By Pauline Springer for Inside Policy

Pauline Springer warns that Canada’s lax rules on foreign investment are doing the dirty work for our geopolitical adversaries.

China’s interest in the Canadian Arctic is growing. The People’s Republic evidently views the Arctic as a strategic frontier rich in untapped resources and geopolitical leverage. China’s attempt to acquire stakes in mining operations such as the Izok Corridor and the Doris North gold mine in Nunavut indicate a broader strategy. China’s Arctic activity is a calculated bid to lock in influence under the friendly sounding banners of the Polar Silk Road and the Belt and Road Initiative, using investment and infrastructure to secure long-term influence.

Admittedly most Chinese investments in the Canadian Arctic to date have failed, are yet to be realized, or are relatively insignificant, but this should not lead Canadians to underestimate the threat or ignore the broader strategy behind China’s significant engagement across the Arctic. Some Canadian stakeholders view Chinese capital as a benign path to regional development and self-sufficiency but this is naïve and dangerous. The limited scale of successful, traceable Chinese investment to date should not be used as a justification for inaction against the clear threat to regional sovereignty.

National security threats arising from foreign investment led to the creation of the Investment Canada Act in early 2024, which requires disclosure of foreign investors and mandates transparency in the submission of investment information. With the passage of Bill C-34 in 2009, the Act was further strengthened to include specific timelines for security reviews and mechanisms for information-sharing with investigative bodies. These reforms were a late and incomplete admission that foreign capital is not just risky – it’s already rewriting the rules in sectors critical to national security.

Chinese state-linked and private entities have not only engaged in opaque investment practices but have also been implicated in large-scale money laundering operations across Canada. The money laundering schemes typically involve underground banking networks, convoluted ownership structures, and unregistered money service businesses, which funnel illicit capital into high-value assets such as real estate, infrastructure, and mining ventures. According to FINTRAC’s Laundering the Proceeds of Crime through Underground Banking Schemes, much of this money is moved through informal and untraceable financial channels, often linked to Chinese sources.

Money laundering typically unfolds in three stages: placement (introducing illicit funds into the financial system), layering (concealing the origin through complex transactions), and integration (reintroducing the money as seemingly legitimate income).

A particularly relevant mechanism in this context is trade-based money laundering (TBML) which enables illicit funds to be disguised as legitimate commerce through the manipulation of trade transactions.

In northern Canada, where oversight of mineral exports and industrial equipment imports is limited, the mining sector provides opportunities for trade based laundering of proceeds from transnational crime under the pretext of resource development. The Organized Crime and Corruption Reporting Project (OCCRP) reported that Chinese Triads and other transnational criminal organizations have laundered billions of dollars through Canadian financial and corporate systems, particularly in British Columbia.

This laundering activity is not a parallel issue to foreign investment – it is embedded within it. The same corporate tools used to facilitate transnational investments are often used to conceal the source of funds, mask ownership, and bypass national scrutiny. Shell companies and foreign actors can disguise themselves as Canadian or Indigenous-owned companies, while the actual control remains offshore.

One of the key enablers of this opacity is the phenomenon known as snow-washing: a term that refers to the use of Canada’s pristine international reputation to launder money through anonymous corporations. Canada’s corporate registration system still allows individuals to form companies without disclosing the true beneficial owner. As of late 2023, Canada ranked 70th in terms of ability to access information on companies, below Sri Lanka, El Salvador and Bahrain. Foreign actors can register companies, list local nominees as front directors, and then use these entities to invest in sensitive sectors with virtually no public oversight. Canada’s lax rules are doing the dirty work for our adversaries.

In early 2024, Canada introduced a requirement under the Canada Business Corporations Act (CBCA) to collect information on “individuals with significant control,” marking a step toward greater transparency. A federal public registry is in development. Crucially, publicly listed corporations are exempt from these disclosure requirements, and the system’s effectiveness hinges on alignment with provincial registries. Without full national coverage and seamless integration between federal and provincial systems, Canada’s transparency framework risks remaining fragmented, with loopholes that continue to benefit bad actors.

What might this look like operationally? The formation of such a shell company in Canada’s Arctic is relatively straightforward. A local entrepreneur registers a mining company in the High North, listing themselves as the owner. However, the actual financial backing originates from Chinese private or state-linked actors, who remain in the background. Due to the scale of their investment and the influence it affords, these individuals become de-facto beneficial owners. Yet, in the absence of effective monitoring mechanisms and a central, publicly accessible registry for beneficial ownership, the company continues to appear Canadian-owned. This poses a significant governance challenge: it is impossible to assess how many ostensibly local companies are, in fact, under foreign control and to what extent.

