The federal memo estimates that more than $176 million in Atlantic lobster catches go unreported and untaxed

The federal Department of Fisheries and Oceans suspects that hundreds of millions of dollars worth of lobster are being caught annually in Atlantic Canadian waters but never reported to authorities, fueling both tax evasion and conservation implications for America’s largest fishery. increase in the country.

An internal August memo to the DFO deputy minister said it is estimated that between 10 and 30 percent of the region’s lobster landings go unreported, and the department said in a statement that it is working to clamp down on criminal networks and to identify money laundering in the sector.

“It’s mind-boggling,” said Osborne Burke, president of the Nova Scotia Seafood Alliance, which represents about 150 lobster buyers and processors and has urged a crackdown on unreported cash sales.

“It is difficult for those who play by the rules to compete in this industry when other illegal activities are taking place.”

Allegations of illegal and unreported fishing have become a flashpoint on the East Coast, both in the lobster sector And the hugely profitable but highly fraught spring fishery for young eels. Some critics have blamed DFO for what they call a lack of enforcement.

Commercial lobster fishermen are required to complete daily logbooks, including dates, vessel and permit numbers, location fished, number of traps collected and weight of lobster when sold. The information provides valuable data for DFO to help analyze the health of the stock.

In recent years, the value of reported lobster landings has fluctuated between $1.2 billion and $2 billion annually. The internal DFO memo, released under access to information legislation, states that when estimates are applied to 2018-2021 landings data, unreported catches range annually from $176 million to $681 million.

DFO declined an interview request. The estimates were prepared by department economists and provided to a steering committee last year, according to a statement. Officials could not provide exact figures showing the extent of the problem.

The memo said DFO is working with the Canada Revenue Agency to conduct industry audits to “gather insights.” The department is also turning to FINTRAC, the country’s financial intelligence unit, with the aim of identifying “key players.”

“Unreported catches can contribute significantly to the decline of stocks and the fragility of our marine ecosystems,” the statement said.

“It also undermines economic stability and fairness among fishing industry participants and could damage Canada’s international reputation for sustainable fishing.”

Morley Knight, a retired former deputy minister at DFO, said the problem has increased over the past decade because a fishery that once provided a modest income can now generate hundreds of thousands of dollars or more a year in revenue for a license holder. .

That kind of big money comes with a lot of taxes. Some income tax could be eliminated if the fisherman is willing to underreport how much lobster he lands and sell some for cash on the dock to a buyer who is also willing to fudge the numbers.

Knight said he has been told the problem is fueled in part by buyers from outside the maritime sector, some of whom use middlemen to show up at yards with “suitcases full of cash.” That puts pressure on local buyers who feel forced to follow suit.

Aside from the revenue hidden from the Canada Revenue Agency, he said, the main concern if there is significant misreporting is that DFO does not have a good understanding of whether lobster catches are increasing or decreasing and whether stocks are stay healthy.

Knight has advocated for a dockside monitoring program for the lobster industry, in which workers from outside companies verify catches when they are weighed at the dock, similar to what already happens in the quota-based crab fishery.

He said such a system is “not perfect,” that people will find ways to cheat, and he acknowledged there may be resistance from fishermen and buyers concerned about logistics, but he believes it is a ” significant improvement compared to the current situation’.

Burke pointed in frustration to a lawsuit filed this week by the Unified Fisheries Conservation Association that alleges a lobster pound in Nova Scotia’s Shelburne County is buying illegally caught lobster. He said the industry is being forced to investigate and take action against those who break the law, when that should be DFO’s responsibility.

The broader problem, he said, is the criminal elements that have descended on the sector. He said he has seen photos of trucks with bags of cash on the back and suspects the lobster fishery is being used to launder dirty money from other criminal enterprises.

Those willing to pay cash for lobster and keep it off the books offer fishermen better prices, Burke said, meaning they can outsell legitimate buyers.

The other concern, he said, is that unreported catches undermine the sustainability of the fishery in the eyes of global markets, noting that maritime lobster is currently certified by the Marine Stewardship Council, an international nonprofit organization that sets standards for sustainable fishing.

Nova Scotia Fisheries Minister Kent Smith has done just that said organized crime linked to illegal off-season lobster fishing in the southwestern part of the province is “terrorizing the community,” while the fishery for young eels, also called glass eels, along the Nova Scotia and New Brunswick rivers is being torn apart by poaching, threats and violence.

DFO has pushed back against criticism from both the commercial fishing industry and Smith that enforcement has been inadequate. It has trap, vessel and noted lobster attacksAnd highlighted dozens of arrests this spring after glass eel fishing was halted, although it is still unclear how many of these lead to prosecution.

Last May, federal Fisheries Minister Diane Lebouthillier sent a letter to all fish harvesters in Atlantic Canada and Quebec saying the department was working to identify and stop “unreported cash sales.”

This fall, after a meeting between Lebouthillier and Smith about illegal fishingDFO released a statement suggesting the province should ban cash sales in the lobster industry, a focus that Smith said “misses the point.”

The province has done that introduce new licensing requirements for fish buyers and processorsand Smith said more holding facilities will be inspected and their records checked.

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