Bill C-59: An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023

Tabled in the House of Commons, February 01, 2024

Explanatory Note

Section 4.2 of the Department of Justice Act requires the Minister of Justice to prepare a Charter Statement for every government bill to help inform public and Parliamentary debate on government bills. One of the Minister of Justice’s most important responsibilities is to examine legislation for inconsistency with the Canadian Charter of Rights and Freedoms [“the Charter”]. By tabling a Charter Statement, the Minister is sharing some of the key considerations that informed the review of a bill for inconsistency with the Charter. A Statement identifies Charter rights and freedoms that may potentially be engaged by a bill and provides a brief explanation of the nature of any engagement, in light of the measures being proposed.

A Charter Statement also identifies potential justifications for any limits a bill may impose on Charter rights and freedoms. Section 1 of the Charter provides that rights and freedoms may be subject to reasonable limits if those limits are prescribed by law and demonstrably justified in a free and democratic society. This means that Parliament may enact laws that limit Charter rights and freedoms. The Charter will be violated only where a limit is not demonstrably justifiable in a free and democratic society.

A Charter Statement is intended to provide legal information to the public and Parliament on a bill’s potential effects on rights and freedoms that are neither trivial nor too speculative. It is not intended to be a comprehensive overview of all conceivable Charter considerations. Additional considerations relevant to the constitutionality of a bill may also arise in the course of Parliamentary study and amendment of a bill. A Statement is not a legal opinion on the constitutionality of a bill.

Charter Considerations

The Minister of Justice has examined Bill C-59, An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023, for any inconsistency with the Charter pursuant to his obligation under section 4.1 of the Department of Justice Act. This review involved consideration of the objectives and features of the bill.

What follows is a non-exhaustive discussion of the ways in which Bill C-59 potentially engages the rights and freedoms guaranteed by the Charter. It is presented to assist in informing the public and Parliamentary debate on the bill. It does not include an exhaustive description of the entire bill, but rather focuses on those elements relevant for the purposes of a Charter Statement.

The main Charter-protected rights potentially engaged by the proposed measures include:

Freedom of expression (section 2(b) of the Charter)

Section 2(b) provides that everyone has freedom of thought, belief, opinion and expression, and includes freedom of the press and other media of communication. Section 2(b) has been broadly interpreted as encompassing any activity or communication, aside from violence or threats of violence that conveys or attempts to convey meaning.

Right to liberty (section 7 of the Charter)

Section 7 of the Charter protects against the deprivation of an individual’s life, liberty and security of the person unless done in accordance with the principles of fundamental justice. These include the principles against arbitrariness, overbreadth and gross disproportionality. An arbitrary law is one that impacts section 7 rights in a way that is not rationally connected to the law’s purpose. An overbroad law is one that impacts section 7 rights in a way that, while generally rational, goes too far by capturing some conduct that bears no relation to the law’s purpose. A grossly disproportionate law is one whose effects on section 7 rights are so severe as to be “completely out of sync” with the law’s purpose. Offences that carry the possibility of imprisonment have the potential to deprive liberty and so must accord with the principles of fundamental justice. The principles of fundamental justice also include residual protections against self-incrimination and for the right to silence, which provide certain additional safeguards beyond those accorded by the more specific rights against self-incrimination in sections 11(c) and 13 of the Charter.

Right against unreasonable search and seizure (section 8 of the Charter)

Section 8 of the Charter protects against “unreasonable” searches and seizures. The purpose of section 8 is to protect individuals against unreasonable intrusion into a reasonable expectation of privacy. A search or seizure that intrudes upon a reasonable expectation of privacy will be reasonable if it is authorized by a law, the law itself is reasonable (in the sense of striking an appropriate balance between privacy interests and the state interest being pursued), and it is carried out in a reasonable manner. The assessment of the reasonableness of the law is a flexible one that takes into account the nature and purpose of the legislative scheme, and the nature of the affected privacy interests.

