The CEO of RBC, the only Canadian financial institution linked to the so-called Panama Papers scandal, said Wednesday the bank is combing through four decades worth of files to determine whether any wrongdoing took place.
David McKay said he is unhappy the bank’s name has been “dragged into” the controversy involving offshore tax evasion allegations, especially considering that there is no evidence to suggest the company has done anything illicit.
“As a CEO, I have to be concerned about our brand and reputation, particularly in a situation where there’s absolutely no allegation of wrongdoing,” McKay said.
McKay’s comments came following the bank’s annual general meeting in Montreal, where Prime Minister Justin Trudeau was also asked about the data leak that has pulled a curtain on the use of offshore tax havens.
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Trudeau called on the international community to work together to make global finance more transparent so that rich investors can’t simply “hop” around to favourable jurisdictions to avoid paying tax.
“The level of awareness that citizens of the world are beginning to take in regards to tax avoidance and evasion is a good thing,” Trudeau said in his first public comments on the matter. “But it’s certainly something that we will be working on together as a community of nations.”
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The federal government knew tax avoidance was a problem long before the scandal put offshore havens in the headlines, he added.
The Toronto Star and CBC, which worked with the International Consortium of Investigative Journalists, have reported that RBC and its subsidiaries used Mossack Fonseca, a Panamanian law firm at the centre of the data leak, to set up more than 370 shell companies.
McKay emphasized that there are many legitimate reasons for setting up such companies and said it’s important not to conflate tax evasion, which is illegal, with tax planning.
“We just happen to have a couple hundred files, going back 40 years, that are attached to this legal firm,” he said. “That’s all that’s been reported.”
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RBC has assembled a team of people to review the company’s files and try to determine what relationship the bank may have had with Mossack Fonseca and whether that relationship still exists, McKay said.
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He added that he doesn’t know how long the process could take, given that the information cited in the leaks spans four decades.
“You can imagine how difficult it is to go back in your files 40 years,” McKay said.
Banks have had to shoulder growing responsibility for policing and monitoring the global financial system in recent years, he said. He expects that trend to continue.
“We accept that responsibility, and we’ve adapted to that responsibility as an industry for over a decade now.”
Bill Downe, the CEO of the Bank of Montreal, offered a similar take during that bank’s annual general meeting earlier this week.
Downe said Canadian banks have “dramatically” beefed up their anti-money laundering controls over the past decade at the request of various governments around the world.
He said if any violations do emerge from the leaked files, he suspects they will likely be in relation to business that was conducted a long time ago, before the banks had invested in improving their practices.