Bill C-34 aims to mitigate this risk by imposing minimum reporting requirements for foreign investment. Nonetheless, the challenge becomes even more acute when examined through the lens of money laundering. As previously discussed, there is substantial evidence that Chinese (including state-linked) entities have used Canada’s economy as a vehicle for laundering illicit funds. When those funds pass through complex corporate layers, where even identifying foreign ownership is already difficult, they can be easily embedded in the local economy. The profits, now “clean,” carry the appearance of legitimate origin, completing the cycle and reinforcing a system that is fundamentally opaque and unaccountable.

Crucially, the use of shell companies for money laundering in the Arctic is extraordinarily difficult to prove, as both the existence of shell structures and the laundering activities themselves are inherently opaque and challenging to detect. Canadian oversight bodies are playing catch-up while foreign actors exploit the shadows.

As a result, there is a serious lack of reliable data in the public domain on the actual extent of the problem. Investigative bodies face structural and legal obstacles in tracing ownership or financial flows, especially when they intersect with international jurisdictions or nominal Indigenous ownership structures that shield the real beneficiaries.

This lack of hard evidence makes it easy for policymakers to downplay or disregard the threat. However, the absence of precise numbers should not be misread as an absence of risk. On the contrary, the reasonable deduction that such structures are ripe for abuse – especially given China’s documented use of opaque financial networks and strategic investments – provides sufficient grounds to act. The deep concealment and the below-threshold tactics are precisely what make it dangerous.

The risks posed by unmonitored foreign investment stem, in part, from deeper domestic shortcomings. Chronic underfunding and a top-down governance model where decisions about the North are made in Ottawa, have left northern regions exposed. Canada’s northern provinces and territories, despite covering over 40 per cent of the national landmass, remain economically marginalized and structurally underdeveloped. This vacuum may invite external actors like China to step in where the federal government has long neglected to act. This further underscores the need for any policy response, whether from the RCMP, FINTRAC, or CSIS, to be coordinated with territorial and Indigenous governments, ensuring their meaningful involvement in the policymaking process and law enforcement actions.

Canada must act decisively on two fronts:

First, it must adopt robust transparency measures in corporate law and foreign investment screening, including following through with establishing a publicly accessible beneficial ownership registry on a national level, and closing loopholes that allow nominee directors or shell entities to hide foreign control.

Second, domestic investment must be scaled up dramatically. Canada needs to close the infrastructure and development gap in the Arctic by directly funding northern communities. Rather than simply increasing spending, policy should focus on making capital more accessible to northern and Indigenous-led projects through transparent, well-regulated mechanisms. This includes expanding grant and loan programs tailored to regional development, enhancing Indigenous financial institutions, and embedding anti-money laundering safeguards into all funding streams. These efforts would not only support reconciliation but also defend against covert financial influence.

Only strong domestic foundations and clear regulations can protect Canada from the corrosive threats of dirty foreign money. A threat exists where both intent and opportunity align; and the opportunity to launder money through shadow companies and foreign investment is undeniably present. The Canadian government must stop treating Arctic security as a seasonal concern, starting with the laws and loopholes that allow foreign money to buy silence, access, and influence in the Arctic.

Pauline Springer is a graduate researcher in International Relations specializing in Arctic security and Chinese influence.

By Sergio R. Karas for Inside Policy

One of the most effective solutions would be to amend the Citizenship Act, making automatic citizenship conditional upon at least one parent being a Canadian citizen or permanent resident.

Amid rising concerns about the prevalence of birth tourism, many Western democracies are taking steps to curb the practice. Canada should take note and reconsider its own policies in this area.

Birth tourism occurs when pregnant women travel to a country that grants automatic citizenship to all individuals born on its soil. There is increasing concern that birthright citizenship is being abused by actors linked to authoritarian regimes, who use the child’s citizenship as an anchor or escape route if the conditions in their country deteriorate.

Canada grants automatic citizenship by birth, subject to very few exceptions, such as when a child is born to foreign diplomats, consular officials, or international representatives. The principle known as jus soli in Latin for “right of the soil” is enshrined in Section 3(1)(a) of the Citizenship Act.

