- Money Laundering Under the Criminal Code
The Criminal Code (RSC 1985, c. C-46) establishes offences on the possession of and dealings in the proceeds of crime, money laundering and the financing of terrorism.
- Possession and Money Laundering Offences
It is an offence under section 354(1) of the Criminal Code to possess any property or the proceeds of any property knowing it was obtained by or derived from the commission of an indictable offence.
Section 462.31 of the Criminal Code addresses money laundering. It is an offence to use, transfer the possession of, send or deliver, transport, transmit, alter, dispose of or otherwise deal with any property or the proceeds of property with intent to conceal or convert the property, knowing or believing that all or a part of the property was obtained directly or indirectly by the commission of a designated offence.
Section 462.3(1) of the Criminal Code defines a designated offence, often called a predicate offence, as any indictable offence under any Act of Parliament other than offences established by regulations.
Designated offences of particular interest to Dealers include:
- Offences relevant to the securities markets:
- breach of trust,
- stock market manipulation,
- insider trading, and
- money laundering itself.
- Terrorism and the financing of terrorism because of special client due diligence and reporting requirements under various regulations described below.
- Bribery and corruption because of the provisions regarding secret commissions and the PCMLTFA requirements regarding politically exposed foreign persons described in this guidance.
Dealers should also be aware of the wide variety of designated offences, including:
- Possession of or trafficking in scheduled substances under the Controlled Drugs and Substances Act.
- Deceptive telemarketing contrary to the Competition Act.
- Smuggling and evasion of duties contrary to the Customs Act.
- Unlawful manufacture, packaging, stamping or sale of tobacco products contrary to the Excise Act.
- Penalties for Possession of the Proceeds of Crime
The maximum punishment under the Criminal Code for possession of proceeds of crime greater than $5,000 is ten years’ imprisonment. If the proceeds are $5,000 or less, the maximum penalty is two years’ imprisonment. The maximum penalty for a money laundering conviction is 10 years’ imprisonment.
Possession of less than $5,000 of the proceeds of a crime or laundering in any amount can be prosecuted by summary conviction, in which case the maximum penalty is six months’ imprisonment or a $5,000 fine or both.
- Terrorist Property and Financing
Knowingly dealing, facilitating transactions or providing financial services in respect of terrorist property is an offence under s. 83.08(1) of the Criminal Code punishable by a maximum of 10 years’ imprisonment.
- PCMLTFA Requirements Applicable to Dealers
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Act
The requirements for financial institutions to implement anti-money laundering mechanisms are based on Proceeds of Crime (Money Laundering) and Terrorist Financing Act (RSC 2000, c. 17) (PCMLTFA).
Most of the specific AML/ATF requirements are contained in regulations under PCMLTFA. The five regulations applicable to Dealers are:
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations which govern cash transaction reporting, client due diligence, compliance and recordkeeping.
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Suspicious Transaction Reporting Regulations which govern the reporting of completed and attempted suspicious transactions.
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Administrative Penalties Regulations which set out FINTRAC’s ability to impose administrative penalties.
- The Proceeds of Crime (Money Laundering) and Terrorist Financing Registration Regulations which set out the registration requirements for entities also conducting money services activities
- The Cross-border Currency and Monetary Instruments Reporting Regulations which establish reporting requirements for cross-border movements of funds and monetary instruments.
- Offences and Penalties under PCMLTFA
Violations of the PCMLTFA can result in up to a $2 million fine and 5 years’ imprisonment for the most serious offences.
- Administrative Penalties
Violations are classified as minor, serious or very serious. Maximum penalties are a $1,000 fine for a minor violation, a $100,000 fine for a serious violation and a $500,000 fine for a very serious violation.
FINTRAC can reduce the penalty by half if the violator enters into a compliance agreement with FINTRAC.
Part 4.1 of PCMLTFA contains more details on the procedures for imposition of administrative penalties.