The federal Fisheries and Oceans Service suspects that hundreds of millions of dollars’ worth of lobster are caught in Atlantic Canadian waters each year but never reported to authorities; This increases both tax evasion and conservation consequences in the country’s largest fishery.

An internal memo sent to DFO’s deputy secretary in August said it was estimated that 10 to 30 percent of lobster catches in the region go unreported, and the department said in a statement it was working to map criminal networks and money laundering in the sector.

“This is mind-boggling,” said Osborne Burke, president of the Nova Scotia Seafood Alliance, which represents about 150 lobster buyers and processors, and called for a crackdown on unreported cash sales.

“It becomes difficult for those who play by the rules to compete in this industry when other illegal activities occur.”

Allegations of illegal and unreported fishing have become a flashpoint on the East Coast. both in the lobster industry And extremely profitable but extremely worrying spring fishing for baby eels. Some critics have accused DFO of what they call a lack of enforcement.

Commercial lobster fishermen are required to fill out log books daily that include dates, vessel and license numbers, location fished, number of traps hauled and the weight of the lobster when sold. The information provides DFO with valuable data to help analyze the health of the stockpile.

The value of reported lobster landings in recent years has fluctuated between $1.2 billion and $2 billion annually. The internal DFO memo, published under access to information laws, stated that if the estimates were applied to 2018-2021 landing data, unreported catches would range from $176 million to $681 million annually.

DFO declined an interview request. The forecasts were prepared by department economists and presented to an executive committee last year, the statement said. Authorities were unable to obtain precise figures showing the extent of the problem.

The memo said DFO was working with the Canada Revenue Agency to conduct inspections of the industry to “gather information.” The ministry is also turning to the country’s financial intelligence unit, FINTRAC, to identify “key players”.

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

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

Morley Knight, a retired former deputy minister at DFO, said the problem had grown over the past decade, with fisheries that once provided a modest living now generating hundreds of thousands of dollars or more a year for a license holder. .

This much money brings with it a lot of taxes. If a fisherman is willing to underreport how many lobsters he brings to shore, selling some of them for cash at the dock to a buyer who is also willing to exaggerate the numbers, some of his income tax may be withheld.

Knight said the problem was said to be fueled in part by buyers from outside the Maritimes, some of whom employed middlemen to arrive at the docks “with bags of cash.” This puts pressure on local buyers who feel forced to follow suit.

Aside from revenue being hidden from the Canada Revenue Agency, he said the real concern in the event of significant misreporting is DFO’s inability to get a good handle on whether lobster catches will go up or down and whether the stock remains healthy.

Knight has advocated for a harbor monitoring program for the lobster industry in which employees of third-party companies verify catches when they are weighed at the dock, similar to what already happens in quota-based fisheries such as crabbing.

He said such a system was “not perfect” as people found ways to cheat, and acknowledged that fishermen and buyers worried about logistics could push back, but he believes it would be a “significant improvement over the current situation”.

Burke noted angrily a lawsuit filed this week by the United Fisheries Conservation Association alleging that a lobster pound in Nova Scotia’s Shelburne County was buying illegally caught lobster. In his view, the industry is being forced to investigate and take action against those who break the law when it should be DFO’s responsibility.

He said that, in a broader sense, the problem was criminal elements infiltrating the industry. He said he saw photos of trucks full of money behind him and suspected lobster fishing was being used to launder dirty money from other criminal organizations.

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

Another concern, he said, is that unreported catches harm the sustainability of fisheries in the eyes of world markets, noting that Marine lobster is currently certified by the Marine Stewardship Council, an international non-profit organization that sets standards for sustainable fisheries.

Nova Scotia Fisheries Minister Kent Smith He said organized crime linked to illegal out-of-season lobster fishing in the state’s southwest was “terrorizing the community.” Fisheries for juvenile eels, also known as elvers, along Nova Scotia and New Brunswick rivers have been shattered by poaching, threats and violence.

DFO disputed criticism from both the commercial fishing industry and Smith that enforcement was inadequate. Trap, ship and lobster fitsAnd highlighted dozens of arrests this spring Although it is still unclear how many led to lawsuits after elver hunting was cancelled.

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

This autumn After a meeting between Lebouthillier and Smith regarding illegal fishingDFO issued a statement suggesting the state should ban cash sales in the lobster industry; Smith said this “misses the point.”

The state did this New licensing requirements are being introduced for fish buyers and processorsMore holding facilities will be inspected and their records audited, Smith said.

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