When the 1991 legislation imposed transaction record requirements, most observers felt it would be just a matter of time before the government yielded to the irresistible siren song of mandatory reporting, and it has only taken a short 7 years (ignoring that it only took 2 years until 1993 to get the banks and other financial institutions to “voluntarily” start to do so).
Mandatory “reporting” (some would call it informing; some would call it snitching) based upon reasonable and probable grounds is one thing. Mandatory informing based upon suspicion is another, and this other thing is usually called ‘a police state.’
With opening sentences like “Money laundering is a serious criminal offence that generates billions of dollars across Canada each year” it is easy to lose perspective, overreact and thoughtlessly sacrifice important principles of basic justice. That opening sentence itself raises issues: how does money laundering “generate” billions of dollars across Canada each year? Whose estimates are these? Are these figures advocacy research generated by parties with a particular agenda that includes magnifying the problem as much as possible? How is “money laundering” being defined? Does it lump together proceeds of heroin transactions with cash from a private car sale where tax of one kind or another is not paid?
In short, does the problem of money laundering accurately assessed require turning the financial infrastructure of this country into a police reporting network? As a matter of principle strong justification would be required. Further, as a matter of practicalities, justification is required. What evidence is there that the present system of record-keeping (and voluntary compliance) is not sufficient? If the police develop reasonable grounds to investigate a person, the records will be there to be gathered as evidence. To change from the present system to the proposed system requires empirical justification other than the police want it that way. Where is that justification?
The proposed scheme itself is also deficient, both logically and constitutionally.
The basic test is one of “suspicion” based on two categories: first, the “primary indicators” category and second, the “secondary indicators” plus “enterprise crime offence – designated substance offence – criminal organization offence” category.
Logically, all these elements are suspect. The indicators appear to be police folklore. Consider a transaction where $10,000 or more is changed from small denominations to larger ones. Is this only done by criminals? Where’s the evidence? Is changing 20’s and 100’s into 50’s and a single 1000-dollar bill going from smaller to larger denominations? What constitutes “unusually packaged” currency? All of the indicators in both categories are vague, ambiguous, judgmental criteria. Where is the evidence that these “indicators” indicate anything illegal in even a mere majority of cases.
These criteria are reminiscent of the “indicators” in child abuse cases or the “indicators” in drug courier profiles, and other similar junk indicators that courts have denounced that are simply police folklore, vague generalities that can be made to fit any case at law enforcement’s self-serving whim. This is especially so because the indicators, according to this proposal, are not exhaustive; the ones given are merely examples. Only the imaginational abilities of the particular bank officers or police officers involved will limit the indicators for suspicion that can be manufactured.
Further, the reasonable suspicion of a crime that must coexist with the secondary indicator is an illlusory protection since those categories capture every conceivable offence that may generate gain of any sort. This element is tautological in effect and will be automatically satisfied if the decision-maker wants it to be in any case where an indicator appears..
Constitutionally, it is difficult to see how these provisions comply with Charter guarantees of reasonable search and seizure and fundamental justice. There is no doubt this reporting constitutes an invasion of a person’s privacy, and it clearly being done to investigate suspected crime. In general this requires reasonable and probable grounds as justification. It also usually requires a warrant authorized by an independent authority acting judicially. Even if an argument could be mounted why the warrant requirement should be dispensed with, the legislation’s standard of suspicion fails to meet even the first and fundamental requirement of reasonable grounds.
The vagueness of the legislation is also quite remarkable as mentioned above, and vague legislation violates the Charter.
There seems little point is discussing the rest of the proposal which simply creates a ‘back end’ to use all this new-found information, creates enforcement provisions to ensure compliance, and protects those furnishing the information. The legislation is fundamentally flawed at its ‘front end.’
Further, it is not clear how this proposed legislation will impact on lawyers, and criminal lawyers in particular. The legal profession stands in a unique position regarding confidentiality and client privacy. There is something very problematic with lawyers sending in forms to the government “informing” on clients and their activities. The strongest justification is required for the state to create such a mechanism, and it must be stringently limited to the demands of the justification.
If it appears from the proposed legislation that it will apply with full force to lawyers, and criminal lawyers especially, then it is the position of the Criminal Lawyers Association that an exemption for criminal lawyers must be provided. It is simply impossible for a criminal lawyer to defend a client while at the same time sending information to the government about that client accusing them of a suspicious transaction. The nature of a criminal practice is such that ‘suspicious transactions’ as defined by a vague set of ubiquitous indicators may be endemic in the practice, and it is not consistent with Charter rights to require criminal lawyers to become ‘informers’ against their clients.
In conclusion, we make simple point is that absent strong and clear and convincing justification founded upon the demonstrated inadequacy of present law, it is not reasonable or rational, however politically expedient and satisfying to police organizations’ wishes, to abandon the present law and create a countrywide network of fiscal spies and informers to routinely and regularly and unconstitutionally invade the privacy of all citizens.
Alan D. Gold
May 30th, 1998