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Commentary
Proposed property seizure law erodes civil rights
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by
Greg McMullen
Imagine a future in which the government can force you to explain how you obtained any piece of property you own, without needing to show any link to criminal activity.
That’s exactly what “unexplained wealth orders” could do, allowing the provincial government to confiscate property without finding any link to crime.
It’s a disturbing notion that does away with the presumption of innocence and would subvert the rights that shield Canadians from unreasonable search and seizure.
The government has proposed that unexplained wealth orders (UWOs) should be adopted as law in British Columbia, and the Cullen Commission of Inquiry into Money Laundering in BC is considering whether UWOs would help address money laundering in the province. The BCCLA is at participant at the inquiry and is vigorously opposing the proposal.
What are UWOs?
UWOs would give the province the power to seize wealth that appears to be beyond a person’s financial means, unless that person can provide an adequate explanation of where the wealth came from. UWOs would be intended to target the proceeds of crime. However, UWOs may not require the target of the order be convicted of a crime, or even be suspected of a crime.
There are already laws on the books to ensure that criminals, and even suspected criminals, do not get to keep the proceeds of their criminal conduct. The Criminal Code allows the seizure of proceeds of crime after a criminal conviction. The BC Civil Forfeiture Act goes further, giving the province broad powers to seize property suspected of having been used to commit an illegal act or acquired by committing an illegal act.
The BCCLA believes that UWOs are an unnecessary expansion of government power and an unacceptable infringement of Canadians’ rights to the presumption of innocence, due process, and privacy. They have no place in Canadian law.
Criminal forfeiture
You have likely seen pictures of police standing in front of a table heaped with money, drugs, and weapons following a high-profile arrest. The Criminal Code and other federal criminal laws allow the government to seize the proceeds of crime, typically after a criminal conviction.[1]
Before the government can seize the proceeds of a crime, the owner of the property usually must be convicted of that crime. To get a conviction, the prosecution must prove that the accused person is guilty beyond a reasonable doubt.
There are two pieces of this requirement: the standard of proof required (beyond a reasonable doubt) and who must prove it (the prosecution). The “beyond a reasonable doubt” standard is exceptionally high. The Supreme Court of Canada has said this standard is “much closer to absolute certainty than to proof on a balance of probabilities.”[2] The prosecution has the responsibility to prove its case because we presume innocence until there is proof of guilt. This is a high bar for the prosecution to meet, but it is necessary to minimize the risk of convicting an innocent person or seizing their property.
Civil forfeiture and administrative forfeiture in British Columbia
In 2006, the BC Civil Forfeiture Act (CFA) created the Civil Forfeiture Office, tasked with seizing property suspected to be the proceeds of unlawful activities. The CFA made seizure much easier for the government by allowing it to seize property without a criminal conviction.
Under the CFA, if the Director of Civil Forfeiture suspects that property was obtained from an illegal act or used to commit that act, they can file a claim in the BC Supreme Court identifying the property, its owners, and the suspected unlawful acts. If the Director proves it is more likely than not that the property was used to commit or is the result of unlawful activity, the court generally must order the property forfeited.
The CFA also allows the court to make presumptions about property and its use if certain conditions are met. For example, if drugs or a gun are found in a car, the car is presumed to be an instrument of unlawful activity. Cash over $10,000 “bundled or packaged in a manner not consistent with standard banking practices” or found “in proximity to” drugs is presumed to be the proceeds of unlawful activity.[3]
In 2011, the Director got a new tool: administrative forfeiture, which allows the Director to make a forfeiture claim for property worth under $75,000 by simply providing notice of the claim to the owner. If the owner doesn’t challenge the claim in time, the property is forfeited.