Offence rights (section 11 of the Charter)

Section 11 of the Charter guarantees certain procedural rights to persons who have been charged with an offence. Its protections apply only to persons "charged with an offence". Persons are "charged with an offence" within the meaning of section 11 if they are subject either to proceedings that are criminal by nature, or that result in "true penal consequences". True penal consequences include imprisonment and fines with a punitive purpose or effect, as may be the case where the fine or penalty is out of proportion to the amount required to achieve regulatory purposes.

Rights to trial fairness and presumption of innocence (section 11(d) of the Charter)

Section 11(d) guarantees the right to be presumed innocent until proven guilty according to law in a fair and public hearing by an independent and impartial tribunal. It also protects the right of an accused to make full answer and defence. Measures that govern how a trial is conducted and that set out rules of evidence may in some circumstances engage the “fair hearing” and “presumption of innocence” rights protected under section 11(d).

Protection against cruel or unusual treatment or punishment (section 12 of the Charter)

Section 12 of the Charter guarantees the right not to be subjected to any cruel and unusual treatment or punishment. In the context of sentencing, section 12 prohibits grossly disproportionate punishments, as well as punishments that are cruel and unusual by nature.

Equality rights (section 15 of the Charter)

Section 15(1) Charter protects equality rights. It provides that every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination, including on the basis of age and mental or physical disability. Equality entails the promotion of a society in which all are secure in the knowledge that they are recognized at law as human beings equally deserving of concern, respect, and consideration.

Part 1 – Amendments to the Income Tax Act and Other Legislation

Part 1 would make a number of amendments to the Income Tax Act. Among these amendments are provisions imposing administrative monetary penalties, in order to promote compliance with some of the existing and proposed provisions of the Act. Situations that would be subject to such a penalty include: engaging in a tax avoidance transaction while failing to disclose the transaction to the Minister; claiming a Carbon Capture, Utilization and Storage investment tax credit or a clean technology investment tax credit at the regular tax credit rate, while failing to meet labour requirements in certain circumstances; and failing to meet certain reporting and disclosure requirements required under the Carbon Capture, Utilization and Storage investment tax credit scheme. The penalties may be imposed by the Minister of National Revenue. Given the possibility of substantial monetary penalties, the new provisions could potentially be perceived as impacting section 11 rights.

The following considerations support the consistency of the provisions with the Charter. The process leading to the imposition of a monetary penalty would be administrative in nature. The purpose of imposing a penalty would be to promote conduct that complies with the purposes of the relevant portions of the Act. The administrative monetary penalties would be subject to legislated limits depending on the nature of the violation and other factors. The proposed penalty provisions would closely follow the example of existing administrative monetary penalty provisions in other tax statutes. In this context, the imposition of a penalty would not give rise to “true penal consequences” for the purpose of section 11 of the Charter.

Part 2 – Enactment of the Digital Services Tax Act

Part 2 would enact the Digital Services Tax Act to implement a tax on certain digital services revenue associated with Canada from online marketplaces, online targeted advertising, social media platforms and the sale or licensing of online user data. The tax would apply to an entity with annual revenue of at least €750,000,000, calculated in Euros to reflect international practices, and Canadian digital services revenue of at least $20,000,000. An entity’s revenue may be calculated on their own or as part of a larger group headed by a parent entity. The Act would set out reporting and filing requirements and rules for determining liability for the new tax. As found in other taxation statutes, the Act would also include administration and enforcement provisions to promote compliance with the statutory scheme.

Administrative monetary penalties

The Digital Services Tax Act would establish administrative monetary penalties where a person fails to fulfill certain requirements of the Act. Such penalties may be imposed by the Minister of National Revenue in the following circumstances under the Act: failure to register when required; failure to file a return when required; making false statements or omissions; pursuing an unreasonable appeal to defer the payment of an amount payable; and tax avoidance planning. Given the possibility of substantial monetary penalties, the new provisions could potentially be perceived as impacting section 11 rights.

The following considerations support the consistency of the provisions with the Charter. The process leading to the imposition of a monetary penalty would be administrative in nature. The purpose of imposing a penalty would be to promote conduct that complies with the purposes of the relevant portions of the Act. The administrative monetary penalties would be subject to legislated limits depending on the nature of the violation and other factors. The proposed penalty provisions would closely follow the example of existing administrative monetary penalty provisions in other tax statutes. In this context, the imposition of a penalty would not give rise to “true penal consequences” for the purpose of section 11 of the Charter.

