3. Overview Documents

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Part 4 – Division 3, Subdivision B – Criminal Code: Anti-Money Laundering Amendments

Budget 2023 announced the Government’s intention to introduce legislative amendments to strengthen the investigative, enforcement, and information sharing tools of Canada’s AML/ATF Regime. An overview of the proposed amendments to the Criminal Code is below. Amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act have also been proposed, however, they are the responsibility of the Minister of Finance.

Proposed Criminal Code Amendments

Subdivision B of Division 3 of Part 4 proposes two amendments to the Criminal Code.

The first amendment is a new special warrant for digital assets that may be confiscated as proceeds of crime. This warrant would enable peace officers to seize digital assets where they have reasonable grounds to believe the assets may be subject to forfeiture as proceeds of crime, with prior judicial authorization based on an application by the Attorney General of Canada or of an Attorney General of one of the provinces. This measure will contribute to law enforcement’s ability to respond to the use of cryptocurrencies in criminal activities.

Related amendments would be made to the provisions of the Parliament of Canada Act relating to possible improper use of funds, goods, services or premises made available to a parliamentarian. Amendments would also be made to the Mutual Legal Assistance in Criminal Matters Act to ensure the availability of the special warrant for digital assets when a request for mutual legal assistance is received, and to ensure a consistent approach in the Seized Property Management Act with related provisions.

The second proposed amendment would add several serious offences associated with significant proceeds of crime to the provision authorizing the disclosure of tax information for the purpose of a criminal investigation. The proposed offences are: extortion, fraud over $5,000, corruption and foreign bribery offences, human trafficking, and possession or laundering of property related to the offences in the provision. The provision would also include the separate offences of conspiracy, attempt, or accessory after the fact to the proposed offences.

These measures address findings of the Cullen Commission by facilitating law enforcement’s efforts to “follow the money” and identify proceeds of crime, and to preserve proceeds of crime for criminal forfeiture.

The Criminal Code provisions would come into force 90 days after Royal Assent.

Part 4 – Division 3, Subdivision A – Division 10 and 33 – Proceeds of Crime (Money Laundering) and Terrorist Financing Act, Economic Sanctions and Modernizing Financial Sector Statutes to Address Emerging Risks

• Budget 2023 proposes legislative amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) and the Criminal Code to strengthen Canada’s ability to combat financial crimes and emerging risks, including those stemming from foreign interference and other national security threats. The proposed measures would fulfil a commitment from Budget 2022 to strengthen AML/ATF investigations, prosecutions, and information sharing tools.
• The PCMLTFA provides a robust framework for the protection of the sensitive financial information that FINTRAC receives from financial intermediaries such as banks and money services businesses. This framework enables FINTRAC to perform its compliance and intelligence functions at arm’s length from law enforcement, in a Charter compliant way.

PCMLTFA – Improve Investigation, Enforcement, and Information Sharing Tools

Bill C-47 would amend the PCMLTFA and the Criminal Code to strengthen the investigative, enforcement, and information sharing tools of Canada’s AML/ATF Regime. The PCMLTFA amendments would:

• Make it an offence to structure a financial transaction in order to avoid value thresholds that would trigger reporting obligations under the PCMLTFA;
• Strengthen the registration framework for money service businesses by enacting more stringent documentation requirements;
• Criminalize the operation of unregistered money services businesses;
• Authorize FINTRAC to conduct strategic analysis related to the financing of threats to the safety of Canada and disseminate its analyses to reporting entities, law enforcement, and the public;
• Strengthen whistleblowing protections for employees who report information to FINTRAC by making employers criminally liable for reprisals or threatened reprisals;
• Facilitate the use of FINTRAC non-compliance reports in a wider array of criminal investigations and prosecutions, when common law standards are met;
• Enhance the designated information that FINTRAC is required to disclose to law enforcement when it has reasonable grounds to believe that the information would be relevant to investigating or prosecuting a money laundering or terrorist financing offences;
• Require reporting entities to report information on sanctioned assets to FINTRAC.