Civil forfeiture has become common in British Columbia. The number of referrals to the Civil Forfeiture Office has increased every year since 2006, from only 72 in 2007 to 1128 in 2019. In 2019, over $13 million in cash and property was seized through civil and administrative forfeiture.[4] In 2019, the CBC revealed the kinds of property seized in administrative forfeiture:
[T]he province made 913 administrative forfeiture claims last year, amounting to $3.36 million in cash, 288 vehicles, 501 cellphones, 56 computers and a slew of other items including electronics, jewelry and a Wayne Gretzky rookie card.[5]
The presumption of guilt created by civil forfeiture has led to innocent people losing property because of their ties to friends, partners, or family members who are allegedly involved in criminal activity.[6] The BCCLA has expressed serious concerns about civil forfeiture and administrative forfeiture for many years. We view them as a punishment for alleged unlawful conduct without a criminal conviction or due process. The presumption of innocence is a core value under the Charter of Rights and Freedoms, but civil forfeiture creates a presumption of guilt.
The expansion of BC’s civil forfeiture regime has also raised significant access to justice concerns. Despite the growing number of seizures, challenges to civil forfeiture and administrative forfeiture claims are rare.[7] Hiring a lawyer to challenge forfeiture can be prohibitively expensive, especially for someone whose assets have been seized. The financial barrier to challenging administrative forfeiture is even greater, as the value of the property seized is often not enough to justify the cost of hiring a lawyer. Further, legal aid is not available for civil forfeiture claims in BC.
There is no evidence that civil forfeiture is effective in deterring money laundering and illegal activity, but the province continues to rely on it heavily. This could be because civil forfeiture enables a “tough on crime” message without adding to the provincial budget. The Civil Forfeiture Office is self-funded, meaning its budget comes from the money it seizes on an annual basis instead of tax dollars. Researchers have shown that self-funding models can create perverse incentives for public authorities to use civil forfeiture laws to benefit their bottom lines rather than to combat crime.[8]
The BCCLA is concerned that civil forfeiture may have a disproportionate impact on poor and marginalized communities in BC. Significant research in the United States has shown that “low-income individuals and communities of color are hit hardest” by civil forfeiture programs.[9] The Cullen Commission heard evidence that there is a worrying lack of research on the impact of civil forfeiture on poor and racialized communities in Canada.[10]
Unexplained wealth orders (UWOs)
The Cullen Commission is considering expanding the already expansive powers of civil forfeiture by recommending the adoption of unexplained wealth orders.
“Unexplained wealth orders raise profound civil liberties implications. They erode privacy rights, undermine the presumption of innocence, and subvert the rights that shield people from unreasonable search and seizure.” – Jessica Magonet, BCCLA Staff Counsel
There are a number of models for UWOs in other countries. However, they generally allow property to be seized without a criminal conviction and put the burden on the owner to prove their wealth was acquired by legitimate means. In some jurisdictions, UWOs do not require suspicion of criminal activity—the appearance of too much wealth is enough. Further, UWOs may not only apply to wealthy people. In some jurisdictions, there is no financial threshold for issuing a UWO.
The BCCLA has several concerns with UWOs: they are contrary to the presumption of innocence, deny due process, violate protections against unreasonable search and seizure, compel self-incrimination, and encourage surveillance of financial activity. Furthermore, there is no evidence that UWOs are effective at addressing money laundering.
Presumption of Innocence and Due Process
Like civil forfeiture, UWOs in other jurisdictions have a lower standard of proof than the “beyond a reasonable doubt” standard required in criminal law. But unlike civil forfeiture, they also reverse the burden of proof, requiring the property owner to show it is more likely than not that their property was acquired legally. A property owner who does not answer the UWO with a satisfactory explanation is presumed guilty of something nefarious and loses their property. UWOs create a presumption of guilt instead of protecting the presumption of innocence.
Self-incrimination
The Charter of Rights and Freedoms gives Canadians the right to not be compelled to provide evidence that will incriminate themselves. However, evidence is only considered “incriminating” if it is later used to prove a part of an offence in a criminal trial.[11] The state could use UWOs to coerce people into providing evidence that could be used against them in further investigations or criminal proceedings. Forcing people to choose between defending their property and not incriminating themselves is a violation of Charter principles.
Privacy and surveillance
The agency responsible for issuing UWOs requires information about the financial resources of the people it targets. It is not clear where that information would come from, but it would likely require police referrals, data sharing between government agencies, or increased financial surveillance. Canadian courts and privacy commissioners have routinely held that financial information is highly sensitive and deserves the highest levels of protection. How we spend our money can reveal a great deal about our political opinions, religious beliefs, sexuality, health, relationships, and interests. We should not allow undue sharing or surveillance of Canadians’ financial activity, especially to justify forfeiture claims.
