This document was prepared by the staff of the Parliamentary Research Branch to provide Canadian Parliamentarians with plain language background and analysis of proposed government legislation. Legislative summaries are not government documents. They have no official legal status and do not constitute legal advice or opinion. Please note, the Legislative Summary describes the bill as of the date shown at the beginning of the document. For the latest published version of the bill, please consult the parliamentary internet site at www.parl.gc.ca.

LS-355E

TABLE OF CONTENTS

BACKGROUND

   A. Introduction

   B. History of Bill C-22

   C. The Problem of Money Laundering

   D. How Money Is Laundered

   E. Current Canadian Law
      1. Criminal Legislation
      2. Record-Keeping Requirements and Transaction Reporting
      3. Canada’s International Commitments

DESCRIPTION AND ANALYSIS

   A. Highlights of Bill C-22
      1. Mandatory Reporting
      2. Financial Transactions and Reports Analysis Centre
      3. Reporting of Cross Border Transactions
      4. Costs of the New System

   B. Interpretations

   C. Detailed Description
      1. Part 1 - Record Keeping and Reporting of Suspicious Transactions (Clauses 5-11)

      2. Part 2 - Reporting of Currency and Monetary Instruments (Clauses 12-39)
   Reporting
   Retention, Search and Seizure Powers and Procedures
   Review and Appeal Process
   Third Party Claims
   Disclosure and Agreements for Exchange of Information

      3. Part 3 - Financial Transactions and Reports Analysis Centre of Canada (Clauses 40-72)
   Collection and Disclosure by the Centre
   Compliance Measures
   Contracts and Agreements
   Legal Proceedings

      4. Part 4 - Regulations (Clause 73)

      5. Part 5 - Offences and Punishment (Clauses 74-82)

      6. Part 6 - Transitional Provision, Consequential and Conditional Amendments,
          Repeal and Coming into Force (Clauses 83-99)

COMMENTARY

APPENDIX 1: MONEY LAUNDERING OFFENCES IN FEDERAL STATUTES

APPENDIX 2: MISCELLANEOUS STATUTES

BILL C-22: AN ACT TO FACILITATE COMBATTING
THE LAUNDERING OF PROCEEDS OF CRIME,
TO ESTABLISH THE FINANCIAL TRANSACTIONS AND
REPORTS ANALYSIS CENTRE OF CANADA AND TO AMEND AND
REPEAL CERTAIN ACTS IN CONSEQUENCE THEREOF

BACKGROUND

   A. Introduction

Bill C-22 received first reading in the House of Commons on 15 December 1999. The broad purpose of the bill is to remedy shortcomings in Canada’s anti-money laundering legislation, as identified by the G-7’s Financial Action Task Force (FATF) on Money Laundering in its 1997-1998 report:

The only major weakness is the inability to effectively and efficiently respond to requests for assistance in relation to restraint and forfeiture. The use of domestic money laundering proceedings to seize, restrain, [and] forfeit the proceeds of offences committed in other countries is recognized as sometimes ineffective, and legislation to allow Canada to enforce foreign forfeiture requests directly should be introduced.

In addition, the FATF recommended that reporting requirements in Canada be made mandatory (rather than voluntary, as is currently the case) and that a "financial intelligence unit" be established to "deal with the collection, management, analysis and dissemination of suspicious transaction reports and other relevant intelligence data."

   B. History of Bill C-22

Bill C-22 was first introduced on 31 May 1999, as Bill C-81, which died on the Order Paper when Parliament prorogued on 9 September 1999. The substance of the two bills is largely the same, except that under C-81 the Deputy Minister of National Revenue would have been charged with certain administrative functions that under Bill C-22 would be discharged by the Commissioner of Customs and Revenue.

Best viewed in the context of existing legislation on money laundering in Canada, in particular the Proceeds of Crime (Money Laundering) Act S.C. 1991, C. 26, Bill C-22 proposes to bolster Canada’s anti-laundering efforts by making it mandatory for financial agencies to report information relating to certain types of transaction. The information would be sent to a central data-gathering and analysis body, the Financial Transactions Reporting and Analysis Centre of Canada (hereinafter referred to as the "Centre"). As well, the bill would authorize the release of information to both domestic and foreign law enforcement agencies, subject to restrictions set out in the bill and other legislation (including the Privacy Act). A third major aim of the bill is to establish, in association with Canada Customs and Revenue, a system of reporting large cross-border transactions.

Bill C-22, if enacted, would replace the 1991 PCML Act with the regulations made under the predecessor legislation remaining in effect until regulations were promulgated under the new Act. The Department of Finance recently released a consultation paper on draft regulations, inviting public discussion.(1)

   C. The Problem of Money Laundering

Money laundering is the process by which revenues derived from criminal activity are converted into assets that cannot be easily traced back to their origin.(2) Criminals who can successfully conceal the origins of money and other property can avoid punitive measures for the confiscation and forfeiture of criminally derived proceeds and can make it more difficult for the authorities to detect underlying criminal activities. Proceeds of crime forfeiture laws and similar measures are seen as key tools in the fight against profit-motivated crime and are widely thought to provide an even more effective deterrent to such crimes than the traditional criminal sanctions of fines and imprisonment.

Since both money laundering and the underlying criminal activities it attempts to conceal are by their nature hidden, it is difficult to ascertain the scale on which money laundering takes place.(3) Globally, experts estimate that some US$300 billion to US$500 billion in criminally derived funds enter international capital markets annually.(4) In Canada, the federal government estimates that between $5 billion and $17 billion in criminal proceeds are laundered in this country each year.(5)

It is generally agreed that, to be effective, countries should coordinate their anti-money laundering efforts; otherwise, tightening the rules in one jurisdiction would probably simply result in the transfer of money laundering activities to other jurisdictions with less stringent rules. To assist in international coordination, the G-7 leaders in 1989 set up an inter-governmental body known as the Financial Action Task Force on Money Laundering (FATF), of which 26 states,(6) including Canada, and two regional organisations (the European Commission and the Gulf Cooperation Council) are now members. In 1990, the FATF drafted some 40 recommendations aimed at enhancing and coordinating these international efforts. The "Forty Recommendations," as revised in 1996, address the need for countries to:

• criminalize money laundering itself, and to provide for sufficiently serious penalties;

• enable competent authorities to identify, trace, freeze, seize, and confiscate criminally derived proceeds;

• ensure that financial institutions take necessary steps to ascertain, and keep records on, their clients’ identities and transactions;

• require that financial institutions promptly report to competent authorities any funds suspected to stem from criminal activity;

• consider implementing measures to monitor the cross-border transportation of cash and bearer negotiable instruments, without impeding the free movement of capital;

• consider adopting a system where financial institutions and intermediaries are required to report all currency transactions above a certain amount to a central agency, whose information would be available to the appropriate authorities, subject to strict safeguards to ensure proper use of the information; and

• promote maximum inter-state cooperation by exchanging information on international cash flows and suspicious transactions, and by facilitating mutual legal assistance and extradition with respect to money laundering activities.

   D. How Money Is Laundered

The FATF 1997-98 report estimated that approximately 70% of the money laundered through Canada is derived from drug trafficking. "However, numerous other types of profitable criminal activities exist such as tobacco and alcohol smuggling, illegal gambling, smuggling and white collar crimes such as fraud, counterfeiting and computer/telecommunications crimes." Money laundering mechanisms in Canada involve the use of a wide range of techniques and methods in many parts of both the financial and non-financial sectors. Money laundering is effected through deposit-taking institutions, currency exchanges, the securities industry, real estate, incorporation and operation of shell companies, dealings in gold and precious metals, the insurance industry, gambling facilities (lotteries and casinos), automobile and boat dealerships, professionals (lawyers and accountants), and cross-border movement of illicit proceeds.

Mechanisms for laundering range from the simple to the complex. In a simple method known as "smurfing" often employed by "small-time" local dealers, proceeds are broken up into amounts small enough to avoid attracting attention and deposited by a few innocuous-looking "bag-men." Larger dealers often employ human "mules" to take money out of the country, usually for deposit in Caribbean banks. The dealers may attempt to conceal cash in refrigerators, overstuffed furniture, machinery, industrial products, coffins or even dead bodies. Alternatively, the cash may be used to buy goods that can be moved across borders. For example, a transaction can be made for international shipment of $5-million worth of goods; the dealer will pay, say, $6 million to the retailer, who will realize, in addition to the normal markup on the goods, an extra 20% for "laundering services." The dealer then takes delivery of the goods in another country, sells them, and deposits the $5 million dollars into a bank account. With little difficulty, this amount can be moved back to North America or Europe.(7) Canadian banks are reportedly favoured for these types of transactions, owing to their wide international presence, as well as their stability, efficiency, strong tradition of banker-client confidentiality,(8) and the many services they offer to facilitate the transfer of clients’ funds between jurisdictions, including wire transfers, currency exchange, denomination exchange, savings deposit boxes and government savings bonds.(9)

Foreign currency-exchange houses are the second most common vehicle for money laundering. In addition to being less regulated than chartered banks, they provide services such as converting small denominations of cash into larger, less suspicious, denominations. As well, launderers will often use currency-exchange houses as an intermediary between themselves and a bank when they purchase negotiable instruments and wire transfers. This arrangement conceals the identity of the launderer because the bank’s client is the currency-exchange house, not the launderer.(10)

Illicit funds may also be laundered through the purchase of stocks and bonds in the securities market. To conceal his or her identity, the launderer may purchase the securities in another name, for example, that of a shell company located in a tax-haven where local laws protect the anonymity of the owners.

