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The Federal Prosecution Service DESKBOOK

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Part VI
POLICY IN CERTAIN TYPES OF LITIGATION
Chapter 24

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24 PROCEEDS OF CRIME

24.1 Introduction

In 1988, as part of Canada's Drug Strategy, the Government of Canada amended the Criminal Code by adding Part XII.2 “Proceeds of Crime”, which has since been amended several times. In early 2002, the possession of proceeds of crime and money laundering offences contained in various other federal statutes were repealed, leaving only those found in sections 354 and 462.31 of the Criminal Code.

When Canada's Drug Strategy was renewed in 1992, the government decided as part of a pilot project to establish three multi disciplinary units, known as Integrated Anti Drug Profiteering Units, in Vancouver, Toronto and Montreal.

Given the success of those units, the number of them was increased to thirteen in 1996. The new units, now known as the Integrated Proceeds of Crime (IPOC) units, were established in Vancouver, Edmonton, Calgary, Regina, Winnipeg, London, Newmarket, Ottawa, Montréal, City of Québec, Fredericton, Halifax and St. John's¹.

24.2 Purpose of the Policy

This chapter is an overview of, not a comprehensive guide to, the Attorney General's practice and policies relevant to proceeds of crime and money laundering cases. It also addresses in certain instances the practice and policies relevant to offence-related property and those associated with terrorist activities.

24.3 Integrated Proceeds of Crime (IPOC) Units

The twelve IPOC units are located in RCMP offices and are staffed by a team made up of officers from different police forces, Canada Revenue Agency (Customs and/or Revenue) investigators, forensic accountants, counsel from the Department of Justice and a representative of the Seized Property Management Directorate (SPMD).

The primary goals of these units is to increase prosecution of major criminal organizations, enhance investigative and prosecution efficiencies and effectiveness and eliminate any financial gain that criminals may derive from their activities.

24.3.1 IPOC Counsel Responsibilities

The role and responsibilities of IPOC counsel have evolved substantially over the years. The relevant background document on that subject is the Memorandum of Understanding on the operation of IPOC units entered into by the RCMP and the Department of Justice in May 1997. Among other things, it contains a description of the role and responsibilities of IPOC counsel within the units. These responsibilities include:

1. providing legal advice to the team during the investigations;
2. applications to the court for orders for disclosure of tax information (462.48 of the Criminal Code), special search warrants (section 462.32 of the Criminal Code), restraint orders (section 462.33 of the Criminal Code and section 14 of the Controlled Drugs and Substances Act (CDSA)), management and destruction orders (section 462.331 of the Criminal Code and section 14.1 of the CDSA), detention and forfeiture orders (section 490 of the Criminal Code), orders for disclosure of information pursuant to subsection 60(3) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC(ML)TFA), and other legal processes, such as authorizations to intercept private communications and search warrants;
3. having foreign special warrants and restraint and forfeiture orders confirmed;
4. preparing statistics, especially for evaluation of the Integrated Proceeds of Crime (IPOC) initiative and the Anti-Money Laundering and Anti-Terrorist Financing initiative;
5. assisting the team in preparing the court brief in relation to the proceeds of crime or money laundering charges;
6. assisting the prosecutor in preparation for trial, and subsequent forfeiture applications.

IPOC counsel report directly to the counsel responsible for the unit or to the FPS Director and play a key role in preserving the independence of the prosecution function.

24.3.1.1 Inter-provincial Special Warrants and Restraint Orders

Pursuant to subsections 462.32(2.1), (2.2), and 462.33(3.01), a special warrant or restraint order can be obtained for execution in another province.

Before obtaining such a warrant or order, the IPOC counsel overseeing its execution should be consulted to ensure that the terms of the warrant, restraint or management order are consistent with the relevant provincial legislation so as to avoid any execution problems.

It is essential, furthermore, to coordinate the obtaining and execution of a warrant or restraint order with counsel in the other IPOC Unit so as to limit the delay between issuance of the instrument and its execution in the other province.

The counsel who obtained the warrant or restraint order continues to be responsible for the process and shall therefore ensure that the document has been duly registered or else renewed under section 462.35 of the Criminal Code, as appropriate.

24.3.1.2 Foreign Orders and Participation of the International Assistance Group

Under sections 9.3 and 9.4 of the Mutual Legal Assistance in Criminal Matters Act, Canada can enforce foreign restraint or forfeiture orders, as well as warrants with respect to proceeds of crime or offence-related property.

The approved order or warrant is executed as though it were issued in Canada under subsections 462.32(1), 462.33(3), 462.37(1), 462.38(2), 490.1(1), 490.2(2), 487(1) or 490.8(3) of the Criminal Code or subsections 11(1), 14(3), 16(1) or 17(2) of the CDSA.

Since confirmation applications are processed by the International Assistance Group (IAG) in Ottawa, that section and the regional prosecutor who has to enforce the foreign warrant or order should work together closely². This makes it important to notify the IAG of all court proceedings relating to property seized or restrained through a foreign order or warrant.