Ineffectiveness
The concerns with UWOs discussed above should be enough to make the BC government think twice about introducing UWOs in the province. Yet, there is an even more pressing concern: there is no evidence that UWOs actually reduce money laundering or illegal behaviour.
Several witnesses at the Cullen Commission said that there is a lack of empirical evidence of the effectiveness of UWOs in fighting crime and money laundering. The BC government should not consider such a draconian, rights-infringing measure without first providing empirical evidence that it will help achieve its goals.
Whether or not the Cullen Commission recommends that the province introduce unexplained wealth orders in BC, we already know one thing—there is no way for UWOs to coexist with Charter values.
The province and federal government already have expansive powers to seize the proceeds of illegal activity or property used to break the law. These powers already threaten rights to the presumption of innocence and due process, and the examples above show how they can impact people who are caught up in their reach. We do not need to expand the power to seize property with unexplained wealth orders.
The BCCLA will continue to stand against unexplained wealth orders at the Cullen Commission. We will watch closely to see what the Commission recommends, and we will be ready to take action if the province moves to introduce UWOs in BC.
Notes:
[1] See for example Criminal Code, RSC, 1985, c C-46, Part XII.2.
Proposed property seizure law erodes civil rights
Imagine a future in which the government can force you to explain how you obtained any piece of property you own, without needing to show any link to criminal activity.
That’s exactly what “unexplained wealth orders” could do, allowing the provincial government to confiscate property without finding any link to crime.
It’s a disturbing notion that does away with the presumption of innocence and would subvert the rights that shield Canadians from unreasonable search and seizure.
The government has proposed that unexplained wealth orders (UWOs) should be adopted as law in British Columbia, and the Cullen Commission of Inquiry into Money Laundering in BC is considering whether UWOs would help address money laundering in the province. The BCCLA is at participant at the inquiry and is vigorously opposing the proposal.
What are UWOs?
UWOs would give the province the power to seize wealth that appears to be beyond a person’s financial means, unless that person can provide an adequate explanation of where the wealth came from. UWOs would be intended to target the proceeds of crime. However, UWOs may not require the target of the order be convicted of a crime, or even be suspected of a crime.
There are already laws on the books to ensure that criminals, and even suspected criminals, do not get to keep the proceeds of their criminal conduct. The Criminal Code allows the seizure of proceeds of crime after a criminal conviction. The BC Civil Forfeiture Act goes further, giving the province broad powers to seize property suspected of having been used to commit an illegal act or acquired by committing an illegal act.
The BCCLA believes that UWOs are an unnecessary expansion of government power and an unacceptable infringement of Canadians’ rights to the presumption of innocence, due process, and privacy. They have no place in Canadian law.
Criminal forfeiture
You have likely seen pictures of police standing in front of a table heaped with money, drugs, and weapons following a high-profile arrest. The Criminal Code and other federal criminal laws allow the government to seize the proceeds of crime, typically after a criminal conviction.[1]
Before the government can seize the proceeds of a crime, the owner of the property usually must be convicted of that crime. To get a conviction, the prosecution must prove that the accused person is guilty beyond a reasonable doubt.
There are two pieces of this requirement: the standard of proof required (beyond a reasonable doubt) and who must prove it (the prosecution). The “beyond a reasonable doubt” standard is exceptionally high. The Supreme Court of Canada has said this standard is “much closer to absolute certainty than to proof on a balance of probabilities.”[2] The prosecution has the responsibility to prove its case because we presume innocence until there is proof of guilt. This is a high bar for the prosecution to meet, but it is necessary to minimize the risk of convicting an innocent person or seizing their property.
Civil forfeiture and administrative forfeiture in British Columbia
In 2006, the BC Civil Forfeiture Act (CFA) created the Civil Forfeiture Office, tasked with seizing property suspected to be the proceeds of unlawful activities. The CFA made seizure much easier for the government by allowing it to seize property without a criminal conviction.