Another method of laundering is to invest in a private company, and then "go public" with a share purchase offer on the securities market. The earnings from the sale of shares create the illusion that the funds are legitimate earnings on securities investments.(11)

Funds may also be laundered through the purchase and re-selling of real estate, thereby suggesting that they are legitimate earnings. Real estate may have the additional incentive of attracting tax breaks, generating rental income, and, where property values appreciate, gains from re-sale of the property. In a more sophisticated variation on this theme, mortgage brokers, developers and construction companies may be used as intermediaries, in this way effectively concealing the identity of the launderer.(12)

The incorporation and operation of business, particularly those such as bars, movie theatres, vending machine companies, and car washes that generate large amounts of small denomination cash sales, are frequent strategies of launderers.

By purchasing precious stones or gold, the launderer converts cash into a form that is more easily concealed and can be smuggled out of the county or sold through an intermediary. As well, cash may be used to purchase cars, boats, or airplanes, which, of course, may have an additional utility in smuggling operations.

In the normal course of their business, insurance companies make large investments. Thus, launderers may simply buy an insurance company or enter into joint ventures to invest in a large project. Similarly, travel agencies may be used to transfer large sums of money anywhere in the world.

Gambling may also offer opportunities for money laundering; for example, launderers may simply gamble large sums of money, knowing that they will win a portion of it back. A corrupt casino might simply corroborate a launderer’s assertion that the money is legitimate winnings. Moreover, even where the casino is honest, an ordinary gambler, playing with the odds stacked in favour of the house (as they must necessarily be in order for the casino to make a profit) might anticipate "taking a loss" no more onerous than the rates (sometimes as high as 30%) that launderers routinely pay to process funds through other means. Of course, using skilled gamblers in this role would increase the "laundered" return on gambled funds. Other methods of laundering through gambling include the large-scale purchase of lottery tickets, or buying winning tickets at the race track. In the latter case, the launderer simply offers the winning ticket-holder more than the prize is worth, and redeems the ticket for its winning value.

   E. Current Canadian Law

      1. Criminal Legislation

In 1988, Canada enacted legislation (R.S.C. 1985, c. 42 (4^th Supp.)(13) creating a distinct criminal offence of money laundering and providing for the seizure and forfeiture of the proceeds and property derived from various criminal and drug offences.

Section 462.31(1) of the Criminal Code, R.S.C. 1985, c. C-46, provides that everyone is guilty of an offence who deals in any way with property or proceeds of property with the intent of concealing or converting them, while knowing or believing that all or part are derived, directly or indirectly, from the commission of either an "enterprise crime offence" or a "designated substance offence." An "enterprise crime offence," defined in section 462.3, includes a list of over 35 Criminal Code and other federal offences ("predicate offences") usually motivated by profit.(14) In addition, section 9(1) of the Controlled Drugs and Substances Act S.C. 1996, c. 19. creates a "designated substance offence" that covers illegal acts (apart from simple possession) in relation to the various controlled drugs and substances set out in the schedules to the Act. A contravention of either section is a hybrid offence, punishable on indictment by a term of incarceration of up to ten years, or a summary conviction, which may attract a penalty of up to six months’ incarceration and/or a fine of up to $2,000.

Similarly worded "predicate-offence" provisions appear in other federal statutes: section 126.2 of the Excise Act, R.S.C. 1985, c. E-14; section 163.2 of the Customs Act, R.S.C. 1985, c. 1 (2^nd Supp.); and section 5 of the Corruption of Foreign Public Officials Act, S.C. 1998, c. 34. The money laundering offences in the Criminal Code, the Controlled Drugs and Substances Act and the Corruption of Foreign Public Officials Act extend to property or proceeds derived from activities that take place outside Canada. Each Act sets out the predicate offences to which the money laundering provisions apply. Only proceeds derived from the predicate offences are subject to the money laundering provisions, whose wording in each of the Acts is essentially the same.

At common law,(15) securing a conviction for money laundering requires the Crown to prove four elements of the offence beyond a reasonable doubt. Specifically, it must be proven that the accused (i) dealt with the laundered property (ii) with intent to convert or conceal it. Moreover, the property must have been (iii) derived from the commission of a predicate offence, and (iv) the accused must have had knowledge of that fact. As a result of legislative enactments, however, the Crown is now required to prove only the accused’s subjective belief that the proceeds were derived from the commission of the predicate offence, even if this is not the case. This allows the police to arrange "sting" operations.

In addition, all the money laundering offences include a companion offence relating to possession of proceeds, which may result in a conviction even where the Crown is unable to prove the laundering offence. The "possession of proceeds of crime" provision is broader in the Criminal Code than in the other statutes; it applies to the possession of proceeds of any indictable offence, not only to predicate offences. While these are not money-laundering provisions themselves, they have proven useful to police in securing convictions in the absence of sufficient evidence to secure a conviction for a laundering offence.

      2. Record-Keeping Requirements and Transaction Reporting

In 1991, Canada adopted legislation establishing record-keeping and retention requirements for financial sector businesses. The Proceeds of Crime (Money Laundering) Act, S.C. 1991, c. 26, (hereinafter the "PCML Act") and regulations apply to all financial institutions, foreign exchange businesses, securities brokers, portfolio managers, investment counsellors, life insurance companies, casinos, and any person or entity engaged in a business or profession where cash is received for payment or transfer to a third party. Such businesses and persons are required to keep a "large cash transaction record" for transactions in which they receive cash in the amount of $10,000 or more. The regulations also require such businesses to retain the records for a period of five years, as well as taking specific steps to verify the identity of customers and clients in certain situations.

Failure to comply with the Act or regulations is a hybrid offence punishable by a fine of up to $500,000 and/or imprisonment for up to five years, for a conviction on indictment, and a fine of up to $50,000 and/or imprisonment for up to six months, for a summary conviction.

As noted above, while Canadian financial institutions are required to maintain records of all client transactions (including, specifically, a register of "suspicious transactions"), the decision of whether to report a given transaction (i.e. to the R.C.M.P.) is left to the financial institution itself; Canada has not yet adopted a system of compulsory reporting as recommended by the FATF. Parliament considered such a system in the 1980s, but rejected it on the basis of its assessment of the experience in the United States, where mandatory reporting of certain suspicious financial transactions was implemented in the early 1970s with the Bank Secrecy Act. After studying the matter, Parliament concluded that these automatic reporting requirements did not appear to have produced sufficient results in terms of increased detection to justify the unwieldy and costly process that they necessitated.(16) In 1990, however, the United States created an independent and specialized financial intelligence unit, the Financial Crimes Enforcement Network (FinCEN), which receives and analyzes the various transaction reports, along with other data, with a view to disseminating information and analyses to law enforcement authorities.

       3. Canada’s International Commitments

In June 1998, the FATF observed that, while Canada’s anti-money laundering measures are "substantially in compliance with almost all of the 1990 FATF Forty Recommendations," a number of shortcomings remained to be addressed,(17) including:

1. Canada’s inability to enforce forfeiture orders directly with respect to foreign criminal proceeds;

2. Canada’s need to establish a system for the mandatory reporting of suspicious transactions and to create a new financial intelligence unit to deal with the collection, management, analysis, and dissemination of transaction reports and other relevant data;

3. the need to provide for reporting of significant cross border transportation of cash and monetary instruments;

4. the need for greater customer identification measures, particularly in relation to corporations and beneficial owners of accounts; and

5. the need to extend record-keeping and customer identification requirements to businesses such as money remitters, cheque cashers and casinos.(18)

Changes to the Proceeds of Crime (Money Laundering) Regulations later that year addressed points 4 and 5,(19) but further compliance would require statutory changes. In addition to the FATF recommendation, Canada has explicitly undertaken, as a member of the G-8, to establish a financial intelligence unit "to collect and analyze information on those engaged in money laundering and [to] liaise with the equivalent agencies in partner countries."(20)  Bill C-22 would address the problems noted by the FATF in points 2 and 3 by providing for mandatory reporting of suspicious financial transactions by financial institutions and certain other businesses and professionals; reporting of large cross-border movements of currency and monetary instruments; and the creation of a new financial intelligence unit, the Financial Transactions and Reports Analysis Centre (hereinafter the "Centre").

DESCRIPTION AND ANALYSIS

   A. Highlights of Bill C-22

      1. Mandatory Reporting

Under the provisions proposed in Bill C-22, the current voluntary reporting of suspicious transactions would become mandatory; as well, the reporting obligation would be extended to non-bank financial institutions and certain other businesses.(21) Reporting requirements would apply to regulated financial institutions, casinos, and currency exchange businesses, as well as to individuals acting as financial intermediaries, such as lawyers and accountants. These individuals would be required to file reports for certain categories of financial transactions (to be prescribed by regulation; Finance Canada has proposed a threshold of C$10,000, with some exceptions), as well as any other transaction that there were reasonable grounds to suspect was related to the commission of a money laundering offence. In keeping with FATF recommendations, persons making such reports in good faith and in compliance with the law would be immune from any civil or criminal liability for such a disclosure. Under the provisions of the bill, failure to report such transactions would be an offence punishable by a fine of up to $2 million and/or imprisonment for up to five years, in the case of a conviction on an indictment; and a fine of up to $500,000 and/or a maximum six months’ imprisonment, for a first offence, on summary conviction. A subsequent summary conviction offence would attract a fine of up to $1 million and/or imprisonment of up to one year. It would also be an offence under the new law for anyone to disclose the making of such a report with the intent of prejudicing a criminal investigation.