Offences and Punishment

The Digital Services Tax Act would establish offences that sanction, among other things, the failure to file a return or to comply with an obligation or order, making or participating in the making of false or deceptive statements, and intentionally failing to pay tax as required under the provisions. A general offence provision would also be created to promote compliance with the new tax scheme as a whole. Punishment under the new offence provisions would be limited to fines, including mandatory minimum fines of $2000 for failing to file a return and 50% of the amount owing for the offence of making a false or deceptive statement.

Section 12 of the Charter provides that everyone has the right not to be subjected to any cruel and unusual treatment or punishment. As the mandatory minimum fine amounts would be punishments for an offence, they have the potential to engage section 12 of the Charter.

The following factors support the consistency of the mandatory minimum fines with section 12. The potential offenders are corporate entities with annual revenue of at least €750,000,000 or their officers and directors. A corporate entity does not benefit from the protection of section 12. As for officers and directors, the mandatory minimum fine amounts would not be excessive considering the scale of the business activities to which the new provisions would apply.

Inspection, Requirement and Search Powers

The Digital Services Tax Act would create regulatory powers similar to those in other tax statutes. A person authorized by the Minister of National Revenue would be allowed to inspect the records, processes, property or premises of a person that may be relevant in determining tax obligations or entitlements, and to verify compliance with the new provisions. Authorized persons would have the ability to require a person to give all reasonable assistance in the context of the inspection including by answering all proper questions related to the administration or enforcement of the new provisions. The new provisions would also permit authorized persons to search any building or place by way of a warrant for any record or thing that may provide evidence of the commission of an offence under the new provisions, and to seize any such record or thing.

The proposed measures described above potentially engage the protection against unreasonable search or seizure under section 8 of the Charter.

The following considerations support the consistency of the measures with section 8. The inspection and requirement powers would not be available to further a penal investigation. Rather, they would be available for regulatory purposes, such as to determine tax obligations or entitlements and to verify compliance with the new provisions. In these circumstances, privacy expectations are reduced. In the case of a place occupied as a residence where privacy interests are heightened, inspectors would only be authorized to enter with the consent of the occupant or with a warrant issued by a judge. A warrant would also be required to search and seize records or things that are expected to provide evidence of the commission of an offence under the new provisions. Warrants issued under the new provisions would be obtained through judicial authorization, meaning a judge would be satisfied there are reasonable grounds to believe the relevant record or thing will likely be found in the premises and afford evidence of the offence, thus meeting the requirements under section 8 of the Charter for a search or seizure to be reasonable.

Inquiry Powers of a Hearing Officer

The Digital Services Tax Act would allow a hearing officer authorized by the Minister of National Revenue to make an inquiry necessary for any purpose related to the administration and enforcement of the new provisions. The hearing officer would have the power to summon any witnesses to the inquiry, and to compel them to give oral or written evidence, and produce any relevant documents or things. Any person who gives evidence or whose affairs are being investigated in the course of an inquiry would be entitled to be represented by a lawyer.

The power to compel an individual to attend at a specified place for oral examination under oath potentially engages the liberty interest under section 7 of the Charter, which includes residual protections against self-incrimination.

The following considerations support the consistency of these powers with section 7. The power to compel testimony serves an important purpose, namely the administration and enforcement of a statute that imposes a tax on revenue from commercial services; it is not available for the predominant purpose of furthering a prosecution against the witness. In addition, any incriminating evidence compelled during an inquiry may not be used in another proceeding, if such use would violate the principle against self-incrimination. Furthermore, the subject of an inquiry and any witnesses would have the right to be represented by a lawyer.

The power to compel production of documents or things at an inquiry potentially engages privacy interests protected by section 8 of the Charter.