Under the CFA, if the Director of Civil Forfeiture suspects that property was obtained from an illegal act or used to commit that act, they can file a claim in the BC Supreme Court identifying the property, its owners, and the suspected unlawful acts. If the Director proves it is more likely than not that the property was used to commit or is the result of unlawful activity, the court generally must order the property forfeited.
The CFA also allows the court to make presumptions about property and its use if certain conditions are met. For example, if drugs or a gun are found in a car, the car is presumed to be an instrument of unlawful activity. Cash over $10,000 “bundled or packaged in a manner not consistent with standard banking practices” or found “in proximity to” drugs is presumed to be the proceeds of unlawful activity.[3]
In 2011, the Director got a new tool: administrative forfeiture, which allows the Director to make a forfeiture claim for property worth under $75,000 by simply providing notice of the claim to the owner. If the owner doesn’t challenge the claim in time, the property is forfeited.
Civil forfeiture has become common in British Columbia. The number of referrals to the Civil Forfeiture Office has increased every year since 2006, from only 72 in 2007 to 1128 in 2019. In 2019, over $13 million in cash and property was seized through civil and administrative forfeiture.[4] In 2019, the CBC revealed the kinds of property seized in administrative forfeiture:
The presumption of guilt created by civil forfeiture has led to innocent people losing property because of their ties to friends, partners, or family members who are allegedly involved in criminal activity.[6] The BCCLA has expressed serious concerns about civil forfeiture and administrative forfeiture for many years. We view them as a punishment for alleged unlawful conduct without a criminal conviction or due process. The presumption of innocence is a core value under the Charter of Rights and Freedoms, but civil forfeiture creates a presumption of guilt.
The expansion of BC’s civil forfeiture regime has also raised significant access to justice concerns. Despite the growing number of seizures, challenges to civil forfeiture and administrative forfeiture claims are rare.[7] Hiring a lawyer to challenge forfeiture can be prohibitively expensive, especially for someone whose assets have been seized. The financial barrier to challenging administrative forfeiture is even greater, as the value of the property seized is often not enough to justify the cost of hiring a lawyer. Further, legal aid is not available for civil forfeiture claims in BC.
There is no evidence that civil forfeiture is effective in deterring money laundering and illegal activity, but the province continues to rely on it heavily. This could be because civil forfeiture enables a “tough on crime” message without adding to the provincial budget. The Civil Forfeiture Office is self-funded, meaning its budget comes from the money it seizes on an annual basis instead of tax dollars. Researchers have shown that self-funding models can create perverse incentives for public authorities to use civil forfeiture laws to benefit their bottom lines rather than to combat crime.[8]
The BCCLA is concerned that civil forfeiture may have a disproportionate impact on poor and marginalized communities in BC. Significant research in the United States has shown that “low-income individuals and communities of color are hit hardest” by civil forfeiture programs.[9] The Cullen Commission heard evidence that there is a worrying lack of research on the impact of civil forfeiture on poor and racialized communities in Canada.[10]
Unexplained wealth orders (UWOs)
The Cullen Commission is considering expanding the already expansive powers of civil forfeiture by recommending the adoption of unexplained wealth orders.
“Unexplained wealth orders raise profound civil liberties implications. They erode privacy rights, undermine the presumption of innocence, and subvert the rights that shield people from unreasonable search and seizure.” – Jessica Magonet, BCCLA Staff Counsel
There are a number of models for UWOs in other countries. However, they generally allow property to be seized without a criminal conviction and put the burden on the owner to prove their wealth was acquired by legitimate means. In some jurisdictions, UWOs do not require suspicion of criminal activity—the appearance of too much wealth is enough. Further, UWOs may not only apply to wealthy people. In some jurisdictions, there is no financial threshold for issuing a UWO.
The BCCLA has several concerns with UWOs: they are contrary to the presumption of innocence, deny due process, violate protections against unreasonable search and seizure, compel self-incrimination, and encourage surveillance of financial activity. Furthermore, there is no evidence that UWOs are effective at addressing money laundering.