As well, the new law would require individuals or entities importing, exporting or transporting large amounts of currency or monetary instruments across the border to report such activities to Canada Customs. Failure to do so could result in the seizure and possible forfeiture of the cash or instruments, or in a monetary penalty.

       2. Financial Transactions and Reports Analysis Centre

In order to receive and analyze the data of the new reporting requirements, Bill C-22 would establish the Financial Transactions and Reports Analysis Centre of Canada. Clause 40 of the bill sets out the objectives of the Centre:

1. to act at arm’s length from law enforcement agencies and other entities to which it was authorized to disclose information;

2. to collect, analyze, assess, and disclose information to assist in the detection, prevention, and deterrence of money laundering;

3. to ensure the protection of personal information under its control from unauthorized disclosure;

4. to operate to enhance public awareness and understanding of matters related to money laundering;(22) and

5. to ensure compliance with the new requirements for reporting of suspicious transactions.

The Centre would act as a central repository for information about money laundering activities across Canada. In addition to analyzing reports and other data received, it would furnish information to law enforcement agencies in money laundering cases where it concluded that there were reasonable grounds(23) to suspect that the information was relevant to the investigation or prosecution of a money laundering offence. If the agency receiving the information required further disclosure, it could apply ex parte to a superior court judge for an order to that effect. To obtain the order, the applicant agency would be required to show reasonable grounds which, as in any application for a warrant under the Criminal Code, would be determined on a case-by-case basis by the judge hearing the application As well, the Centre would be authorized to provide information to other federal enforcement agencies, such as Revenue Canada, Citizenship and Immigration, and the Canadian Security and Intelligence Service, where the information suggested there were reasonable grounds for believing that an offence fell within their jurisdiction. The Centre would be authorized to share information with foreign agencies and international organisations, where agreements were in place to that effect.

   3. Reporting of Cross Border Transactions

Most money laundering involves an element of international activity. Money launderers often import large amounts of currency and/or monetary instruments into Canada. Bill C-22 would create a system requiring persons importing or exporting currency and/or monetary instruments in excess of C$15,000 to report the fact. The person responsible for reporting would vary depending upon the nature of the transaction. As well, the legislation would permit an "officer" (defined as a Canada Customs officer) to seize as forfeit any unreported currency or monetary instruments in excess of the threshold. The bill also contemplates an immediate "on-site" review by a superior officer, as well as a process for asking the Minister to decide on the validity of a seizure. All information reported would be forwarded to the Centre for analysis.

   4. Costs of the New System

If adopted, the proposals in Bill C-22 would involve some additional costs for the financial sector and for Canadian society as a whole. The planned financial transaction reporting requirements would likely impose additional costs on involved financial institutions, businesses and individual professionals, who would pass these on to their customers. Also, the creation and operation of the Centre would likely involve additional federal expenditures (preliminary estimates from Finance Canada indicate that the Centre might cost about $10 million per year to operate(24)). Moreover, if the system were to generate more criminal investigations and prosecutions, government expenditures in those areas would be likely to increase. These costs could well be recovered, however, through taxation and forfeiture of illegal proceeds, as well as through levying criminal fines and civil penalties.

   B. Interpretations

Clause 2 defines terms used throughout the bill.

"Authorised person" refers to a person authorized by the Director (under clause 45(2)) of the Centre to examine records, make inquiries, and take other necessary action, pursuant to clauses 62 to 64, for the purpose of ensuring compliance with the record keeping and reporting requirements in Part 1.

"Centre" refers to the Centre proposed in clause 41.

"Client" refers to the person making a transaction with a financial institution to which the Act applies and to a person or entity on whose behalf that person is acting.

The definition of "Commissioner" is incorporated by reference to section 2 of the Canada Customs and Revenues Agency Act S.C. 1999 c. 17 (not yet proclaimed in force). Section 2 refers to the "Commissioner of Customs and Revenue appointed under section 25" of the same Act, according to which "the Commissioner of Customs and Revenue must be appointed by the Governor in Council to hold office during pleasure for a term of not more than five years, which term may be renewed for one or more further terms of not more than five years each." Accordingly, the Commissioner referred to in Bill C-22 is the Commissioner of Customs and Revenue.

The definition of "courier" is incorporated by reference to section 2 of the Customs Act, R.S.C, 1985, c. 1 (2nd Supp.) where "courier has the meaning assigned by regulation." SOR 86-1062 (the regulation to the Act) defines the term to mean "a commercial carrier that is engaged in scheduled international transportation of shipments of goods other than goods imported as mail (messager)."

"Customs office" has the same meaning as in section 2(1) of the Customs Act, where it is defined as "a place designated as a customs office by the Minister under section 5." Section 5 states that "the Minister may designate customs offices inside or outside Canada for a specified purpose or generally for business relating to customs and may at any time amend, cancel or reinstate any such designation."

"Legal counsel" has its usual meaning.

"Mail" has the same meaning as in section 2(1) of the Canada Post Corporations Act: "mailable matter from the time it is posted to the time it is delivered to the addressee thereof."

The term "Minister" in relation to clauses 25 to 39 refers to the Minister of National Revenue; in relation to any other provision of the Act, "Minister" means the member of the Privy Council designated by the Governor in Council for the purposes of that provision.

"Money laundering offence" includes the offences set out in section 462.3(1) of the Criminal Code, as well as the offences set out in section 9 of the Controlled Drugs and Substances Act, section 126.2 of the Excise Act, section 163.2 of the Customs Act, and section 5 of the Corruption of Foreign Public Officials Act. (These sections are attached as Appendix 1.)

"Officer" has the same meaning as in section 2(1) of the Customs Act: "a person employed in the administration or enforcement of this Act, the Customs Tariff or the Special Import Measures Act and includes any member of the Royal Canadian Mounted Police."

Clause 3 sets out the objectives of the Act, the essence of which is to assist in the international fight against organized crime by implementing measures to detect and report money laundering.

   C. Detailed Description

      1. Part 1 - Record Keeping and Reporting of Suspicious Transactions (Clauses 5-11)

Under clauses 5 and 6, the following "persons or entities" would be required to keep and retain records: any bank, co-operative, savings and credit union, caisse populaire, life insurance company, trust or loan company (federal or provincial), securities dealer (including portfolio manages and investment counsellors), foreign exchange business, casinos, person engaged in certain professions as set out in regulation; and any Crown department or agency accepting deposits or selling money orders.

The general duty to report prescribed transactions is found in clause 9(1), with certain parties exempted under clause 9(2).(25) In addition, clause 7 would require all persons or entities to report any financial transaction that they had reasonable grounds to suspect was an attempt to launder money. Unlike the general reporting requirements of clause 9(1), this obligation would not depend upon a monetary threshold. Clause 8 would ensure the confidentiality of an investigation by prohibiting those providing information under clause 7 from disclosing that they had done so. Persons reporting "in good faith" would be immune from criminal or civil proceeding. Solicitor-client privilege would be explicitly protected by clause 11.

      2. Part 2 - Reporting of Currency and Monetary Instruments (Clauses 12-39)

Clause 12 would require any import or export of currency or monetary instrument in excess of an amount prescribed by regulation to be reported. Finance Canada’s Consultation Paper: 1 proposes a threshold of C$15,000. The term "monetary instrument" is not defined in the Act or the Consultation Paper. Clause 12(2) would permit exemptions (to allow, for example, large transfers between banks) but no exemptions are currently proposed. Clause 12(3) specifies who would have to report, depending on the nature of the activity. When currency or monetary instruments: (a) arrived with a person, that person would be required to report; (b) were imported by courier, the exporter/sender would be required to do so or, if this proved impracticable, the importer/recipient; (c) were exported from Canada, the exporter would be required to report (d) were imported or exported by any other form of conveyance, the operator of the conveyance would be so required. In any other case, the person on whose behalf the export or import took place would be responsible. Persons arriving in or departing from Canada with prescribed amounts would have to present the amounts and answer any questions upon request by an officer, who would then forward the results to the Centre (clause 12(5)).

A person faced with the obligation to report under clause 12 would be able to avoid doing so under clause 13 by "decid[ing] not to proceed further with importing or exporting…."

An Officer who was informed that a reportable amount was being imported or exported, but that a report had not been completed, would be allowed, upon notice, to retain the funds for a period of time prescribed by regulation (clause 14). Finance Canada’s Consultation Paper: 1 proposes "that the prescribed period for providing a report for the purposes of Part 2…mirror those already provided in regulations under the Customs Act. These regulations currently provide 40 days to remove goods from customs -- and provision is made for an additional period of 30 days to respond to any notice concerning the goods -- before they are considered to be forfeited to the Crown (a total of 70 days)." "Notice," in a form to be prescribed by regulation, would first be sent to the exporter, who would be required to report in order to release the funds. If the exporter’s address was not known, notice would be sent to the importer. Clause 14(3) would require funds to be released: a) once the officer was satisfied that they had been properly reported; or b) where the importer or exporter opted not to proceed with the import or export. Clause 14(4) sets out that the "notice" requirement would include informing the recipients of their options under the Act and the consequences (forfeiture for failure to retrieve the funds within the prescribed time frame). Forfeiture would be established by clause 14(5).

Clause 15 states that an officer who had reasonable grounds to believe that funds were being smuggled could search any person: arriving in Canada "within a reasonable time of their arrival"; leaving Canada; or having access to an area designated for foreign departures (such as an airport international departures lounge) who did not depart from Canada within a reasonable time after leaving the area. Under clause 15(2), before submitting to a search, a person could, upon request, be brought to the senior officer on site. If the senior officer did not find reasonable grounds, he or she would be required to discharge the person; otherwise, the search would have to proceed (clause 15(3)) and be conducted by an officer of the same sex as the person (clause 15(4)).

Clause 16 would allow an officer with reasonable grounds to stop, board, and search a conveyance, examine it or any of its cargo, or direct that it be moved to a customs office or a more suitable place for being searched. Under clause 16(2), an officer would be entitled to search baggage or direct that bags be removed to a customs office or to a more suitable place.

Clause 17 would authorize an officer with reasonable grounds to open mail for import or export. Clause 17(2) would prohibit the opening of mail weighing 30 grams or under unless: (a) with the consent of the addressee; or (b) the sender consented and had completed and attached to the mail a label in accordance with article 116 of the Detailed Regulations of the Universal Postal Convention. An officer would be authorized to cause mail weighing 30 grams or less to be opened in his or her presence by either the addressee or the sender.

Clauses 18 to 20 outline proposed seizure provisions. Under clause 18(1), an officer might seize funds where, on reasonable grounds, he or she believed that clause 12(1) had been contravened (i.e., that the funds had not been reported). By operation of clause 23, funds would be deemed forfeit from the time of this contravention; no further act would be required to effect the forfeiture.

The officer would have to return the funds upon payment of a fine (to be determined by regulation) unless he or she had reasonable grounds to suspect that the funds were proceeds of crime (clause 18(2)).

Under clause 18(3), an officer seizing funds would have to provide written notice of the seizure, which would also have to set out the review and appeal procedures established under clauses 25 and 30. Where the funds were not for import/export, notice would go to the person from whom they were seized; where the funds were for import/export, the exporter (where the address was known) would receive notice by registered mail. The officer would also be required to give notice to any person who the officer believed would be entitled to make a third party claim under clause 32.

Clause 19 would permit an officer to enlist the aid of "other persons" to assist in the seizure or retention, while clause 20 would require the officer to report the seizure to the Commissioner and the Centre.(26) At report stage, the House of Commons amended Bill C-22 by adding a new clause 19.1 which would require an officer who seized currency or monetary instruments pursuant to clause 18(1) to record in writing the reasons for doing so.

Clause 21 would permit an officer to obtain from Canada Post any mail from Canada to a foreign country that contained "or was suspected to contain" reportable funds. Unless the mail was seized or retained, it would be considered as remaining in the course of post. If the mail was seized or retained, Canada Post would have to be notified within 60 days. An officer would be required to treat seized mail in accordance with the Act and laws applicable to customs, and to return it to Canada Post.

Clause 22 would require funds forfeited under clause 14(5) and funds seized or penalties paid under clause 18(2) to be remitted to Minister of Public Works and Government Services without delay. Forfeiture would be final subject only to the review and appeal process set out in clauses 25 to 30.

Under clause 25, the person from whom the funds were seized, or the lawful owner, would have 30 days from the seizure to request a decision from the Minister as to whether clause 12(1) had been contravened. Notice of the request would have to be in writing and delivered to the officer, or to another officer at a customs office near where the seizure took place. Once a request had been received, under clause 26(1) the Commissioner(27) would have to serve on the requesting person, without delay and by registered mail, "written notice of the circumstances in respect of which the decision is requested." Clause 26(2) would give the person 30 days to furnish any evidence. From the expiry of the 30-day period, the Minister would have 90 days to make a decision (clause 27(1)). Where charges of money laundering were laid, the Minister might defer the decision until no later than 30 days after the final disposition of the charges (clause 27(2)). Once a decision was made, the Minister would be required to notify the person of it without delay (clause 27(3)).

Under clause 28, where the Minister decided that clause 12(1) had not been contravened, he or she would have to inform the Minister of Public Works, who would, in turn, be required to return the penalty or the funds as the case might be. If the decision was that the Act had been contravened, clause 29(1) would allow the Minister to: a) return the funds upon payment of a fine or without penalty; b) refund any penalty paid; or c) subject to any court order evidencing a third party claim, confirm the forfeiture to the Crown. If the item had been sold or disposed of under the Seized Property Management Act, clause 29(2) stipulates that payment could not exceed the selling price less the cost of sale of the seized item.

Clause 30(1) would allow a person 90 days to appeal the Minister’s decision to the Federal Court. If the decision were overturned on appeal, but the seized item had already been disposed of, the amount to be paid could not exceed the selling price less the cost of sale (clause 30(4)).

Clause 32 sets out procedures for dealing with third party claims to the seized funds. Any person, other than the person from whom the funds were seized, would be entitled to make an application - within 60 days of the forfeiture -- to the superior court in the province -- for an order under clause 33 declaring the nature and extent of that person’s interest in the seized funds; and that this interest was not affected by the seizure. The judge, upon receiving the application, would set a date for a hearing to take place within 30 days. The applicant would have to serve notice on the Commissioner not later than 15 days after the fixing of this date.

If the court was satisfied that applicants: had acquired the interest in good faith before the contravention took place; were innocent of any complicity in the contravention; and had exercised all reasonable care to ensure that the funds would be properly reported, applicants would be entitled to an order declaring that their interest was not affected by the seizure and stating the nature and extent of their interest at the time of the contravention.

Clause 34 would provide the right of appeal from a judge’s decision to the court of appeal for the province as defined in section 2 of the Criminal Code. Appeals would be governed by the appeal court’s ordinary procedure.

On being informed that a person had obtained an order, the Minister of Public Works would be required to return the funds, or an amount equal to the applicant’s interest in the funds, as declared in the order. Again, the amount to be paid could not exceed the selling/disposition price of the seized item less the cost of sale (clause 35(2)).

Clause 36 makes proposals for disclosure of information by the Centre. Disclosure would be subject both to the terms of the bill and to section 12(1) of the Privacy Act.(28) "Information" would include: (a) information provided pursuant to reporting requirements under clause 12(1); (b) any other information obtained for purposes of Part 2; and (c) information prepared from (a) and (b). In effect, the Centre would not be authorized to disclose information collected or the results of its calculation and investigation based on that information, except in accordance with clause 36.

An officer who had reasonable grounds to suspect that information would be relevant to investigating or prosecuting a money laundering offence could disclose information to the appropriate police force (clause 36(2)). At report stage, the House of Commons amended Bill C-22 by adding a new clause 36(3.1) which would require an officer who disclosed information pursuant to clauses 36(2) or (3) to record in writing the reasons for doing so.

An "official," defined in 36(6) as a person who has obtained or had access to information in the course of exercising powers or performing duties and functions under Part 2, would be entitled, by clause 36(4) to disclose such information in order to discharge his or her duties under that Part. Subject to section 36 of the Access to Information Act and section 34 of the Privacy Act, an official would be required to comply with any court order issued in criminal proceedings or proceedings under Part 2.(29)

Clause 38(1) would authorize the Minister of National Revenue, with the consent of the Minister responsible for the Centre (to be designated by the Governor in Council) to share with foreign states that had similar reporting requirements, information about funds exported to Canada from that state, and imported to that state from Canada. The Canada Customs and Revenue Agency would receive the information on behalf of Canada; a foreign agency with similar powers and duties would receive information on behalf of the other country. Any information received under such an arrangement would be sent to the Centre and, for purposes of confidentiality, would be deemed to be information reported under clause 12.

Where an agreement was negotiated under clause 38(1), a person who exported currency or monetary instruments from Canada to a foreign state and who had fulfilled the reporting requirements of the foreign state would be deemed to have complied with Canada’s reporting requirement (clause 38(2)).

Clause 39(1) would permit the Minister (and clause 39(2) would permit the Commissioner) to authorize an officer or class of officers to exercise any duties of the Minister under Part 2.

       3. Part 3 - Financial Transactions and Reports Analysis Centre of Canada (Clauses 40-72)

Clause 40 sets out the objectives of the Centre. Clause 41 would establish the Centre, which would exercise its powers as an agent of the Crown.

Under clause 42, the Minister responsible for the Centre (to be designated by the Governor in Council) would be authorized to "direct the Centre on any matter that, in the Minister’s opinion, materially affects public policy or the strategic direction of the Centre." A Minister’s direction would not be considered a statutory instrument under the Statutory Instruments Act and accordingly would be exempt from publication. As well, the Minister would be authorized to engage the services of advisors on any matter within his or her authority.

The Governor in Council would appoint a Director for a term of not more than five years, renewable for a total of 10 years in the aggregate. The Director would serve as the CEO of the Centre and would report to the Minister. The head office of the Centre would be located in the National Capital Region, although other offices could be authorized by the Minister (clauses 43 to 48).