The following considerations support the consistency of this power with section 8. The type of documents or things that may be required to be provided must be relevant to the administration and enforcement of a tax statute in a context where privacy expectations are reduced. Further, an order to produce a document or thing is not particularly intrusive, as it does not involve entry into a taxpayer’s private property to conduct a search or seizure. Similar inquiry powers that exist in other tax statutes have been upheld by the courts.

Powers to Collect, Disclose and Use Information

The Digital Services Tax Act would enact powers to collect, disclose and/or use information. The Minister of National Revenue would be authorized to require any person to provide information or records, such as documents relevant to the determination of a taxpayer’s Canadian digital services revenue, for a purpose related to the administration or enforcement of the new provisions. The new provisions would also empower the Minister to require a person resident in Canada or non-resident person that carries on business in Canada to provide any foreign-based information or record. The term “foreign-based information or record” would be defined as any information or record that is available or located outside Canada and that may be relevant to the administration or enforcement of the Act. In addition, the new provisions would authorize the disclosure and use of confidential information in specified circumstances.

The measures to collect, disclose and/or use information potentially engage section 8 of the Charter.

The following considerations support the consistency of these measures with section 8. Privacy interests are diminished in the regulatory and administrative contexts. Similar powers to require the production of or permit the sharing of relevant information for regulatory or administrative purposes, rather than for the purpose of investigating offences, have been upheld as reasonable under section 8. The amendments set out numerous measures to safeguard privacy interests including: a requirement for judicial authorization to compel information about unnamed persons; strict rules governing the permissible disclosure and use of confidential information; and the ability to judicially review an order to produce any evidence relating to confidential information or a requirement to provide foreign-based information.

Part 4 – Amendments to the Excise Act, 2001 and to Related Legislation (Vaping Products)

Part 4 includes administrative monetary penalties for violations of provisions of the Excise Act, 2001, in particular for selling, purchasing, possessing, disposing of or distributing vaping products that are not properly packaged and stamped to indicate that duties imposed on vaping products under that Act have been paid. Administrative monetary penalties may also be imposed for manufacturing vaping products without a licence, importing for sale in Canada vaping products that are not properly packaged and stamped, and for failure to immediately deliver imported vaping products for stamping. The penalty may be imposed by the Minister of National Revenue. Given the possibility of substantial monetary penalties, the new provisions could potentially be perceived as impacting section 11 rights.

The following considerations support the consistency of the provisions with the Charter. The process leading to the imposition of a monetary penalty would be administrative in nature. The purpose of imposing a penalty would be to promote conduct that complies with the purposes of the relevant portions of the Act. The administrative monetary penalties would be determined based on the amount of duty that would be imposed on the vaping products in question. The proposed penalty provisions would closely follow the example of existing administrative monetary penalty provisions in the Act and in other tax statutes. In this context, the imposition of a penalty would not give rise to “true penal consequences” for the purpose of section 11 of the Charter.

Division 2 of Part 5 - Leave Related to Pregnancy Loss and Bereavement Leave

Division 2 of Part 5 proposes to enact a new leave related to pregnancy loss in the Canada Labour Code. The leave would be available to an employee whose pregnancy ended in the loss of the foetus, the spouse or common-law partner of a person who suffered a pregnancy loss, and an employee who intended to be the legal parent of the child that would have been born had another person’s pregnancy resulted in a live birth.

The length of the leave of absence granted would depend on the type of the pregnancy loss. In the case of a stillbirth after 20 weeks of pregnancy, eligible employees would be entitled to a leave of up to 8 weeks, while in the case of a pregnancy loss before the 20th week of pregnancy, the eligible employees would be entitled to a leave of up to three days.

The creation of a new leave for pregnancy loss could be seen as engaging s.15(1) of the Charter, as it would not be available to some men who were not married or in a common-law relationship with the person who experienced the pregnancy loss, unless they can demonstrate that they intended to be a parent when the child was born. A distinction could potentially be made on the enumerated ground of sex and on the analogous ground of marital status. The following considerations support the consistency of the provisions with the Charter.

The new leave would potentially lead to positive effects for those who become pregnant, their spouses and partners, and any individuals who demonstrate they intended to become a parent, including through surrogacy. By allowing spouses, common law partners and employees who intended to be the legal parent of the unborn child to benefit from this leave, the proposed amendments have been targeted at individuals who are most likely to be affected by a pregnancy loss.

Division 6 of Part 5 – Measures Related to Competition

Division 6 of Part 5 would include several amendments to the Competition Act. The amendments would improve the effectiveness of the provisions that address anti-competitive conduct and strengthen the enforcement framework, including by allowing for several new remedial orders that could include administrative monetary penalties.

Representations of a product’s benefits for the environment

If someone engages in “reviewable conduct” as defined in the Competition Act, then the Commissioner of Competition can apply to the Competition Tribunal, the Federal Court and/or the superior court of a province, for a binding civil order to address that conduct. The order can include prohibitions on taking certain actions, requirements to take certain actions, or an administrative monetary penalty, depending on the circumstances. The amendments would add, to the existing section dealing with representations to the public, a new form of reviewable conduct: a statement, warranty or guarantee of a product’s benefits for protecting the environment or mitigating the environmental and ecological effect of climate change that is not based on an adequate and proper test.

This amendment has the potential to engage the freedom of expression under section 2(b) of the Charter, because it would allow for legally binding orders on persons, as a consequence for making certain kinds of statements to the public about a product. Section 2(b) includes protection for advertising and other expression that is done for commercial purposes.

The following considerations support the consistency of this amendment with the Charter. Commercial expression that has the potential to mislead the public has a lower value compared to other forms of protected expression, because it has a weaker link to the core values of the right. The proposed amendment would seek to protect consumers, competitors, and the proper functioning of the market, against the harms of untested representations about a product’s benefits for protecting the environment or mitigating the effects of climate change. Requiring persons to adequately test their environmental claims improves the functioning of the market by improving the reliability of information provided to consumers and preventing persons from relying on untested claims to gain a market advantage. The amendment would not impose a requirement that testing prove the representation with absolute certainty. Instead, it requires “adequate and proper” testing of the claim. Furthermore, the amendment would not establish a criminal offence: if a person is found to have engaged in reviewable conduct for the purpose of this amendment, only civil or administrative proceedings would be available.

Administrative monetary penalties

The amendments would enact several new circumstances where a person who fails to fulfill a requirement of the Competition Act could be ordered to pay an administrative monetary penalty. Such penalties could be ordered in the following circumstances: failure to comply with a consent agreement, whether it is reached with the Commissioner of Competition or between parties to a private action; failure of a private party to serve a consent agreement on the Commissioner; making or proposing an agreement or arrangement between competitors that substantially prevents or lessens competition in a market, or is likely to do so; and engaging in reprisal action or being likely to engage in that action. Depending on the circumstances, the penalty may be imposed by the Competition Tribunal, the Federal Court, and/or the superior court of a province. Given the possibility of substantial monetary penalties, the amendments could potentially be perceived as impacting section 11 rights.

The following considerations support the consistency of the provisions with the Charter. The proceedings leading to the imposition of a monetary penalty would be administrative in nature. As the amendments specify, the purpose of imposing a penalty would be to promote conduct that complies with the purposes of the relevant portions of the Competition Act, and “not with a view to punishment”. The administrative monetary penalties would be subject to legislated limits depending on the nature of the violation, its duration, and other factors. There would be no mandatory minimum penalty amounts. The proposed penalty provisions would closely follow the example of a number of existing administrative monetary penalty provisions in the Competition Act. In this context, the imposition of a penalty would not give rise to “true penal consequences” for the purpose of section 11 of the Charter.

Division 8 of Part 5 – Money Laundering, Terrorist Financing, Sanctions Evasion, and Other Measures

Subdivision A – Proceeds of Crime (Money Laundering) and Terrorist Financing Act

Subdivision A of Division 8 of Part 5 would make a number of amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), as well as consequential amendments to other Acts and a regulation.

Sanctions Evasion

Amendments would expressly include sanctions evasion within the scope of the reporting, analysis and disclosure scheme of the PCMLTFA. These amendments would require reporting entities (such as financial institutions) to report to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) where they have reasonable suspicion that a transaction, or attempted transaction, that occurs within the scope of their activities is related to the commission of a sanctions evasion offence. They would also require FINTRAC, after conducting its analysis, to make a report to the appropriate police force when FINTRAC reasonably suspects that information would be relevant to investigating or prosecuting a sanctions evasion offence. FINTRAC would also have to disclose the information to other agencies where the information relates both to a sanctions evasion offence and matters within the mandate of those agencies. As these amendments involve the mandatory reporting of information, and its subsequent analysis and disclosure to law enforcement, they could have potential effects under section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with the Charter. The amendments would extend to sanctions evasions offences the same kind of reporting, analysis and disclosure obligations that already exist in the PCMLTFA for money laundering and terrorist offences. There is a considerable amount of overlap between these offences. Even in instances where a sanctions evasion offence does not at the same time constitute a money laundering or terrorist financing offence, the detection and prosecution of these offences pose similar challenges to the detection and prosecution of money laundering and terrorist financing offences. These include, in particular, that there is no direct “victim” with an incentive to report crime to police, and that the complexity of these schemes often means that indications of crime only appear on analysis of ongoing patterns of activity. Further, Canada’s sanctions legislation, consistent with its international obligations, already requires that Canadians and persons in Canada report any property in their possession or control that is subject to sanctions, as well as any transactions or attempted transactions in respect of such property, to law enforcement or security agencies. It also already requires a wide range of financial institutions to monitor for such property and make reports to the appropriate regulator. The privacy safeguards that currently exist in the PCMLTFA would also apply to reporting, analysis and disclosure of information relating to sanctions evasions offences.

Private Automated Banking Machines

Amendments would include, as money service businesses under section 5 of the PCMLTFA, providers of acquirer services for private “white label” automated banking machines (ABMs), meaning machines that are not owned by a bank or other financial institution as defined in the bill. “Acquirers” provide the owners of such machines with a connection between the machine and payment networks, such as the Interac network, and so play a role in processing transactions made through white label ABMs. Inclusion of these entities under section 5 of the PCMLTFA would subject them to obligations including regarding customer due diligence, record-keeping, and reporting of suspicious transactions to FINTRAC, subject to regulations. As the listing of these entities would obligate them to provide certain information to FINTRAC, this amendment could be seen as having potential effects under section 8 of the Charter.

The following considerations support the consistency of these amendments with section 8. Acquirers are like other entities currently listed under section 5 in that they handle financial transactions on behalf of others. The white label ABM industry, in particular, has been identified as a source of money laundering risk by law enforcement, the Financial Action Task Force, and FINTRAC. This is because of the potential for such machines to be loaded with cash from illicit sources, which can then be laundered by dispensing it to customers of the ABM, in return for which the ABM owner/operator receives an electronic deposit into their bank account. Acquirers, being the link between the ABM owner and the payment network, are well placed to conduct the appropriate due diligence to aid in the detection of money laundering in the use of white label ABMs, and in fact currently perform certain measures to this effect under their contractual obligations toward Interac. The privacy safeguards that currently exist in the PCMLTFA would also apply to reporting, analysis and disclosure of information from acquirers.

Importation and Exportation of Goods

The amendments would create a new Part 2.1 of the PCMLTFA, which would create obligations and powers in order to respond to the risk of Trade-Based Money Laundering (TBML). These include reporting obligations to the Canada Border Services Agency (CBSA) and a scheme for disclosures from CBSA to law enforcement and regulators, as well as search and seizure powers to help in administering the new reporting requirement.

Reporting and disclosure

The amendments would require anyone who reports the importation or exportation of goods under section 12 or 95 of the Customs Act, or who engages in a financial transaction purporting to pay for such goods, to declare to an officer whether the goods are proceeds of crime, or are goods related to money laundering, terrorist financing or sanctions evasion, as well to declare that the goods are actually being imported or exported. They would also enable customs officers to disclose the contents of these declarations, as well as other information obtained for the purposes of Part 2.1 of the PCMLTFA and information prepared from either of these categories, to law enforcement and/or regulatory bodies. The information would be reported where the customs officer has reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering, terrorist financing or sanctions evasion offence. As these provisions involve the mandatory collection of information, and permit its eventual disclosure to law enforcement, they have the potential to engage section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with section 8 of the Charter. Privacy expectations are diminished in the border context. These amendments serve the important objectives of controlling the import and export of proceeds of crime, as well as the use of international trade as an avenue for money laundering, which has been recognized as a source of money laundering risk, including for example by the Financial Action Task Force and the Commission of Inquiry into Money Laundering in British Columbia. The information requested is narrowly tailored to what is necessary to control the import and export of proceeds of crime, and to detect trade-based money laundering. Disclosure of information to law enforcement is discretionary as opposed to mandatory, and can only occur on a threshold of reasonable suspicion, as is currently the case with disclosures from FINTRAC. Disclosure and use of this information is also prohibited except for the purposes just described.

Retention, Searches, Seizures and Forfeitures

The amendments would grant powers to customs officers to temporarily retain goods where a declaration has not yet been made, to search persons for goods that have not been declared or that are proceeds of crime, to exercise Customs Act examination and search powers in respect of such goods, to seize such goods and to subject such goods to forfeiture. Because these actions constitute searches and seizures, they have potential effects on section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with section 8.  These powers are similar to existing powers under the Customs Act and other border legislation. Privacy expectations are diminished in the border context. The provision regarding searches of persons includes the right of a person subject to the search to request review by a senior customs officer. The provisions for seizure of goods and forfeiture include a right to review and appeal, and require officers to notify the implicated persons of these rights.

Offences

Amendments would create an offence for failing to make a required report to a customs officer. They would also create an offence for officials who disclose or use information contained in reports outside the circumstances specified in the legislation. As these offences would be punishable by imprisonment, they could engage the right to liberty protected by section 7 of the Charter.

The following considerations support the consistency of these amendments with section 7. The offences are tailored to capture only conduct relevant to the purpose of the legislation. In the case of failure to report, they serve an important function by helping to ensure compliance with the new reporting requirement. In the case of the offences relating to unauthorized disclosure or use of information reported under the new Part 2.1, they help ensure the protection of privacy by imposing sanctions for disclosure or use other than under the conditions specified in the legislation. The offences are not subject to any minimum punishment.

Disclosures to the Department of the Environment and the Department of Fisheries and Oceans

Amendments would require FINTRAC to disclose information to the Department of the Environment and/or the Department of Fisheries and Oceans where they have reasonable grounds to suspect that the information is relevant to investigating or prosecuting a money laundering, terrorist financing or sanctions evasion offence and the information also would be relevant to investigating an offence under the responsibility of the Minister of the Environment or the Minister of Fisheries and Oceans, respectively. As these amendments require the disclosure of information to law enforcement, they have the potential to engage section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with section 8. Disclosure is only authorized where FINTRAC has already developed reasonable grounds to suspect that the information would be relevant to the investigation of a money laundering, terrorist financing or sanctions evasion offence, and so would already be obligated to disclose it to the appropriate police force. Disclosure to the Department of the Environment and the Department of Fisheries and Oceans would be incidental, and would reflect the reality that information related to money laundering, terrorist financing and sanctions evasion can also reveal information relevant to the investigation of other offences. The disclosure power would not extend FINTRAC’s mandate beyond money laundering, terrorist financing and sanctions evasion but would merely allow incidental disclosure of information that is already being disclosed to police.

Subdivision B – Criminal Code

Subdivision B of Division 8 of Part 5 amends the Proceeds of Crime and the General Powers of Certain Officials provisions of the Criminal Code.

Evidentiary matters

Section 462.31 of the Criminal Code establishes the offence of laundering proceeds of crime. The offence applies in relation to property or proceeds that are obtained or derived, directly or indirectly, from the commission of a “designated offence”. The designated offences are set out in section 462.3 of the Criminal Code.

