7. (Canada Revenue Agency) Income Tax Act and Excise Tax Act (AML) – Division 34, Subdivision B
Questions & Answers
Part 4
Division 34 – Money Laundering, Terrorist Financing, Sanctions Evasion and Other Measures
Q. What is Budget 2024 proposing in relation to financial crimes?
A. Budget 2024 announces the government’s intention to introduce legislative and regulatory amendments to strengthen Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) framework to support stronger AML/ATF compliance, enhance information sharing and continue to provide new tools for financial crime investigations, prosecutions, and asset recovery.
Q. Why is the government proposing these legislative amendments?
A. Money laundering, terrorist financing, and sanctions evasion are serious threats to the safety of Canadians and the integrity of the financial system.
The government continuously monitors risks and adapts its AML/ATF framework and toolkit to respond to new and increasingly sophisticated techniques to launder money, finance terrorist activities and evade sanctions.
Proposed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) seek to close gaps in the coverage of financial services under Canada’s AML/ATF framework, support stronger AML/ATF compliance and enhance information sharing and use of financial intelligence to detect, deter and disrupt financial crimes.
Proposed amendments to the Criminal Code, the Income Tax Act and Excise Tax Act seek to provide additional tools for law enforcement and Canada Revenue Agency (CRA) investigators and computer forensic analysts to support financial crime investigations, prosecutions, and asset recovery.
The proposed measures respond to feedback from public consultations and findings of the Commission of Inquiry into Money Laundering in British Columbia (known as the Cullen Commission). They also continue to align Canada’s AML/ATF framework with international standards and best practice.
Q. Will these measures fix the problem of financial crime in Canada?
A. The rapidly evolving and complex nature of financial crime requires ongoing changes to the legislative and regulatory framework to provide effective tools to confront new money laundering and terrorist financing techniques.
The government has implemented a significant number of measures since 2019 to strengthen and modernize the AML/ATF Regime and has invested close to $379 million in combatting financial crimes.
The legislative amendments proposed in Budget 2024 continue to build and adapt Canada’s tools to fight financial crime effectively and efficiently. They will support stronger AML/ATF compliance, enhance information sharing and continue to provide new tools for financial crime investigations, prosecutions, and asset recovery.
The government takes financial crimes seriously and will continue to adapt and strengthen the AML/ATF Regime to respond to new and emerging challenges.
Q. Why do private sector businesses need to share information?
A. Information sharing between private sector entities can improve their risk mitigation practices, promote higher quality reporting to FINTRAC, and lead to better intelligence in support of criminal investigations and prosecutions. The Financial Action Task Force, the international standard setting body on AML/ATF, has recognized private-to-private information sharing as an important tool for disrupting money laundering and terrorist financing. Canada’s lack of an information sharing framework exposes risks to the effectiveness of Canada’s AML/ATF Regime.
Q. How will people’s privacy and personal information be protected?
A. To protect privacy, businesses would only be able to disclose information to each other for anti-money laundering, anti-terrorist financing, and sanctions evasion purposes and under conditions to be prescribed in regulations. Regulations would also provide an an oversight role for the Office of the Privacy Commissioner.
Q. How will financial intelligence from FINTRAC help provincial and territorial civil forfeiture offices?
A. By making provincial civil forfeiture offices recipients of FINTRAC financial intelligence, these offices would receive more information to support civil proceedings targeting funds generated from unlawful activity. Civil asset forfeiture serves as a disincentive for crime by making the proceeds generated from unlawful activity at risk of seizure.
Q. Will law enforcement still pursue criminal asset forfeiture?
A. Law enforcement will continue to pursue criminal asset forfeiture. Civil asset forfeiture is not intended to be a substitute for criminal asset forfeiture, rather it is a tool to recover unlawful proceeds.
Q. Why does Immigration, Refugees and Citizenship Canada (IRCC) need financial intelligence from FINTRAC?
A. IRCC is responsible for ensuring that citizenship applicants do not pose national security or organized criminality concerns, as well as for revoking Canadian citizenship when obtained through false representation or fraud.
Financial intelligence disclosures from FINTRAC will enhance citizenship investigations, as well as indirectly support Canada’s AML/ATF Regime by reducing the risk that criminals, and those posing national security risks, becoming Canadian citizens.
This measure supports the Government’s broader efforts to strengthen the integrity of Canada’s immigration system.
Q. Why does the Government want to regulate factoring companies, cheque cashing businesses, and finance and leasing companies for AML/ATF?
A. The lack of AML/ATF requirements for factoring companies, cheque cashing businesses, and financing and leasing companies has been identified as a gap in Canada’s AML/ATF framework, which includes obligations on other businesses providing similar services. This represents a loophole in Canada’s financial system that can be exploited by criminals to launder illicit funds. Regulating factoring companies, cheque cashing businesses, and financing and leasing companies would remove this money laundering loophole and create a more level playing field across industry.
Q. What additional information would FINTRAC be able to publish surrounding violations of the PCMLTFA when it issues an administrative monetary penalty?