Clause 52 would require that the Director: report to the Minister from time to time; "keep the Minister informed of any matter that could materially affect public policy of the strategic direction of the Centre"; disclose any information that the Minster considered relevant to carrying out his or her duties; and disclose to any person advising the Minister any information that the latter considered relevant for that purpose. Clause 53, however, would prohibit the Director from disclosing information under clause 52 that would directly or indirectly identify an individual who had provided a report to the Centre or a person or entity discussed in the report.

Clause 54 would authorize the Centre to: receive reports contemplated in Parts 1 and 2; collect information that was publicly or commercially available, including - where there was an agreement to that effect - information stored in federal or provincial government databases maintained for law-enforcement purposes; analyse and assess reports and information; and, subject to section 6 of the Privacy Act,(30) to retain reports and information for at least five years, but not more than eight.

Clause 55 would prohibit disclosure of any information by the Centre, or any persons whose duties gave them access to information, except as contemplated by clauses 55(3), (4), and (5), clause 52 (see above), clause 58(1), clause 65, and section 12(1) of the Privacy Act.

Clause 55(3) would allow the Centre to disclose information: (a) to the appropriate police force, where it had reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence; (b) to the Canada Customs and Revenue Agency, if the Centre deemed the information to be relevant to a duties or tax-evasion offence; (c) to CSIS, if the Centre determined that the information was relevant to threats to the security of Canada; and (d) to Citizenship and Immigration. In disclosing information to Citizenship and Immigration, the Centre would have to determine that the information would "promote international order and justice by denying the use of Canadian territory to persons who are likely to engage in criminal activity;"(31) or was relevant to determining whether an entrant: was an "inadmissible person";(32) was a permanent resident who might be subject to deportation (under section 27 of the Immigration Act(33)); or had committed an offence under sections 94.1, 94.2, 94.4, 94.5 or 94.6 of the Immigration Act (people smuggling offences).

Clauses 55(4) and (5) would authorize disclosure to a foreign state or international agency, where an agreement to that effect had been negotiated by the Minister pursuant to clause 56(1), if the Centre had reasonable grounds to believe the information was relevant to money laundering, or a "substantially similar" offence. The Centre would have to record in writing the reasons for all decisions made pursuant to clause 55(3), (4)(a), or (5)(a). Clause 55(6) would authorize "any person" to disclose information if this was necessary to exercising powers or performing duties under Part 3. Clause 55(7) would specify what information might be disclosed, including: the name of the client, importer or exporter; location of the transaction and its amount, type or value; transaction or account numbers; and "any other similar information that may be prescribed."

As indicated above, clause 56(1) would authorize the Minister to enter into international agreements for the exchange of information; clause 56(2) would allow the Centre to conclude similar arrangements with the approval of the Minister. Such agreements would be required to restrict the use of information specifically to the investigation or prosecution of money laundering or "substantially similar" offences. Similarly, clause 57 would explicitly restrict the use of disclosed information to the purpose contemplated by the Act.

Clause 58 would authorize the Centre to: inform persons who had made reports under clauses 7 and 9 about measures that had been taken; conduct research into - and develop means of detecting, preventing and deterring - money laundering; and inform the public, enforcement authorities and stakeholders about their obligations under the Act, the nature and extent of money laundering in Canada, and measures for its prevention.

Clause 59 would require the Centre, and any person who had obtained information in the course of exercising duties (other than under Part 2), to comply with any subpoena, production order, or compulsory process issued by a court only if this was issued in respect of a money laundering offence or a charge laid in connection with an offence under this Act. The duty would also be subject to section 36 of the Access to Information Act and section 34 of the Privacy Act (see Appendix 2). No search warrant could be issued in respect of the Centre.

The Attorney General could make an ex parte application under clause 60, which sets out the requirements for the application, and would have to provide an affidavit setting out the facts leading to reasonable belief that the person about whom the information was sought had committed an offence, and that the information was likely to be of "substantial value." If satisfied as to Attorney General’s reasons, and "that there are reasonable grounds for believing it is in the public interest," the judge would have the authority to order the Director – or some other designated person – to give a police officer access to the information. The order might be made "subject to conditions that the judge considers advisable in the public interest." A judge’s order made in one province could be enforced in another province after being endorsed by a judge there.

Clause 60(8) would allow the Director, despite a court order, to object to the disclosure on the grounds that: (a) he or she was prohibited from doing so by a bilateral or international treaty, convention or other agreement; (b) the document or information was privileged; (c) the information or document had been sealed by a court of competent jurisdiction; (d) disclosure would not be in the public interest. The validity of the objection would be determined by the Chief Justice of the Federal Court (or a judge of that court designated by the Chief Justice) (clause 60(9)). An appeal would lie to the Federal Court of Appeal.

Clause 62 would permit an authorized person to "examine the records and inquire into the business" of any person or entity to which the Act applied, in order to ensure compliance with Part 1 reporting requirements. This would include the right to "at any reasonable time, enter any premises, other than a dwelling house, in which the authorized person believes, on reasonable grounds, there are records relevant to ensuring compliance…." As well, the authorized person might have access to computers, examine data and reproduce records. The person in charge of the premises would be required to render all reasonable assistance and comply with reasonable requests for information.

Clause 63 would require an authorized person wishing to enter a dwelling-house to obtain a warrant by way of ex parte application before a justice of the peace, setting out the reasonable grounds for believing that: the premises contained relevant records; entry to the dwelling-house was necessary; and entry had been refused or it was reasonably anticipated that this would be the case.

Clause 65 would authorize the Centre to disclose to law enforcement agencies any information it suspected on reasonable grounds to be evidence of a contravention of Part 1.

Clause 64 would address the issue of solicitor-client privilege. Where a solicitor asserted that a document was privileged, the authorized person would not be allowed to copy or examine it. Instead, the document would be sealed in a package, identified, and retained to ensure that it was preserved until the issue could be decided on application to a judge of the superior court in the jurisdiction or the Federal Court. The application would be heard in private and decided "summarily" and with reasons. If the claim was upheld, the document would be returned to counsel; if the claim was rejected, counsel would be required to make the document available for inspection. Because the privilege vests in the client – not the solicitor – the client might waive the privilege. In order to allow the authorized person the option of seeking the client’s waiver of privilege, the solicitor would be required to provide the authorized person with the client’s name and address.

Clause 66 would authorize the Centre to enter into contracts or agreements with any federal or provincial government department or agency and "with any other person or organization, whether inside or outside Canada, in its own name or that of the Crown. Agreements on access to database information would have to specify the nature and limits of the access. Clause 66(3) would reserve to the Minister the authority to enter into agreements under clause 56(1).

Clause 68 specifies that legal action against the Centre could be brought in the name of the Centre itself, in any court that would have jurisdiction if the Centre were not an agent of the Crown. Clause 69 specifies that no action would lie against the Director or any employee of the Centre for anything they did or omitted to do in good faith in the course of their duties.

Clause 70 would explicitly subject the receipts and expenditures of the Centre to the Auditor General’s review.

On or before 30 September of each year, clause 71 specifies that the Director would have to submit an annual report for the preceding year to the Minister, who would be required to table the report in Parliament. The report would have to include a description of the management guidelines and policies of the Centre for the protection of human rights and freedoms.

Clause 72 would mandate a five-year review of the administration and operation of the Act by a committee of Parliament.

      4. Part 4 - Regulations (Clause 73)

The extent of the proposed regulation-making authority of the Governor in Council is set out in clause 73. Regulations would be published at least 90 days before their proposed effective date and persons would be given a reasonable opportunity for comment.

      5. Part 5 - Offences and Punishment (Clauses 74-82)

Under clause 74, anyone who knowingly contravened clause 6 (keeping and retaining records), clause 12(4) (duty to answer and comply with officer), clause 36(1) (unauthorised disclosure by official of reported information), clause 37 (unauthorised use of information by official), clause 55(1) or (2) (unauthorised disclosure of information by Centre, person or employee), clause 57 (unauthorised use of information), clause 62(2) (failing to assist with search) or 64(3) (failing to seal and retain privileged document), or the regulations would be guilty of an offence. This would be punishable on summary conviction, to a fine of up to $50,000 and/or imprisonment for up to six months or on indictment, to a fine of up to $500,000 and/or imprisonment up to five years.

Under clause 75, anyone who contravened clause 7 (duty to report suspected money laundering offence) would be guilty of an offence punishable on summary conviction for a first offence, to a fine of up to $500,000 and/or imprisonment for up to six months, and for a subsequent summary conviction, to a fine of up to $1,000,000 and/or imprisonment for up to one year; or on indictment, to a fine of up to $2,000,000 and/or imprisonment up to five years.

Under clause 76, anyone who contravened clause 8 (disclosing a section 7 report) would be guilty of either a summary offence,(34) or an indictable offence punishable by imprisonment of not more than two years.

By clause 77(1), contravening clause 9(1) (failure to report to Centre) or 9(3) (maintaining a list of clients exempted by regulation) would be a summary offence only, punishable by a fine of not more than $500,000 for first offence, and $1,000,000 for a subsequent offence. Clause 77(2) would provide a due diligence defence to a charge under clause 77(1).

Clause 78 would extend liability for an offence under the Act to any officer, director or agent of the person or entity who directed, authorized, assented to, or acquiesced or participated in the offence, even where the person or entity had not been prosecuted or convicted.