Furthermore, the same consultations as those prescribed for Canadian orders or warrants must take place, especially with the SPMD, prior to any decision to confirm a foreign order or warrant. All matters pertaining to the management of seized or restrained assets must also be discussed with the IAG.

24.3.1.3 Information Gathering

Most federal government initiatives, including the proceeds of crime and money laundering initiatives, are required to be regularly evaluated.

Both IPOC counsel and prosecutors play a critical role in enabling the Department to fulfil its reporting and evaluation obligations.

This makes it important for both IPOC counsel and prosecutors to ensure that the necessary information is gathered or made accessible to answer central agency queries.

24.4 Undertakings

As a prerequisite for the issuance of a search warrant or restraint order under section 83.13 (Terrorism) or Part XII.2 (Proceeds of Crime) of the Criminal Code, the Attorney General of Canada shall enter into an undertaking to pay any damages or costs that could arise from issuance and execution of that instrument. This undertaking accompanies the application for the warrant or order and must be approved by a senior official within the Department of Justice. The sections below describe the policy governing pre approval of undertakings under section 83.13 or Part XII.2 of the Criminal Code, as well as the policy governing pre-approval of restraint and management orders under the CDSA or the Seized Property Management Act (SPMA).³

24.4.1 Proceeds of Crime and Terrorism Cases

24.4.1.1 Approvals Generally

Subject to subsection 24.4.1.2 below, approval for the signing of the undertaking shall be obtained from the Regional Director, or his or her designate, in all cases regardless of the estimated asset value involved.

24.4.1.2 Pre-approval Levels

Where the property in question is a business enterprise or a property the seizure or restraint of which might reasonably affect the operation of a business enterprise, the pre-approval levels are as follows:

1. where the estimated aggregate value of the property is $1,000,000 or less, approval for the signing of the undertaking shall be obtained from the Senior Regional Director, or his or her designate;
2. where the estimated aggregate value of the property is between $1,000,000 and $2,000,000, approval for the signing of the undertaking shall be obtained from the Strategic Operations Section (SOS) Director & Senior General Counsel; and
3. where the estimated aggregate value of the property exceeds $2,000,000, approval for the signing of the undertaking shall be obtained from the Assistant Deputy Attorney General (ADAG)(Criminal Law).

24.4.2 Involvement of Public Works and Government Services (PWGS)

Under the legislation⁴, the Minister of PWGS is responsible for management of:

• all property restrained or seized under Part XII.2,
• all property restrained or seized under the CDSA,
• property restrained or seized under section 83.13 of the Criminal Code, and
• property seized under section 487 of the Criminal Code,

provided that a management order has been issued for that property. In accordance with the provisions of the SPMA, PWGS established the Seized Property Management Directorate (SPMD), located in Gatineau, Quebec. One duty of the SPMD is to manage such property.

Since PWGS is responsible for payment of damages arising from all undertakings given by the Attorney General of Canada, SPMD personnel should be consulted prior to any seizure, restraint or forfeiture of property. Such consultation serves to notify the SPMD that a particular property will be put under its management and allows SPMD personnel to have input regarding the feasibility or advisability of the seizure, restraint or forfeiture.

Where terrorism-related property is involved, counsel may forego consulting with the SPMD, if he or she considers it appropriate given the circumstances, prior to obtaining an order to seize or restrain property under section 83.13 of the Criminal Code. Once the order has been obtained, counsel should immediately notify the SPMD, which can then take appropriate management measures.

SPMD personnel should also be consulted before the counsel agrees to the payment of legal costs out of seized or restrained property.

Consultation with the SPMD should continue after the seizure or restraint as circumstances require (e.g. prior to an amendment to the order) to ensure that the property is properly protected and maintained.

24.4.3 Briefing Note and Supporting Material

When pre-approval from the Director, SOS or the ADAG (Criminal Law) is required, a briefing note and all supporting material shall be submitted to the appropriate office.

The briefing note should contain the following information:

A copy of the affidavit accompanying the application and the proposed order must be attached to the briefing note and forwarded to the Director, SOS.

24.4.4 Offence-related Property

Approval for restraint of offence-related property under the CDSA or the Criminal Code, or any application for a management order, shall be obtained in all cases from the Senior Regional Director, or his or her designate, regardless of the estimated value and nature of the property involved.

Prior consultation with the SPMD should be undertaken in all cases involving management, restraint and forfeiture of offence-related property, regardless of the estimated value and nature of the property involved.

Before obtaining a management order, counsel should be satisfied that an order of forfeiture is feasible in respect of the offence-related property.

With respect to terrorism-related property, counsel may forego consulting with the SPMD, if he or she considers it appropriate in the circumstances, prior to obtaining an order to seize or restrain offence-related property associated with a terrorism offence. Once the order has been obtained, counsel should immediately notify the SPMD, which can then take appropriate management measures.