A. The proposed amendment would allow FINTRAC to provide the reasons and contextual information around their decision to issue an administrative monetary penalty. Examples of information provided would include: FINTRAC’s analysis of the severity of the violation, details around the organization’s compliance activities and any other considerations that formed part of the decision. This is similar to information disclosed by the Financial Consumer Agency of Canada (FCAC) and international AML/ATF regulators in the United States and Australia.
More transparency around violations will help all reporting entities understand compliance expectations and aligns FINTRAC’s public reporting on AML/ATF compliance violations with international best practice.
Q. Will disclosing more information within the FINTRAC administrative monetary penalty create undue reputational damage to businesses?
A. The proposed amendment limits FINTRAC to providing only relevant information that informed their decision to issue a penalty and the severity of the violation. Before publication of a public notice FINTRAC engages with the affected reporting entity to discuss and determine what information is included in the notice. This practice will continue and will enable reporting entities to contribute to the development of the notice.
Q. Why is the government proposing amendments to the Criminal Code?
A. The government is proposing amendments to the Criminal Code to support the investigation and prosecution of financial crimes.
The Government has consistently signalled its commitment to respond to economic crime, notably money laundering, in recent years.
In Budget 2023, the Government committed to bringing forward legislative amendments following a public consultation on ways to strengthen Canada’s Anti-Money Laundering and Terrorist Financing (AML/ATF) Regime.
Q. How will the proposed amendments to the Criminal Code support criminal investigations?
A. A new order to keep an account open or active for a limited period of time would enable activity in an account to continue for a specific period of time. The objective is to support a criminal investigation.
A new repeating production order would enable the court to issue an order for the production of specified data or documents on multiple, pre-determined dates over a period of up to 60 days after the issuance of the order, regarding activity associated with an account and in anticipation of that activity taking place.
Both of these orders are intended to apply to a wide variety of accounts that a person may hold, and for this reason, the term “account” is not defined.
A new offence related to laundering proceeds of crime for the benefit of a criminal organization would provide a new tool for police and prosecutors to pursue money laundering related to organized crime and complement previous amendments to the money laundering offence to support the prosecution of third-party money launderers.
Q. Will a financial institution that keeps an account open or active when criminal activity is suspected in relation to the account be protected from criminal and civil liability?
A. Persons or entities who are subject to a court order and comply with its terms are protected from criminal or civil liability for complying with a judicial authorization. The court order provides the legal authority to do what it specifies.
Q. Is the Government introducing a U.S.-style racketeering offence to combat auto-theft and money laundering?
A. The Criminal Code offence proposed in Budget 2024, laundering proceeds of crime on behalf of a criminal organization, would complement Canada’s existing framework by adding a new tool for police and prosecutors. The measures proposed in Budget 2024 build on previous amendments to the money laundering offence to address third-party money launders, to continue to facilitate investigations and prosecutions of money laundering related to organized crime.
The new measures, while not the same as measures in the Racketeer Influenced and Corrupt Organizations Act or RICO in the U.S., have the common goal of disrupting organized criminal activity and proceeds of crime.
Q. Did the government consult Canadians on changes to the Criminal Code?
A. The Department of Finance, with input from Justice Canada and other departments, publicly released a consultation paper and solicited input from citizens and stakeholders over the course of summer 2023. Justice Canada included a chapter on ideas for Criminal Code reforms and held roundtables and meetings with a variety of justice-sector stakeholders over the course of summer 2023.
Among various positions advanced by stakeholders in their feedback on the Criminal Code, most stakeholders recognized the need for up-to-date investigative measures for law enforcement to combat economic crime. Most stakeholders supported amendments for investigative measures that are consistent with Charter-protected rights.
Justice Canada continues to assess stakeholder input.
Q. Are these changes to the Criminal Code consistent with rights and freedoms protected under the Canadian Charter of Rights and Freedoms?
A. The Minister of Justice has reviewed these amendments for inconsistency with the Charter as required by section 4.1 of the Department of Justice Act. The Minister of Justice will table a Charter Statement that will identify potential effects that these amendments may have on rights and freedoms guaranteed by the Charter.
Q. What amendments are proposed to the Income Tax Act and the Excise Tax Act?
A. The amendments would grant the Canada Revenue Agency (CRA) authority to seek, obtain and execute general warrants for certain specified and limited purposes. Under a general warrant granted by a judge, CRA investigators and computer forensic analysts could use any device, investigative technique, or procedure, or do what is described in the warrant – other than video surveillance or recording – to obtain information concerning the offences investigated under the Income Tax Act and the Excise Tax Act.
The amendments would also streamline the process for the return of things seized. CRA investigators would have the ability to return seized property to their lawful owner without the need for a court order where detention is not required and there is no dispute as to who is lawfully entitled to possession.