Modernizing Financial Sector Oversight to Address Emerging Risks (Protect National Security and Prevent Foreign Interference)

• Budget 2023 also announces the government’s intention to amend the financial institutions statutes (Bank Act, the Insurance Companies Act, the Trust and Loan Companies Act, the Office of the Superintendent of Financial Institutions Act), and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to modernize the federal financial sector framework to address emerging risks.
• The amendments to the PCMLTFA will:
  • Provide new powers to enable the Minister of Finance to impose enhanced due diligence requirements on reporting entities for the purpose of protecting Canada’s financial system from the financing of national security threats;
  • Enable the Director of FINTRAC to share intelligence analysis with the Minister of Finance in circumstances where the analysis would be relevant to ministerial assessments of national security or financial integrity risks, and the Minister’s exercise of statutory authorities to address them;
  • Improve the sharing of compliance information between FINTRAC, the Office of the Superintendent of Financial Institutions (OSFI) and the Minister of Finance;
  • Designate OSFI as a recipient of FINTRAC disclosures pertaining to threats to the security of Canada, where relevant to OSFI’s responsibilities.

The proposed legislative amendments would enhance OSFI’s financial sector oversight by expanding its mandate and enhancing the Superintendent’s and the Minister’s authorities. Specifically, the amendments would:

• Expand the mandate of OSFI to include supervising Federally Regulated Financial Institutions (FRFIs) in order to determine whether they have adequate policies and procedures to protect themselves against threats to their integrity and security, including protection against foreign interference, and require FRFIs to establish and adhere to such policies and procedures;
• Expand the range of circumstances where the Superintendent can take control of a FRFI to include where the integrity and security of that FRFI is at risk, where all shareholders have been precluded from exercising their voting rights, or where there are national security risks;
• Expand the existing authority of the Superintendent to:
  • Issue a direction of compliance to a FRFI when its integrity or security is threatened;
  • Examine the business and affairs of FRFIs, at least once in each calendar year, to determine whether they have adequate policies and procedures to protect themselves against threats to their integrity or their security;
  • Order the production of information and documents to be satisfied that a FRFI has adequate policies and procedures to protect itself against threats to its integrity or its security; and
  • Enter into a prudential agreement with a FRFI for the purpose of establishing adequate policies and procedures to protect itself against threats to its integrity or its security;
• Provide new authorities to the Minister of Finance to:
  • Direct a person to dispose of all shares of a FRFI where their holding of shares poses a threat to the integrity and security of the FRFI, to Canada’s financial system, or to Canada’s national security;
  • Direct the Superintendent to take control of a FRFI for reasons related to national security; and
  • Enable temporary emergency exercise of the Minister of Finance’s approval powers under the statutes that govern FRFIs for public interest reasons; and
• Add a requirement for the Minister of Finance to notify the National Security and Intelligence Committee of Parliamentarians and the National Security and Intelligence Review Agency within 30 days after the Minister uses the new authorities for reasons related to national security.

These proposals are supported by separate measures to improve the sharing of information between regulatory authorities, including OSFI, that will improve supervision of the financial sector by regulatory authorities.

Part 4 – Division 10

Economic Sanctions

• This targeted amendment to the PCMLTFA will designate the Minister of Foreign Affairs as an additional recipient of FINTRAC disclosures, when the information contained in a disclosure is also relevant to Global Affairs Canada’s (GAC) administration of the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act.
• This amendment will support GAC’s capacity to make, administer and enforce sanctions.

Part 4 – Division 34 – Criminal Code: Criminal Rate of Interest Amendments

• To combat predatory lending and high-cost borrowing, Part 4 Division 34 proposes legislative amendments to section 347 of the Criminal Code (criminal interest rate) to lower the criminal rate of interest to 35% annual percentage rate and ensure that charges for payday loans are capped. These legislative changes will help protect consumers from falling into a cycle of debt that they cannot afford nor escape.
• This measure builds on the Budget 2021 announcement, as well as the Minister of Finance’s mandate letter commitment to crack down on predatory lenders. These amendments lower the criminal rate of interest from the current 60 per cent effective annual rate (equivalent to 47 per cent annual percentage rate) to 35 per cent annual percentage rate. A regulation-making authority is also introduced to allow for certain types of loans, such as commercial loans, to be exempt from the criminal rate of interest.
• Section 347.1 of the Criminal Code, currently provides for an exemption from the criminal rate of interest for certain types of payday loans in designated provinces. The proposed amendments introduce a new regulation making authority to allow a limit to be placed on what payday lenders may charge to borrowers.
• To ensure adequate time for businesses to adjust their operations, these amendments will be brought into force on a day or days set by the Governor in Council. Furthermore, any loan agreement signed prior to the effective date of the new criminal rate of interest would not be captured by the new rate.

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