Proof that a clause 75 or 77 offence had been committed by an unidentified employee or agent of the accused would be deemed sufficient to convict the accused (clause 79). Again, a defence would be provided by clause 79(2) for any person who had "exercised due diligence" to prevent the commission of the offence.

Under clause 80, a police officer (or a person acting under the officer’s direction) would be deemed not guilty of contravening clause 74 to 77 where the contravention was "for the purpose of investigating a money laundering offence."

The limitation for prosecuting summary convictions under clauses 74 to 77 would be one year (clause 81). There would be no limitation on indictments.

Clause 82 would permit an offence to be tried in a court where the accused was resident or carrying on business, even if the subject matter of the complaint had arisen elsewhere.

      6. Part 6 - Transitional Provision, Consequential and Conditional Amendments,
          Repeal and Coming into Force (Clauses 83-99)

Clause 83 stipulates that regulations under the existing PCML Act that were in force at the time Bill C-22 came into force would remain in effect until regulations were promulgated under the new statute. Current regulations would be deemed to have been made under Bill C-22.

Clause 84 would amend Schedule I of the Access to Information Act to include the Centre among the definitions of "Government Institutions." The effect of the amendment would be as follows:

1. to permit the publication under section 5(1) by the designated Minister of a report containing (a) a description of the organization and responsibilities of each government institution, including details on the programs and functions of each division or branch of each government institution; (b) a description of all classes of records under the control of each government institution in sufficient detail to facilitate the exercise of the right of access under this Act; (c) a description of all manuals used by employees of each government institution in administering or carrying out any of the programs or activities of the government institution; and (d) the title and address of the appropriate officer for each government institution to whom requests for access to records under this Act should be sent;

2. to bring the Centre within the scope of the Act for purposes of section 68, which states that "This Act does not apply to: (a) published material or material available for purchase by the public; (b) library or museum material preserved solely for public reference or exhibition purposes; or (c) material placed in the National Archives of Canada, the National Library, the National Gallery of Canada, the Canadian Museum of Civilization, the Canadian Museum of Nature or the National Museum of Science and Technology by or on behalf of persons or organisations other than government institutions [emphasis added];

3. Section 70.(1) requires that the designated Minister shall: (a) cause to be kept under review the manner in which records under the control of government institutions are maintained and managed to ensure compliance with the provisions of this Act and the regulations relating to access to records.

Clause 85 would amend Schedule II of the Access to Information Act to include a reference to the Proceeds of Crime (Money Laundering Act) and a corresponding reference to section 55(1)(a), (d) and (e). Because section 24.(1) of the Access to Information Act prohibits the head of a government institution from disclosing any record requested under the Act that contains information whose disclosure is restricted by or pursuant to any provision in Schedule II, the amendment would have the effect of prohibiting the disclosure of information contemplated by clause 55(1)(a), (d) and (e), specifically:

55. (1) Subject to subsections (3), (4) and (5), section 52, subsection 58(1) and section 65 and to subsection 12(1) of the Privacy Act, the Centre shall not disclose the following:

1. information set out in a report made under section 7;

2. information set out in a report made under section 9;

3. information set out in a report made under section 12(1), whether or not it is completed, or section 20;

4. information about suspicions of money laundering that is provided voluntarily to the Centre;

5. information prepared by the Centre from information referred to in paragraphs (a) to (d);

6. an other similar information that may be prescribed.

Clause 86 would amend section 40(3) of the Canada Post Corporations Act to add a reference to the Proceeds of Crime (Money Laundering Act), thereby allowing officers to demand from Canada Post, and receive, mail that was in the course of post.

Clause 87 would amend section 42(2) to (3) of the Canada Post Corporations Act to add a reference to the Proceeds of Crime (Money Laundering Act) so that mail submitted to an officer would be deemed "to remain in the course of post" unless it was seized. Amendments to sections 42(2.1) and (3) would require Customs to provide proper notice to Canada Post of mail seized. The last amendment would specify that mail submitted to the officer would have to be dealt with according to applicable laws.

Clause 88 would amend section 48 of the Canada Post Corporations Act to add a reference to the Proceeds of Crime (Money Laundering Act), thereby allowing an officer to open, keep, secrete, delay or detain mail, without committing an offence.

Clause 89 would amend section 488.1(11) of the Criminal Code by adding, in addition to a reference to the Income Tax Act, a reference to the Proceeds of Crime (Money Laundering Act). Section 488.1 of the Code sets out the procedure for determining claims of solicitor-client privilege in relation to documents in the possession of a lawyer. The amendment would remove similar claims under the PCML Act from the operation of that section. As discussed above, the PCML Act contains a procedure for determining these issues in the context of investigations under that Act.

Clause 90 would amend the schedule to the Privacy Act to include the Centre under the definition of "Other Government Institutions," thereby extending to the Centre the obligations attaching to "government institutions" in the Act.

Clause 91, for similar reasons, would amend Part II of Schedule I of the Public Service Staff Relations Act.

Clauses 92 to 96 would amend several sections of the Seized Property Management Act so as to authorize the Minister to manage property forfeited under clause 14(5), seized under clause 18(1) or paid under section 18(2) of the PCML Act; to invest the Minister with the responsibility of custody and management of the property; and to authorize the sharing of the proceeds of the property (or fine) as prescribed by the Act and regulation.

Clause 97 would amend Bill C-6 (the Personal Information Protection and Electronic Documents Act),(35) with the amendments becoming effective at the time Bill C-6 received Royal Assent. The bill was given Royal Assent on 13 April 2000.(36) The purpose of Bill C-6 is "to establish…rules to govern the collection, use and disclosure of personal information in a manner that recognizes the right of privacy of individuals with respect to their personal information and the need of organisations to collect, use or disclose personal information for purposes that a reasonable person would consider appropriate in the circumstances."

By operation of clause 5(1) of Bill C-6, it would be mandatory for every "organization," a term which, for practical purposes, here appears to include, in effect, any commercial enterprise, to "comply with the obligations set out in Schedule 1," a code developed by the Canadian Standards Association in consultation with stakeholders. (Compliance with the code had been initially conceived as being voluntary.)

The purpose of Bill C-6 is not to re-codify the provisions of Schedule 1 but rather, where circumstances warrant, to exempt an organization from compliance with them.

Under "Principle 9" in Schedule 1 of Bill C-6, there is a presumption in favour of allowing individuals to have access to information about themselves: "Upon request, an individual shall be informed of the existence, use, and disclosure of his or her personal information and shall be given access to that information." Clause 9 of Bill C-6, however, places limits on the individual’s right of access, for example, where: a) disclosure would likely reveal personal information about a third party without the third party’s consent (unless the individual needed the information because his or her life, health or security was threatened); (b) the disclosure could reasonably be expected to be injurious to (i) national security, the defence of Canada or the conduct of international affairs or (ii) law enforcement or investigation in Canada or a foreign jurisdiction; (c) solicitor-client privilege is claimed; (d) disclosure would reveal confidential commercial information; or (e) disclosure could reasonably be expected to threaten the life or security of another individual.

It will be recalled that clause 8 of Bill C-22 would make it an offence to disclose the fact that a report had been made under clause 7, or to disclose the contents of the report; such disclosure would, however, have to be made "with the intent to prejudice a criminal investigation…"(a mens rea requirement). Under this apparent "loophole," a person about whom a clause 7 report had been made could, by legitimately invoking the terms of Bill C-6 (and, more particularly "Principle 9"), request: a) confirmation of whether an organization had made a clause 7 report about him or her; and b) the personal information contained in that report. The organization, unless it could rely on one of the exemptions in section 9, would be required to comply with the request but, because it would not do so with the intent of prejudicing a criminal investigation, it would not be deemed to have committed an offence under clause 8. Clearly, this loophole affects the integrity of the investigation process.

Under the proposed amendment, that loophole would effectively be closed. A new section 9.1 would be added to Bill C-6, setting out that individuals could not have access to personal information about themselves that was contained in a clause 7 report (suspected money laundering) and that an organization could not disclose that it had made a clause 7 report or had been given access to the report.

Finally, clause 98 would provide for the repeal of the 1991 PCML Act, and clause 99 would provide for the coming into force of Bill C-22, on a day "to be fixed by Governor in Council."

COMMENTARY

In May 1998, the Department of the Solicitor General released a Consultation Document with the purpose of eliciting comments and suggestions on a number of proposals aimed at improving the detection, prevention and deterrence of money laundering activity. Interested readers may access the Consultation Document on line at:
http://www.sgc.gc.ca/Epub/Pol/eConsultation/eConsultation.htm.

Annex I of the Consultation Document provides a summary of the proposals contained in the Document itself. The broader purpose of the document is to summarize the many views and suggestions expressed in response. Annex II contains a list of the approximately 60 parties that provided written submissions on the Consultation Document, along with a list of the 34 participants in the face-to-face discussions have so far taken place across the country, as organized by the Department of Finance. Comments were received from numerous representatives from government and the law enforcement, security, legal and financial sectors. Additional face-to-face discussions with stakeholders from the Atlantic Region will take place during the next two months.

The consultations indicated strong support for the proposals in the Document and for the underlying policy objectives. A majority of the respondents expressed moderate to strong support for most or all of the aspects of a mandatory system for reporting suspicious transactions. Others supported the objective of such mandatory reporting, but had technical concerns. Only very few respondents expressed serious reservations about the proposals.

