it was sad to see people in the financial sector accommodating someone in this way.
“This is not a tape the bank would ever want to be made public. The fact that she’s willing to take money she knows is tainted,” said one insider, who used to run one of Canada’s largest offshore banking companies.
In a statement, DGM said that it “is not engaged in any business practices that are not legal by the law of Barbados or of the laws of Canada. Any assertion to the contrary by the CBC will be aggressively rebutted both publicly and by legal means.”
If you have tips on offshore havens, or other investigative stories, please email [email protected]
CBC policy for hidden-camera journalism
CBC’s policy for hidden-camera journalism generally requires that we have credible information about wrongdoing before we film.
However when dealing with a secretive industry like this one, when the industry as a whole has come under critical scrutiny, the practice is to permit testing in this way, on a random basis.
For more on this story go to:
http://www.cbc.ca/news/canada/ex-revenue-canada-lawyer-advised-how-to-hide-money-offshore-1.1875481
Related story:
Barbados is a well regulated and reputable jurisdiction – Central Bank
BRIDGETOWN, Barbados, CMC – The Central Bank of Barbados (CBB) has defended the reputation of the island as a “well regulated and reputable jurisdiction” after indicating it was aware of reports in the Canadian press regarding the operation of a Barbados-based financial institution.
In a statement, the CBB said it understood that a statement was issued by that entity stating that it “is not engaged in any business practices that are not legal by the law of Barbados or of the laws of Canada. DGM (the company) is committed to providing important financial services to our clients in a legal and ethical way.”
But the CBB said it wanted to reiterate that Barbados “continues to be a reputable and well regulated jurisdiction”.
It said that in the 2013 – 2014 Global Competitiveness Report published by the World Economic Forum, Barbados was ranked 11 out of 148 countries in the area of “Soundness of Banks” and was the only country in the region to have made the top 20, ranking ahead of countries such as the United States and the United Kingdom.
“Barbados has 33 Double Taxation Agreements (DTAs) and two Tax Information Exchange Information Agreements in force. These unequivocally signify Barbados’ commitment to preventing fiscal evasion.
It said the Barbados/Canada DTA, which is based on the OECD (Organization for Economic Cooperation and Development) model, was signed in 1980 and like other treaties provide for effective and transparent mechanisms for taxation of investment vehicles, that accord with Barbados and Canadian law.
“The Central Bank cannot speak to the veracity and context of the purported interview but reiterates that as a jurisdiction we do not promote or condone in any way, persons who seek to circumvent the law, whether it be of Barbados, that of our Treaty partners, or at all,” the statement added.
PHOTO: The Central Bank of Barbados said it wanted to reiterate that Barbados “continues to be a reputable and well regulated jurisdiction”.
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