Q. Why is access to the general warrant by Canada Revenue Agency investigators needed?
A. Criminal tax investigations are becoming more complex, often extending beyond provincial and national borders. Canada Revenue Agency investigators and computer forensic analysts are authorized to seek and execute search warrants and a range of other Criminal Code warrants and orders to investigate Income Tax Act and Excise Tax Act offences. However, they are not authorized to seek and execute Criminal Code general warrants. Providing CRA investigators with access to some aspects of the general warrant would allow time-sensitive, sophisticated, and complex tax offence cases to more efficiently be investigated without having to rely on law enforcement agencies to execute such warrants.
Q. Will CRA have the same powers as police officers?
A. No. The amendments would grant the Canada Revenue Agency (CRA) authority to seek, obtain and execute general warrants for certain specified and limited purposes. CRA investigators would not be detaining, arresting, or searching or frisking a person, and will not carry firearms or other restricted weapons.
Q. Did the Government consult on these measures?
A. The Government is consulting on an ongoing basis with law enforcement agencies and other investigative bodies on ways to enhance their ability to investigate financial crimes.
Q. What technical amendments are included in this package, and how will they strengthen the AML/ATF framework?
A. Technical amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act would bolster certain requirements to strengthen the registration framework for money service businesses that were introduced through the Budget Implementation Act, 2023, No.1 under general and false information offences. These amendments close a loophole in the MSB registration framework.
Overview
Part 4
Division 34 – Money Laundering, Terrorist Financing, Sanctions Evasion and Other Measures
Part 4, Division 34 proposes amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), the Criminal Code, the Income Tax Act and Excise Tax Act to support stronger AML/ATF compliance, enhance information sharing and continue to provide new tools for financial crime investigations, prosecutions, and asset recovery.
Strengthening Supervision and the AML/ATF Framework
Amendments proposed to the PCMLTFA would enable the introduction of regulations to cover cheque cashing businesses, factoring, leasing and financing companies. Coverage of these sectors under the PCMTFLA would ensure comprehensive and consistent coverage of businesses providing financial services in Canada. These amendments require regulations to fully implement and would come into force upon an Order of the Governor in Council.
Proposed amendments to the PCMLTFA would also allow FINTRAC to publish additional information surrounding compliance violations within an administrative monetary penalty notice to improve transparency and promote compliance. These amendments would enable FINTRAC to provide a similar level of information as other regulators in its public notice of violations, which can provide insights to all reporting entities on compliance expectations. The amendments would come into force upon Royal Assent.
Technical amendments are proposed to the PCMLTFA to close a loophole in the registration framework for money services businesses, which would come into force upon an Order of the Governor in Council.
Enhancing the Sharing of Information and Financial Intelligence
Amendments are proposed to the PCMLTFA to enhance the ability of businesses with obligations under the Act to share information with each other while maintaining privacy protections for personal information. Information sharing between private sector entities can improve their risk mitigation practices and promote higher quality reporting to FINTRAC, Canada’s AML/ATF regulator and financial intelligence unit. This in turn can lead to better intelligence in support of financial crime investigations and prosecutions.
Consequential amendments are also proposed to Canada’s privacy legislation, the Personal Information Protection and Electronic Documents Act. Regulations would prescribe an oversight role for FINTRAC and the Office of the Privacy Commissioner. These amendments would come into force by an Order of the Governor in Council.
Amendments are also proposed to the PCMLTFA to permit FINTRAC to disclose financial intelligence to:
- provincial and territorial civil forfeiture offices to support their efforts to seize assets linked to unlawful activity. These amendments would come into force by an Order of the Governor in Council.
- Immigration, Refugees and Citizenship Canada (IRCC) to administer the Citizenship Act. This would help ensure citizenship applicants do not pose national security or organized crime concerns. These amendments would come info force upon Royal Assent.
Improving Tools to Investigate and Prosecute Financial Crimes
Amendments are proposed to the Criminal Code, the Income Tax Act and the Excise Tax Act to strengthen investigative powers and support operational effectiveness of Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime. These amendments would come into force ninety days following Royal Assent.
Two amendments are proposed to the Criminal Code to support the enforcement of laws dealing with money laundering and associated crime.
- A new order to keep an account open or active for a limited period of time to assist in the investigation of a suspected criminal office. Financial service providers often close accounts suspected to be linked to criminal activity, which can hinder investigations into financial crimes; and
- A new repeating production order to enable law enforcement to obtain information regarding on-going activity in an account believed to be linked to criminal activity on pre-established dates over a set period of time. This would provide law enforcement more consistent and timely information to support criminal investigations and would include robust safeguards to respect Charter-protected rights.
Both orders would be available to law enforcement based on prior judicial authorization and include measures to protect the interests of those subject to these orders, including measures to limit burden, review mechanisms that enable the court to revoke or to vary an order, and protection from liability for complying with the orders.
Part 4, Division 36 further proposes to create a new offence under the Criminal Code related to laundering proceeds of crime of for the benefit of a criminal organization. This would complement amendments to the laundering proceeds of crime offence introduced in Bill C-59 to support the prosecution of third-party money launderers.
Finally, amendments are proposed to the Income Tax Act and Excise Tax Act to include an additional warrant power to allow the CRA authority to seek, obtain and execute general warrants for certain specified and limited purposes.
- Date modified: