Canada

1. Does Canada have legislation making it a criminal offence to engage in money laundering and/or terrorist financing?

The Criminal Code of Canada prohibits money laundering and terrorist financing. Section 462.31(1) of Canada’s Criminal Code criminalizes money laundering by prohibiting the use of any property or proceeds of property with an intent to conceal or convert that property while knowing, believing, or being reckless as to whether that property was obtained through a criminal offence either in Canada, or anywhere in the world such that if it had occurred in Canada, it would be considered a criminal offence. Sections 83.02 to 83.04 of the Criminal Code criminalize terrorist financing by prohibiting the direct or indirect use, provision, or collection of property or services (financial or otherwise) in order to facilitate or carry out terrorist activity.

2. To whom does the legislation apply?

The Criminal Code primarily applies to individuals and organisations in Canada, however in certain circumstances Canadian courts can assume jurisdiction and prosecute extra-territorial offences. Notwithstanding that section 6(2) of the Criminal Code provides that “no person shall be convicted […] of an offence committed outside Canada” unless a specific provision provides otherwise, “outside Canada” has been judicially interpreted as lacking a “real and substantial” connection to Canada. A “real and substantial” connection to Canada will be established where a significant portion of the activities constituting the offence took place in Canada.

In addition, both the anti-money laundering (AML) and terrorism financing provisions of the Criminal Code contain specific language, which provide extra-territorial effect. The AML provision prohibits dealing in property that was acquired as a result of the commission abroad of an act that would be a criminal offence in Canada. A terrorism financing offence is deemed to be committed in Canada where there is a nexus between the underlying terrorist act and Canada, either through the perpetrator or the victim, or if the person who commits the terrorist financing offence is linked to Canada.

3. What does the legislation prohibit?

The AML provision makes it an offence to deal in property with the intention to conceal or convert it to another form of property, in the knowledge or belief that the property is the proceeds of crime.

The terrorism financing provisions make it an offence to provide or collect property with the intent or knowledge that it will be used for terrorist activity.

4. How is money laundering defined? Does underlying criminal activity have to be proven?

Money laundering is defined under section 462.31(1) of the Criminal Code and comprises any act in which (1) the accused dealt with property or proceeds of property (i.e. by using, transferring, disposing of, etc. the property); (2) the property was obtained by crime; (3) the accused knew, believed, or was reckless to the fact that the property was obtained by crime; and (4) the accused intended to conceal or convert the property.

The proceeds of crime must relate to a “designated offence”, which is any offence that may be prosecuted as an “indictable offence” under the Criminal Code or any other federal penal statute.

The underlying criminal activity need not be proven to establish the offence of money laundering.

5. What level of intent or knowledge is required to establish a violation?

The level of intent or knowledge required to establish an offence under the Criminal Code is specific to each provision. The mens rea requirement under the AML provision includes the intent to conceal or convert property or proceeds of property, and the knowledge or belief that the property or proceeds were derived from a designated offence. “Intent to convert” is given its ordinary meaning and does not require an intent to disguise or conceal. This mens rea requirement may be satisfied by proving belief or wilful blindness. The mens rea of the terrorist financing provisions include wilfully providing financial services and intending or knowing that the related property will be used for the financing of terrorist activities.

6. What are the potential penalties for infringing the legislation?

Money laundering and terrorism financing are both punishable by up to ten years’ imprisonment.

7. Does the legislation have extra-territorial reach?

The AML provision and terrorism financing provisions both explicitly allow for Canada to prosecute these offences where the underlying criminal acts occurred outside Canada but would be considered criminal offences had they occurred within Canada. The jurisdictional test in the case of Libman must also be met and a “real and substantial” connection between the offence and Canada must be established.

8. Are there additional anti-money laundering or counter terrorist financing regulations or obligations, such as registration or reporting obligations, for businesses or individuals that operate in particular sectors or undertake particular activities?

Reporting entities designated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) must comply with registration, identity verification, record-keeping, reporting and compliance requirements. Such entities include a range of financial services providers, such as banks, securities dealers, and trust and loan companies.

Foreign and domestic entities that provide the following services to clients in Canada must also register as a money services business and meet compliance obligations under the PCMLTFA and its associated regulations: foreign exchange dealing; remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network; issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments except for cheques payable to a named person or entity, dealing in virtual currencies; or any prescribed service.

9. What are the potential penalties for failing to comply with these obligations?

Failure to comply with the PCMLTFA may result in up to five years imprisonment and/or fines of up to $2,000,000. The government agency responsible for enforcing the PCMLFTA, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), may also impose fines by issuing administrative monetary penalties and serving notices of violations.

10. Who are the relevant enforcement authorities in Canada and what are their contact details?

Criminal Code offences are prosecuted by either federal or provincial prosecutors in conjunction with investigation support by provincial police or the Royal Canadian Mountie Police (RCMP). Federal prosecutions are conducted by the Public Prosecution Service of Canada (PPSC). The PCMLTFA is enforced by FINTRAC and, in some circumstances, reporting entities must report to the RCMP and/or the Canadian Security Intelligence Service (CSIS).

Terrorist property reports required to be submitted to the RCMP and/or CSIS are reported to: RCMP, unclassified fax: +1 613 825 7030 or CSIS Financing Unit, unclassified fax: +1 613 369 2303.

Terrorist property reports are submitted to FINTRAC in paper form. They are submitted to FINTRAC by fax: to +1 866 226 2346; or registered mail.