Presumption of Innocence and Due Process
Like civil forfeiture, UWOs in other jurisdictions have a lower standard of proof than the “beyond a reasonable doubt” standard required in criminal law. But unlike civil forfeiture, they also reverse the burden of proof, requiring the property owner to show it is more likely than not that their property was acquired legally. A property owner who does not answer the UWO with a satisfactory explanation is presumed guilty of something nefarious and loses their property. UWOs create a presumption of guilt instead of protecting the presumption of innocence.
Self-incrimination
The Charter of Rights and Freedoms gives Canadians the right to not be compelled to provide evidence that will incriminate themselves. However, evidence is only considered “incriminating” if it is later used to prove a part of an offence in a criminal trial.[11] The state could use UWOs to coerce people into providing evidence that could be used against them in further investigations or criminal proceedings. Forcing people to choose between defending their property and not incriminating themselves is a violation of Charter principles.
Privacy and surveillance
The agency responsible for issuing UWOs requires information about the financial resources of the people it targets. It is not clear where that information would come from, but it would likely require police referrals, data sharing between government agencies, or increased financial surveillance. Canadian courts and privacy commissioners have routinely held that financial information is highly sensitive and deserves the highest levels of protection. How we spend our money can reveal a great deal about our political opinions, religious beliefs, sexuality, health, relationships, and interests. We should not allow undue sharing or surveillance of Canadians’ financial activity, especially to justify forfeiture claims.
Ineffectiveness
The concerns with UWOs discussed above should be enough to make the BC government think twice about introducing UWOs in the province. Yet, there is an even more pressing concern: there is no evidence that UWOs actually reduce money laundering or illegal behaviour.
Several witnesses at the Cullen Commission said that there is a lack of empirical evidence of the effectiveness of UWOs in fighting crime and money laundering. The BC government should not consider such a draconian, rights-infringing measure without first providing empirical evidence that it will help achieve its goals.
Whether or not the Cullen Commission recommends that the province introduce unexplained wealth orders in BC, we already know one thing—there is no way for UWOs to coexist with Charter values.
The province and federal government already have expansive powers to seize the proceeds of illegal activity or property used to break the law. These powers already threaten rights to the presumption of innocence and due process, and the examples above show how they can impact people who are caught up in their reach. We do not need to expand the power to seize property with unexplained wealth orders.
The BCCLA will continue to stand against unexplained wealth orders at the Cullen Commission. We will watch closely to see what the Commission recommends, and we will be ready to take action if the province moves to introduce UWOs in BC.
Notes:
[1] See for example Criminal Code, RSC, 1985, c C-46, Part XII.2.
[2] (https://www.canlii.org/en/ca/scc/doc/2000/2000scc40/2000scc40.html R v Starr, 2000 SCC 40 at para 242)
[3] CFA ss 19.03 and 19.04
[4] Overview Report – Asset Forfeiture in British Columbia https://cullencommission.ca/data/exhibits/373%20-%20Overview%20Report%20-%20Asset%20Forfeiture%20in%20British%20Columbia.pdf p 44-45
[5] https://www.cbc.ca/news/canada/british-columbia/bc-administrative-civil-forfeiture-data-part-one-1.5180022
[6] See ex: https://www.cbc.ca/news/canada/british-columbia/bc-administrative-civil-forfeiture-data-part-two-1.5180210; https://www.theglobeandmail.com/news/british-columbia/cash-back-return-of-rare-coins-puts-bc-civil-forfeiture-under-fire/article16566247/
[7] https://cullencommission.ca/data/transcripts/Transcript%20December%2018,%202020.pdf, pages 114-115.
[8] see: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2617402
[9] https://cdn.americanprogress.org/wp-content/uploads/2016/04/01060039/CivilAssetForfeiture-reportv2.pdf?_ga=2.8223354.977788911.1611620777-1913739743.1611620777 at p 2.
[10] https://cullencommission.ca/data/transcripts/Transcript%20December%2014,%202020.pdf, pages 151-152
[11] https://www.canlii.org/en/ca/scc/doc/2012/2012scc59/2012scc59.html R v Nedalcu, 2012 SCC 59 at para 9
CIVIL LIBERTIES CAN’T PROTECT THEMSELVES