Criminal Code s. 462.31(1)

Every one commits an offence who uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or otherwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds, knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of

(a) the commission in Canada of an enterprise crime offence or a designated substance offence; or

(b) an act or omission anywhere that, if it had occurred in Canada, would have constituted an enterprise crime offence or a designated substance offence.

Controlled Drugs and Substances Act s. 9

No person shall use, transfer the possession of, send or deliver to any person or place, transport, transmit, alter, dispose of or otherwise deal with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds and knowing or believing that all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of

(a) the commission in Canada of an offence under this Part except subsection 4(1);(37)

(b) an act or omission anywhere that, if it had occurred in Canada, would have constituted an offence referred to in paragraph (a); or

(c) a conspiracy or an attempt to commit, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a) or an act or omission referred to in paragraph (b).

Excise Act 126.2 (1)

No person shall use, transfer the possession of, send or deliver to any person or place, transport, transmit, alter, dispose of or otherwise deal with, in any manner or by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds and knowing or believing that all or part of that property or those proceeds was obtained or derived directly or indirectly as a result of

(a) the commission of an offence under subsection 233(1)(38) or 240(1)(39); or

(b) a conspiracy or an attempt to commit, being a party to, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a).

Customs Act 163.2

163.2 (1) No person shall use, transfer the possession of, send or deliver to any person or place, transport, transmit, alter, dispose of or otherwise deal with, in any manner or by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds and knowing or believing that all or part of that property or those proceeds was obtained or derived directly or indirectly as a result of

(a) the commission of an offence contrary to section 153(40) or under section 159(41) in relation to spirits or tobacco products; or

(b) a conspiracy or an attempt to commit, being a party to, being an accessory after the fact in relation to, or any counselling in relation to, an offence referred to in paragraph (a).

Corruption of Foreign Public Officials Act s. 5

5. (1) Every person commits an offence who uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or otherwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds and knowing or believing that all or part of that property or of those proceeds was obtained or derived directly or indirectly as a result of

(a) the commission of an offence under section 3(42); or

(b) an act or omission anywhere that, if it had occurred in Canada, would have constituted an offence under section 3.

Access to Information Act s. 36

36. Powers of Information Commissioner in carrying out investigations

36. (1) The Information Commissioner has, in relation to the carrying out of the investigation of any complaint under this Act, power

(a) to summon and enforce the appearance of persons before the Information Commissioner and compel them to give oral or written evidence on oath and to produce such documents and things as the Commissioner deems requisite to the full investigation and consideration of the complaint, in the same manner and to the same extent as a superior court of record;

(b) to administer oaths;

(c) to receive and accept such evidence and other information, whether on oath or by affidavit or otherwise, as the Information Commissioner sees fit, whether or not the evidence or information is or would be admissible in a court of law;

(d) to enter any premises occupied by any government institution on satisfying any security requirements of the institution relating to the premises;

(e) to converse in private with any person in any premises entered pursuant to paragraph (d) and otherwise carry out therein such inquiries within the authority of the Information Commissioner under this Act as the Commissioner sees fit; and

(f) to examine or obtain copies of or extracts from books or other records found in any premises entered pursuant to paragraph (d) containing any matter relevant to the investigation.

36(2) Access to records

(2) Notwithstanding any other Act of Parliament or any privilege under the law of evidence, the Information Commissioner may, during the investigation of any complaint under this Act, examine any record to which this Act applies that is under the control of a government institution, and no such record may be withheld from the Commissioner on any grounds.

36(3) Evidence in other proceedings

(3) Except in a prosecution of a person for an offence under section 131 of the Criminal Code (perjury) in respect of a statement made under this Act, in a prosecution for an offence under this Act, or in a review before the Court under this Act or an appeal therefrom, evidence given by a person in proceedings under this Act and evidence of the existence of the proceedings is inadmissible against that person in a court or in any other proceedings.

36(4) Witness fees

(4) Any person summoned to appear before the Information Commissioner pursuant to this section is entitled in the discretion of the Commissioner to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.

36(5) Return of documents, etc.

(5) Any document or thing produced pursuant to this section by any person or government institution shall be returned by the Information Commissioner within ten days after a request is made to the Commissioner by that person or government institution, but nothing in this subsection precludes the Commissioner from again requiring its production in accordance with this section.

Privacy Act s. 34

34. Powers of Privacy Commissioner in carrying out investigations

(1) The Privacy Commissioner has, in relation to the carrying out of the investigation of any complaint under this Act, power

(a) to summon and enforce the appearance of persons before the Privacy Commissioner and compel them to give oral or written evidence on oath and to produce such documents and things as the Commissioner deems requisite to the full investigation and consideration of the complaint, in the same manner and to the same extent as a superior court of record;

(b) to administer oaths;

(c) to receive and accept such evidence and other information, whether on oath or by affidavit or otherwise, as the Privacy Commissioner sees fit, whether or not the evidence or information is or would be admissible in a court of law;

(d) to enter any premises occupied by any government institution on satisfying any security requirements of the institution relating to the premises;

(e) to converse in private with any person in any premises entered pursuant to paragraph (d) and otherwise carry out therein such inquiries within the authority of the Privacy Commissioner under this Act as the Commissioner sees fit; and

(f) to examine or obtain copies of or extracts from books or other records found in any premises entered pursuant to paragraph (d) containing any matter relevant to the investigation.

34(2) Access to information

(2) Notwithstanding any other Act of Parliament or any privilege under the law of evidence, the Privacy Commissioner may, during the investigation of any complaint under this Act, examine any information recorded in any form under the control of a government institution, other than a confidence of the Queen's Privy Council for Canada to which subsection 70(1) applies, and no information that the Commissioner may examine under this subsection may be withheld from the Commissioner on any grounds.

34(3) Evidence in other proceedings

(3) Except in a prosecution of a person for an offence under section 131 of the Criminal Code (perjury) in respect of a statement made under this Act, in a prosecution for an offence under this Act or in a review before the Court under this Act or an appeal therefrom, evidence given by a person in proceedings under this Act and evidence of the existence of the proceedings is inadmissible against that person in a court or in any other proceedings.

34(4) Witness fees

(4) Any person summoned to appear before the Privacy Commissioner pursuant to this section is entitled in the discretion of the Commissioner to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.

34(5) Return of documents, etc.

(5) Any document or thing produced pursuant to this section by any person or government institution shall be returned by the Privacy Commissioner within ten days after a request is made to the Commissioner by that person or government institution, but nothing in this subsection precludes the Commissioner from again requiring its production in accordance with this section.

Inadmissible persons

19. (1) No person shall be granted admission who is a member of any of the following classes:

(a) persons, who are suffering from any disease, disorder, disability or other health impairment as a result of the nature, severity or probable duration of which, in the opinion of a medical officer concurred in by at least one other medical officer,

(i) they are or are likely to be a danger to public health or to public safety, or

(ii) their admission would cause or might reasonably be expected to cause excessive demands on health or social services;

(b) persons who there are reasonable grounds to believe are or will be unable or unwilling to support themselves and those persons who are dependent on them for care and support, except persons who have satisfied an immigration officer that adequate arrangements, other than those that involve social assistance, have been made for their care and support;

(c) persons who have been convicted in Canada of an offence that may be punishable under any Act of Parliament by a maximum term of imprisonment of ten years or more;

(c.1) persons who there are reasonable grounds to believe

(i) have been convicted outside Canada of an offence that, if committed in Canada, would constitute an offence that may be punishable under any Act of Parliament by a maximum term of imprisonment of ten years or more, or

(ii) have committed outside Canada an act or omission that constitutes an offence under the laws of the place where the act or omission occurred and that, if committed in Canada, would constitute an offence that may be punishable under any Act of Parliament by a maximum term of imprisonment of ten years or more,

except persons who have satisfied the Minister that they have rehabilitated themselves and that at least five years have elapsed since the expiration of any sentence imposed for the offence or since the commission of the act or omission, as the case may be;

(c.2) persons who there are reasonable grounds to believe are or were members of an organization that there are reasonable grounds to believe is or was engaged in activity that is part of a pattern of criminal activity planned and organized by a number of persons acting in concert in furtherance of the commission of any offence under the Criminal Code or Controlled Drugs and Substances Act that may be punishable by way of indictment or in the commission outside Canada of an act or omission that, if committed in Canada, would constitute such an offence, except persons who have satisfied the Minister that their admission would not be detrimental to the national interest;

(d) persons who there are reasonable grounds to believe will

(i) commit one or more offences that may be punishable under any Act of Parliament by way of indictment, other than offences designated as contraventions under the Contraventions Act, or

(ii) engage in activity that is part of a pattern of criminal activity planned and organized by a number of persons acting in concert in furtherance of the commission of any offence that may be punishable under any Act of Parliament by way of indictment;

(e) persons who there are reasonable grounds to believe

(i) will engage in acts of espionage or subversion against democratic government, institutions or processes, as they are understood in Canada,

(ii) will, while in Canada, engage in or instigate the subversion by force of any government,

(iii) will engage in terrorism, or

(iv) are members of an organization that there are reasonable grounds to believe will

(A) engage in acts of espionage or subversion against democratic government, institutions or processes, as they are understood in Canada,

(B) engage in or instigate the subversion by force of any government, or

(C) engage in terrorism;

(f) persons who there are reasonable grounds to believe

(i) have engaged in acts of espionage or subversion against democratic government, institutions or processes, as they are understood in Canada,

