Although it has not attracted a lot of attention in the press, the Chretien government
recently introduced legislation in the House of Commons designed to combat money
laundering. This article will examine their proposals and how it will leased to an
expanded role for the Canada Customs and Revenue Agency (formerly Revenue Canada) in the
Money laundering is an illegal activity that involves the transfer of funds between
parties with the sole purpose of concealing their dubious origin. One example might be the
profits that are earned by drug dealers who sell illicit drugs in our society. The money
generated from such operations, which largely initially in the form of cash, must
ultimately be returned to the larger economy, and it is at this pint that it becomes a
problem for our law enforcement agencies.
The proposed legislation pledges to protect individual privacy while at the same time
creating a mandatory reporting system of suspicious financial transactions involving the
movement of large quantities of currency. A newly created body, the Financial Transactions
and Reports Analysis Centre of Canada, will be established to receive and manage reported
information from lawyers, accountants, financial institutions, currency-exchange dealers
and other intermediaries regarding funds that are believed to be related to a
As the legislation is currently proposed, the Centre will analyze and assess such
disclosed information as (a) the name of the party; (b) the date of the transaction; (c)
the value of the transaction, and (d) the account number(s) of the financial
institutions(s) involved. When and if warranted, they will be charged with the
responsibility of providing such information to the proper authorities, including the
Canada Customs and Revenue Agency, if tax evasion is suspected.
At this writing, some important details about the proposed legislation have yet to be
tabled. However, if the Canadian legislation is modeled on that enacted in the U. S.,
dollar amount in excess of $10,000 will come under scrutiny and failure to disclose that
transaction will result in the seizure of the currency or monetary instrument, fines that
could reach up to $2 million and/or imprisonment for as long as five years.
The proposed legislation places the responsibility of determining what is private and
what is suspicious clearly on the shoulders of those individuals who handle the
transactions and not on those who initiate them. If this sounds familiar, couple this
proposal with others contained in the 1999 Federal Budget aimed at introducing civil
penalties upon tax advisors who make false statements or omissions in regard to another
persons income tax matters and you can see that the government has again found it
expedient to lean on the "good guys" and have them do their policing for them.
It is obviously important to support the introductions of legislation to curb illegal
activity. Money laundering continues to be a significant problem in Canada and in other
parts of the world. However, as details of the proposals come out, it is obvious that the
Canada Customs and Revenue Agency will ultimately become a large benefactor of the new
reporting regime. We must be ever vigilant that whatever wording is finally passed into
law it concentrates on its stated goal and does not open up Canada to further erosion of
our individual right to privacy.