Unlike many other developed countries, Canada’s legislation does not consider the immigration or residency status of the parents for the child to be a citizen. Individuals who are in Canada illegally or have had refugee claims rejected may be taking advantage of birthright citizenship to delay their deportation. For example, consider the Supreme Court of Canada’s ruling in Baker v. Canada. The court held that the deportation decision for a Jamaican woman – who did not have legal status in Canada but had Canadian-born children – must consider the best interests of the Canadian-born children.

There is mounting evidence of organized birth tourism among individuals from the People’s Republic of China, particularly in British Columbia. According to a January 29 news report in Business in Vancouver, an estimated 22–23 per cent of births at Richmond Hospital in 2019–20 were to non-resident mothers, and the majority were Chinese nationals. The expectant mothers often utilize “baby houses” and maternity packages, which provide private residences and a comprehensive bundle of services to facilitate the mother’s experience, so that their Canadian-born child can benefit from free education and social and health services, and even sponsor their parents for immigration to Canada in the future. The financial and logistical infrastructure supporting this practice has grown, with reports of dozens of birth houses in British Columbia catering to a Chinese clientele.

Unconditional birthright citizenship has attracted expectant mothers from countries including Nigeria and India. Many arrive on tourist visas to give birth in Canada. The number of babies born in Canada to non-resident mothers – a metric often used to measure birth tourism – dropped sharply during the COVID-19 pandemic but has quickly rebounded since. A December 2023 report in Policy Options found that non-resident births constituted about 1.6 per cent of all 2019 births in Canada. That number fell to 0.7 per cent in 2020–2021 due to travel restrictions, but by 2022 it rebounded to one per cent of total births. That year, there were 3,575 births to non-residents – 53 per cent more than during the pandemic. Experts believe that about half of these were from women who travelled to Canada specifically for the purpose of giving birth. According to the report, about 50 per cent of non-resident births are estimated to be the result of birth tourism. The upward trend continued into 2023–24, with 5,219 non-resident births across Canada.

Some hospitals have seen more of these cases than others. For example, B.C.’s Richmond Hospital had 24 per cent of its births from non-residents in 2019–20, but that dropped to just 4 per cent by 2022. In contrast, Toronto’s Humber River Hospital and Montreal’s St. Mary’s Hospital had the highest rates in 2022–23, with 10.5 per cent and 9.4 per cent of births from non-residents, respectively.

Several developed countries have moved away from unconditional birthright citizenship in recent years, implementing more restrictive measures to prevent exploitation of their immigration systems. In the United Kingdom, the British Nationality Act abolished jus soli in its unconditional form. Now, a child born in the UK is granted citizenship only if at least one parent is a British citizen or has settled status. This change was introduced to prevent misuse of the immigration and nationality framework. Similarly, Germany follows a conditional form of jus soli. According to its Nationality Act, a child born in Germany acquires citizenship only if at least one parent has legally resided in the country for a minimum of eight years and holds a permanent residence permit. Australia also eliminated automatic birthright citizenship. Under the Australian Citizenship Act, a child born on Australian soil is granted citizenship only if at least one parent is an Australian citizen or permanent resident. Alternatively, if the child lives in Australia continuously for ten years, they may become eligible for citizenship through residency. These policies illustrate a global trend toward limiting automatic citizenship by birth to discourage birth tourism.

In the United States, Section 1 of the Citizenship Clause of the Fourteenth Amendment to the Constitution prescribes that “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” The Trump administration has launched a policy and legal challenge to the longstanding interpretation that every person born in the US is automatically a citizen. It argues that the current interpretation incentivizes illegal immigration and results in widespread abuse of the system.

On January 20, 2025, President Donald Trump issued Executive Order 14156: Protecting the Meaning and Value of American Citizenship, aimed at ending birthright citizenship for children of undocumented migrants and those with lawful but temporary status in the United States. The executive order stated that the Fourteenth Amendment’s Citizenship Clause “rightly repudiated” the Supreme Court’s “shameful decision” in the Dred Scott v. Sandford case, which dealt with the denial of citizenship to black former slaves. The administration argues that the Fourteenth Amendment “has never been interpreted to extend citizenship universally to anyone born within the United States.” The executive order claims that the Fourteenth Amendment has “always excluded from birthright citizenship persons who were born in the United States but not subject to the jurisdiction thereof.” The order outlines two categories of individuals that it claims are not subject to United States jurisdiction and thus not automatically entitled to citizenship: a child of an undocumented mother and father who are not citizens or lawful permanent residents; and a child of a mother who is a temporary visitor and of a father who is not a citizen or lawful permanent resident. The executive order attempts to make ancestry a criterion for automatic citizenship. It requires children born on US soil to have at least one parent who has US citizenship or lawful permanent residency.