(ii) have engaged in terrorism, or

(iii) are or were members of an organization that there are reasonable grounds to believe is or was engaged in

(A) acts of espionage or subversion against democratic government, institutions or processes, as they are understood in Canada, or

(B) terrorism,

except persons who have satisfied the Minister that their admission would not be detrimental to the national interest;

(g) persons who there are reasonable grounds to believe will engage in acts of violence that would or might endanger the lives or safety of persons in Canada or are members of or are likely to participate in the unlawful activities of an organization that is likely to engage in such acts of violence;

(h) persons who are not, in the opinion of an adjudicator, genuine immigrants or visitors;

(i) persons who, pursuant to section 55, are required to obtain the consent of the Minister to come into Canada but are seeking to come into Canada without having obtained such consent;

(j) persons who there are reasonable grounds to believe have committed an act or omission outside Canada that constituted a war crime or a crime against humanity within the meaning of subsection 7(3.76) of the Criminal Code and that, if it had been committed in Canada, would have constituted an offence against the laws of Canada in force at the time of the act or omission;

(k) persons who constitute a danger to the security of Canada and are not members of a class described in paragraph (e), (f) or (g); or

(l) persons who are or were senior members of or senior officials in the service of a government that is or was, in the opinion of the Minister, engaged in terrorism, systematic or gross human rights violations or war crimes or crimes against humanity within the meaning of subsection 7(3.76) of the Criminal Code, except persons who have satisfied the Minister that their admission would not be detrimental to the national interest.

19(2) Inadmissible classes where entry permitted

(2) No immigrant and, except as provided in subsection (3), no visitor shall be granted admission if the immigrant or visitor is a member of any of the following classes:

(a) persons who have been convicted in Canada of an indictable offence, or of an offence for which the offender may be prosecuted by indictment or for which the offender is punishable on summary conviction, that may be punishable under any Act of Parliament by a maximum term of imprisonment of less than ten years, other than an offence designated as a contravention under the Contraventions Act;

(a.1) persons who there are reasonable grounds to believe

(i) have been convicted outside Canada of an offence that, if committed in Canada, would constitute an offence that may be punishable by way of indictment under any Act of Parliament by a maximum term of imprisonment of less than ten years, or

(ii) have committed outside Canada an act or omission that constitutes an offence under the laws of the place where the act or omission occurred and that, if committed in Canada, would constitute an offence that may be punishable by way of indictment under any Act of Parliament by a maximum term of imprisonment of less than ten years,

except persons who have satisfied the Minister that they have rehabilitated themselves and that at least five years have elapsed since the expiration of any sentence imposed for the offence or since the commission of the act or omission, as the case may be;

(b) persons who

(i) have been convicted in Canada under any Act of Parliament of two or more summary conviction offences not arising out of a single occurrence, other than offences designated as contraventions under the Contraventions Act,

(ii) there are reasonable grounds to believe have been convicted outside Canada of two or more offences, not arising out of a single occurrence, that, if committed in Canada, would constitute summary conviction offences under any Act of Parliament, or

(iii) have been convicted in Canada under any Act of Parliament of a summary conviction offence, other than an offence designated as a contravention under the Contraventions Act, and there are reasonable grounds to believe have been convicted outside Canada of an offence that, if committed in Canada, would constitute a summary conviction offence under any Act of Parliament

where any part of the sentences imposed for the offences was served or to be served at any time during the five year period immediately preceding the day on which they seek admission to Canada;

(c) other members of a family accompanying a member of that family who may not be granted admission or who is not otherwise authorized to come into Canada; or

(d) persons who cannot or do not fulfil or comply with any of the conditions or requirements of this Act or the regulations or any orders or directions lawfully made or given under this Act or the regulations.

27. Reports on permanent residents

27. (1) An immigration officer or a peace officer shall forward a written report to the Deputy Minister setting out the details of any information in the possession of the immigration officer or peace officer indicating that a permanent resident is a person who

(a) is a member of an inadmissible class described in paragraph 19(1)(c.2), (d), (e), (f), (g), (k) or (l);

(a.1) outside Canada,

(i) has been convicted of an offence that, if committed in Canada, constitutes an offence that may be punishable under any Act of Parliament by a maximum term of imprisonment of ten years or more, or

(ii) has committed, in the opinion of the immigration officer or peace officer, based on a balance of probabilities, an act or omission that would constitute an offence under the laws of the place where the act or omission occurred and that, if committed in Canada, would constitute an offence that may be punishable under any Act of Parliament by a maximum term of imprisonment of ten years or more,

except a person who has satisfied the Minister that the person has been rehabilitated and that at least five years have elapsed since the expiration of any sentence imposed for the offence or since the commission of the act or omission, as the case may be;

(a.2) before being granted landing, was convicted in Canada of

(i) an indictable offence, or

(ii) an offence for which the offender may be prosecuted by indictment or for which the offender is punishable on summary conviction,

that may be punishable by way of indictment under any Act of Parliament by a maximum term of imprisonment of less than ten years;

(a.3) before being granted landing,

(i) was convicted outside Canada of an offence that, if committed in Canada, would constitute an offence referred to in paragraph (a.2), or

(ii) committed outside Canada, in the opinion of the immigration officer or peace officer, based on a balance of probabilities, an act or omission that constitutes an offence under the laws of the place where the act or omission occurred and that, if committed in Canada, would constitute an offence referred to in paragraph (a.2),

except a person who has satisfied the Minister that the person has been rehabilitated and that at least five years have elapsed since the expiration of any sentence imposed for the offence or since the commission of the act or omission, as the case may be;

(b) if that person was granted landing subject to terms and conditions, has knowingly contravened any of those terms or conditions;

(c) [Repealed, 1992, c. 49, s. 16];

(d) has been convicted of an offence under any Act of Parliament, other than an offence designated as a contravention under the Contraventions Act, for which a term of imprisonment of more than six months has been, or five years or more may be, imposed;

(e) was granted landing by reason of possession of a false or improperly obtained passport, visa or other document pertaining to his admission or by reason of any fraudulent or improper means or misrepresentation of any material fact, whether exercised or made by himself or by any other person;

(f) wilfully fails to support himself or any dependent member of his family in Canada;

(g) is a member of the inadmissible class described in paragraph 19(1)(j) who was granted landing subsequent to the coming into force of that paragraph; or

(h) became a member of the inadmissible class described in paragraph 19(1)(j) subsequent to the coming into force of that paragraph.

94.1 Organizing entry into Canada

94.1 Every person who knowingly organizes, induces, aids or abets or attempts to organize, induce, aid or abet the coming into Canada of a person who is not in possession of a valid and subsisting visa, passport or travel document where one is required by this Act or the regulations is guilty of an offence and liable

(a) on conviction on indictment, to a fine not exceeding one hundred thousand dollars or to imprisonment for a term not exceeding five years, or to both; or

(b) on summary conviction, to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding one year, or to both.

94.2 Idem

94.2 Every person who knowingly organizes, induces, aids or abets or attempts to organize, induce, aid or abet the coming into Canada of a group of ten or more persons who are not in possession of valid and subsisting visas, passports or travel documents where such visas, passports or travel documents are required by this Act or the regulations is guilty of an offence and liable on conviction on indictment to a fine not exceeding five hundred thousand dollars or to imprisonment for a term not exceeding ten years, or to both.

94.4 Disembarking persons at sea

94.4 Every person who, being the master or a member of a crew of a vehicle used for transportation by sea, disembarks or allows the disembarkation of, or attempts to disembark or attempts to allow the disembarkation of, a person or group of persons at sea for the purpose of inducing, aiding or abetting that person or group of persons to come into Canada in contravention of this Act or the regulations is guilty of an offence and liable on conviction on indictment to a fine not exceeding five hundred thousand dollars or to imprisonment for a term not exceeding ten years, or to both.

94.5 Counselling false statements

94.5 Every person who knowingly counsels, induces, aids or abets, or who knowingly attempts to counsel, induce, aid or abet, any other person to make any false or misleading statement in connection with a claim by that other person to be a Convention refugee is guilty of an offence and liable

(a) on conviction on indictment, to a fine not exceeding ten thousand dollars or to imprisonment for a term not exceeding five years, or to both; or

(b) on summary conviction, to a fine not exceeding two thousand dollars or to imprisonment for a term not exceeding six months, or to both.

94.6(1) Offences relating to approved businesses or funds

94.6 (1) Every person is guilty of an offence who

(a) knowingly submits any false or misleading information to the Minister in relation to an application for the approval of a business or fund or in a report required in relation to an approved business or fund;

(b) knowingly makes any false or misleading representation about an approved business or fund or falsely represents that a business or fund is approved; manages or controls an approved business or fund and fails to comply with any term or condition governing the approval; or

(c) fails to do anything that the person is required to do under paragraph 102.001(2)(b) or section 102.003.

(42) S. 3. (1) Every person commits an offence who, in order to obtain or retain an advantage in the course of business, directly or indirectly gives, offers or agrees to give or offer a loan, reward, advantage or benefit of any kind to a foreign public official or to any person for the benefit of a foreign public official as consideration for an act or omission by the official in connection with the performance of the official's duties or functions; or (b) to induce the official to use his or her position to influence any acts or decisions of the foreign state or public international organization for which the official performs duties or functions.