This Subdivision would amend section 462.31 of the Criminal Code to better address third party money laundering. Amendments would clarify that it is not necessary for the prosecution to prove that the accused knew, believed they knew, or was reckless as to the specific nature of the designated offence. Amendments would also provide a legislated inference allowing a court to infer that the mental element (mens rea) for the offence is met, if it is satisfied that the manner in which the accused dealt with property or proceeds is markedly unusual or that the accused’s dealings are inconsistent with lawful activities typical of the sector in which they take place. These provisions would only be available where the accused is not also charged with the designated offence that generated the proceeds of crime. As these amendments deal with the manner in which the offence is proven, they could be seen as having potential effects on the accused’s fair trial rights as protected by section 11(d) of the Charter.

The following considerations support the consistency of these amendments with section 11(d). The amendment clarifies that the prosecution need not prove mens rea with respect to the specific nature of the designated offence – it does not remove the need to prove mens rea at all. It merely clarifies what mens rea must be proven by the prosecution beyond a reasonable doubt: specifically, a general mens rea with respect to the fact that the property or proceeds are proceeds of crime. The amendment allowing a court to draw an inference from the manner in which the accused dealt with property or proceeds is permissive. It does not require the court to draw such an inference, and it preserves the need for a court to be satisfied beyond a reasonable doubt as to the mens rea and other elements of the offence before it can convict an accused.

Search, Seizure, and Restraint – Undertaking

This Subdivision would amend sections 462.32, 462.321 and 462.33 of the Criminal Code to remove the requirement that a judge obtain from the Attorney General an undertaking with respect to the payment of damages or costs when issuing a warrant for the search and seizure of proceeds of crime, or an order for the restraint of proceeds of crime. As this affects the conditions under which a warrant of search and seizure can be issued, it could have potential effects under section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with section 8. The removal of the undertaking requirement does not mean that the Attorney General will not be responsible for the payment of damages or costs where these are warranted either under the Charter or otherwise. The amendments retain the existing accountability measures under section 462.32, including, for example, obligations regarding notice, record-keeping and return of things seized, as well as obligations to take reasonable care to ensure that the property is preserved to be dealt with in accordance with the law. Amendments would ensure that a judge could include reasonable conditions as the judge considers necessary, for all three of these kinds of warrants. Such a power currently exists only for section 462.33.

Search, Seizure and Restraint Orders

This Part would amend sections 462.32, 462.321 and 462.33 of the Criminal Code to require that a judge must have reasonable grounds to believe that property or digital assets are proceeds of crime as defined in subsection 462.3(1) in order to issue a search and seizure warrant or restraint order,,). This would be a change from the current text, which requires a judge to have reasonable grounds to believe that the property is property in respect of which an order of forfeiture may be issued. These amendments could have effects on the right to be secure against unreasonable search and seizure protected by section 8 of the Charter, as search and seizure warrants and restraint orders under these provisions constitute searches and/or seizures for the purposes of section 8.

The following considerations support the consistency of these amendments with section 8. The amendments, while clarifying the grounds on which a restraint order may be issued, maintain the essential safeguards of the current provisions. These include, in particular, that the order is authorized by a judge, based on reasonable grounds to believe the essential facts that support the seizure or restraint of the property, namely that the property is proceeds of crime in relation to a particular offence. In addition, a person with an interest in seized or restrained property can apply for a review of the seizure or restraint by a court.

Production Order for Financial Data - Digital Assets

This Part would amend s. 487.018 of the Criminal Code, which allows for the issuance of judicially-authorized production orders to obtain financial data including names associated with an account number, or account numbers associated with a name. The amendments would specify that these orders can be issued to obtain names and account numbers of a person where authorities know an identifier associated with digital assets, such as a bitcoin wallet number. As this affects the scope of a judicially-authorized production order power, it could have potential effects under section 8 of the Charter, which guarantees the right to be secure against unreasonable search and seizure.

The following considerations support the consistency of these amendments with section 8 of the Charter. The amendments would modernize the existing provision to keep up to date with technological developments in relation to financial data. The information that could be obtained as a result of the amendments would be in the same nature as information currently targeted by such orders, namely identifying information associated with a financial account. The scope of these orders remains narrow, and the amendments do not affect the safeguards currently in place with respect to the issuance of these production orders.