On June 27, 2025, the US Supreme Court in Trump v. CASA, Inc. held that lower federal courts exceed their constitutional authority when issuing broad, nationwide injunctions to prevent the Trump administration from enforcing the executive order. Such relief should be limited to the specific plaintiffs involved in the case. The Court did not address whether the order is constitutional, and that will be decided in the future. However, this decision removes a major legal obstacle, allowing the administration to enforce the policy in areas not covered by narrower injunctions. Since the order could affect over 150,000 newborns each year, future decisions on the merits of the order are still an especially important legal and social issue.

In addition to the executive order, the Ban Birth Tourism Act – introduced in the United States Congress in May 2025 – aims to prevent women from entering the country on visitor visas solely to give birth, citing an annual 33,000 births to tourist mothers. Simultaneously, the State Department instructed US consulates abroad to deny visas to applicants suspected of “birth tourism,” reinforcing a sharp policy pivot.

In light of these developments, Canada should be wary. It may see an increase in birth tourism as expectant mothers look for alternative destinations where their children can acquire citizenship by birth.

Canadian immigration law does not prevent women from entering the country on a visitor visa to give birth. The Immigration and Refugee Protection Act (IRPA) and the associated regulations do not include any provisions that allow immigration officials or Canada Border Services officers to deny visas or entry based on pregnancy. Section 22 of the IRPA, which deals with temporary residents, could be amended. However, making changes to regulations or policy would be difficult and could lead to inconsistent decisions and a flurry of litigation. For example, adding questions about pregnancy to visa application forms or allowing officers to request pregnancy tests in certain high-risk cases could result in legal challenges on the grounds of privacy and discrimination.

In a 2019 Angus Reid Institute survey, 64 per cent of Canadians said they would support changing the law to stop granting citizenship to babies born in Canada to parents who are only on tourist visas. One of the most effective solutions would be to amend Section 3(1)(a) of the Citizenship Act, making it mandatory that at least one parent be a Canadian citizen or permanent resident for a child born in Canada to automatically receive citizenship. Such a model would align with citizenship legislation in countries like the UK, Germany, and Australia, where jus soli is conditional on parental status. Making this change would close the current loophole that allows birth tourism, without placing additional pressure on visa officers or requiring new restrictions on tourist visas. It would retain Canada’s inclusive citizenship framework while aligning with practices in other democratic nations.

Canada currently lacks a proper and consistent system for collecting data on non-resident births. This gap poses challenges in understanding the scale and impact of birth tourism. Since health care is under provincial jurisdiction, the responsibility for tracking and managing such data falls primarily on the provinces. However, there is no national framework or requirement for provinces or hospitals to report the number of births by non-residents, leading to fragmented and incomplete information across the country. One notable example is BC’s Richmond Hospital, which has become a well-known birth tourism destination. In the 2017–18 fiscal year alone, 22 per cent of all births at Richmond Hospital were to non-resident mothers. These births generated approximately $6.2 million in maternity fees, out of which $1.1 million remained unpaid. This example highlights not only the prevalence of the practice but also the financial burden it places on the provincial health care programs. To better address the issue, provinces should implement more robust data collection practices. Information should include the mother’s residency or visa status, the total cost of care provided, payment outcomes (including outstanding balances), and any necessary medical follow-ups.

Reliable and transparent data is essential for policymakers to accurately assess the scope of birth tourism and develop effective responses. Provinces should strengthen data collection practices and consider introducing policies that require security deposits or proof of adequate medical insurance coverage for expectant mothers who are not covered by provincial healthcare plans.

Canada does not currently record the immigration or residency status of parents on birth certificates, making it difficult to determine how many children are born to non-resident or temporary resident parents. Including this information at the time of birth registration would significantly improve data accuracy and support more informed policy decisions. By improving data collection, increasing transparency, and adopting preventive financial safeguards, provinces can more effectively manage the challenges posed by birth tourism, and the federal government can implement legislative reforms to deal with the problem.

Sergio R. Karas, principal of Karas Immigration Law Professional Corporation, is a certified specialist in Canadian citizenship and immigration law by the Law Society of Ontario. He is co-chair of the ABA International Law Section Immigration and Naturalization Committee, past chair of the Ontario Bar Association Citizenship and Immigration Section, past chair of the International Bar Association Immigration and Nationality Committee, and a fellow of the American Bar Foundation. He can be reached at [email protected]. The author is grateful for the contribution to this article by Jhanvi Katariya, student-at-law.