Canada Mandates Wealth One Bank Shareholders to Divest Holdings

04 Sep, 2023

Canada Mandates Wealth One Bank Shareholders to Divest Holdings

Canada's Finance Minister, Chrystia Freeland, has issued a directive to three founding investors of Wealth One Bank of Canada, instructing them to divest their holdings in the institution. This development was reported by The Globe & Mail, which cited documents obtained through an access to information request.

The investors in question include Toronto-based insurance executive Shenglin Xian, Vancouver property developer Morris Chen, and Toronto grocery tycoon Yuansheng Ou Yang. They were formally notified in April to dispose of their shares in the bank, as revealed by documents sourced from the Office of the Superintendent of Financial Institutions, Canada's financial industry regulator. The Globe & Mail noted that these investors are currently under scrutiny by Canadian national security authorities due to alleged connections to the Chinese government.

As part of the directive, Finance Minister Freeland has mandated Wealth One Bank to sever all ties with these three investors. Additionally, the bank has been instructed to implement rigorous security measures to combat potential money laundering and unauthorized information sharing.

The Globe & Mail reported that attempts to reach Ou Yang and Chen for comment were unsuccessful. Glen Jennings, a lawyer at Gowling WLG representing Shenglin Xian, conveyed that his client maintains regular communication with authorities and anticipates a favorable outcome for all stakeholders, benefitting Canadians. Jennings also emphasized that matters related to the bank are regulated and subject to confidentiality rules, leading Xian to abstain from commenting at this juncture.

In her capacity as Finance Minister, Chrystia Freeland possesses the authority to take action in response to risks affecting any bank in Canada. Jessica Eritou, her senior communications adviser, confirmed this authority and declined to delve into the specifics of the Finance Minister's actions against Wealth One and its founders.

The Globe & Mail reiterated these comments when reaching out to Jessica Eritou, and attempts to solicit comments from Wealth One Bank, as well as individuals Shenglin Xian, Morris Chen, and Yuansheng Ou Yang outside of regular business hours, proved unsuccessful.

Among the measures imposed on Wealth One Bank, the lender is obligated to subject all of its employees to national security vetting. Furthermore, the bank must relocate its Toronto headquarters to secure new premises and conduct comprehensive sweeps of its corporate properties to detect any surveillance devices. The institution has also been banned from utilizing the Chinese social-media messaging app WeChat for any banking-related activities.

In addition to these measures, the bank is required to appoint an independent third-party monitor and hire two compliance officers. One of these officers must oversee security compliance and hold a valid national security clearance, while the other is tasked with anti-money laundering and anti-terrorism compliance, as per The Globe & Mail's report.