After obtaining a restraint or management order, counsel should continue to consult with the SPMD as circumstances require (e.g., prior to an amendment to the order) to ensure that the property is adequately protected and maintained.

24.5 Destruction Order

On January 7, 2002⁵, section 462.331 was added to the Criminal Code to permit the destruction of property which has little or no value. Prior to the amendment, the SPMD had found that management of some property entailed major expense, whereas the property was practically worthless since there was no lawful market for it.

The legislation now states that application for a destruction order can be made for property of little or no value. Barring rare exceptions, this provision will apply mostly to offence-related property, e.g. hydroponic equipment. Before applying for a destruction order, counsel should make certain that the SPMD will pay the associated costs since the legislation requires that the asset manager, i.e. the SPMD, be responsible for obtaining such an order.

It is strongly recommended that a destruction order and a management order be obtained at the same time. This will save time and avoid having property transferred to the SPMD without a destruction order, which would needlessly generate management costs until that order has been obtained.

To simplify the obtaining of such instruments, a model destruction order, as well as supporting documents, have been created and they may be found on the SOS website. The documents may be varied as needed.

24.6 Application for Disclosure of Income Tax Information under Section 462.48 of the Criminal Code

Section 462.48 of the Criminal Code allows for the disclosure of income tax information during investigation of the offences listed in subsection 462.48(1.1). The affiant of the affidavit accompanying an application made under section 462.48 must be designated by the Attorney General of Canada⁶, and the order must include the name of the investigator to whom the information described in the order will be disclosed.

24.7 Application for a Disclosure Order under Section 60 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PC(ML)TFA)

No order for disclosure of information may be issued in respect of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), except for those orders contemplated in subsection 60(4) and section 60.1 of the PC(ML)TFA

Section 60 of the PC(ML)TFA provides for the disclosure of information during investigation of a money laundering offence or a terrorist activity financing offence. The affiant of the affidavit accompanying an application made under this section must be designated by the Attorney General ⁷. In this regard, police force members assigned to the Proceeds of Crime Branch, the Integrated Proceeds of Crime (IPOC) Units and the Proceeds of Crime Units have all been designated to sign this type of affidavit⁸.

It is important to note that the order must include the name of the investigator to whom the information described in the order will be disclosed⁹.

FINTRAC Legal Services is to be contacted for all questions with respect to enforcement of the PC(ML)TFA.

24.8 Relationships

24.8.1 Between IPOC Counsel and Proceeds of Crime Prosecutors

Crown counsel should be assigned to complex cases as soon as practicable in order to assist the investigators and help ensure the effectiveness of any prosecution¹⁰. Ongoing legal advice will still be provided by the IPOC counsel, who will continue to be responsible for obtaining orders during the investigation.

Crown counsel assigned to the case and the IPOC counsel shall maintain regular contact, especially if important issues that could affect the trial arise during the investigation.

When charges are laid, the responsibility for prosecution rests entirely with Crown counsel. Crown counsel shall continue to consult with IPOC counsel, for example with respect to plea bargaining.

The FPS Director or the counsel responsible for the unit should take steps to ensure continuous consultation between prosecutors and IPOC counsel.

24.8.2 Between IPOC Counsel, Proceeds of Crime Prosecutors and the SOS

Among its roles, the SOS manages the IPOC initiative. It decides on the strategic direction of the Integrated Proceeds of Crime initiative within the FPS, coordinates proceeds of crime matters and shares in formulating prosecution policies in this regard.

As a result, there is no actual hierarchy governing the relationship between the SOS, IPOC counsel and proceeds of crime prosecutors. Instead, their relationship stems from the service that the SOS offers those counsel. SOS counsel are therefore resources qualified to provide advice on a range of proceeds of crime and money laundering issues.

It is important to contact the SOS for all matters pertaining to national policies, the current state of case law or legal issues with respect to proceeds of crime or money laundering. This will ensure that the Attorney General's position on the matter is consistent.

24.9 Sharing

The Seized Property Management Act¹¹ (the “Act”) prescribes that property forfeited at the federal level is to be managed by the Minister of Public Works and Government Services (the “Minister”), and its regulations govern disposition of such property and sharing of the proceeds of disposition. The Act stipulates that the Minister shall share within Canada and internationally. Sharing can take place only with a government of a province, territory or foreign state. Where a foreign state is concerned, Canada and that state must enter into a sharing agreement. Such an agreement is not necessary for the Canadian government to share with Canadian provinces and territories. Sharing always takes place in a proportion of 10%, 50% or 90%.

The SOS is responsible for negotiating sharing agreements with foreign states. Given this, it is important to notify the SOS when countries have participated or cooperated in a federal investigation or when Canada or a province/territory has participated or cooperated in a foreign investigation. Steps can then be taken to negotiate a sharing agreement with that country to allow for subsequent sharing in the case. Where a sharing agreement is already in effect, Canada can take steps to share with the foreign state or ask it to share with Canada, whichever applies.

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Date Modified:

2008-12-24