The BCCLA is participating in the Cullen Commission of Inquiry into Money Laundering in British Columbia. We are working to ensure that civil liberties, human rights, and the values set out in the Charter of Rights and Freedoms play a key role as the Commission goes about its work.
The BCCLA supports efforts to combat money laundering in the province, however, some of the government’s recommendations to combat this activity raise serious concerns for privacy and due process and risk having a disproportionate impact on racialized and other marginalized people.
We will argue for strong limits on government surveillance and civil forfeiture laws. Any new surveillance and police seizure powers must be proven to be effective, must not do too much harm to Canadians’ rights and freedoms and should be subject to meaningful oversight and strong safeguards. We will also press the Commission to explore the root causes of money laundering and organized crime, such as drug prohibition and weak oversight of the real estate and gaming sectors.
What is the Cullen Commission of Inquiry?
The Cullen Commission of Inquiry into Money Laundering in British Columbia (the Commission) was established by the BC government in 2019 to study money laundering in British Columbia. Under its terms of reference the Inquiry will look at:
- Methods of money laundering in BC, and the extent of the problem in the province;
- Rules and regulations intended to stop money laundering, and how effective they are;
- Failures by regulators to stop money laundering and whether there is corruption in the regulatory system; and
- Barriers to effective law enforcement around money laundering.
The Commission will hear testimony from many witnesses, including experts on money laundering, regulators, officials in the gaming, real estate, financial services, luxury goods, and professional services sectors, and law enforcement. It will then issue a report detailing its findings and making recommendations for how to address money laundering in the future.
What is the BCCLA’s role?
We are working hard to ensure that civil liberties, human rights, and the rights set out in the Charter of Rights and Freedoms are protected as the government takes measures to combat money laundering.
The issues that will be addressed by the Commission are at the core of our mandate. Money laundering in BC is a legitimate crisis and we support the Commission’s work to address this problem. However, effective solutions cannot simply reflect government and private sector desires for more invasive police powers, more resources for policing and the mass collection and sharing of sensitive information without warrants or judicial processes.
Commissioner Austin Cullen granted the BCCLA full standing rights, which means that he thinks we will help the Commission with its important work. Our lawyers will be able to make submissions and question witnesses who appear before the Commission.
What issues are at stake?
We will be addressing many critical issues at the Commission, ensuring that civil liberties and human rights inform its recommendations. Here are several issues we will be focusing on:
The Commission will be considering recommendations to expand police surveillance and increase information collection and sharing between government agencies to combat money laundering. Some of the proposals present deeply problematic incursions on privacy rights, with little evidence that they will prevent criminal activity.
We will work to protect your privacy rights by arguing for strong limits on the expanded use of surveillance technologies, such as facial recognition technology and high-tech profiling. Any new information collection and sharing by government agencies and private businesses must be proven to be effective, must not do too much harm to our rights and freedoms, and should be subject to meaningful oversight and strong safeguards. Respect for individuals’ autonomy, anonymous speech, and the right to free association must be balanced against legitimate concerns like law enforcement.
“As the government collects and shares reams of sensitive information about us through various agencies, it is increasingly able to stitch together detailed profiles about our behavior and interests. When the government develops massive profiles on people – it is massively dangerous.”Megan Tweedie, Senior Counsel, BCCLA
Government demands for new surveillance powers are all too familiar, including well-meaning proposals to use various forms of data to combat money laundering. The Commission is considering government proposals to expand the surveillance powers of the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) – raising serious privacy rights concerns.
FINTRAC is Canada’s financial intelligence unit. It collects, analyzes, stores and disseminates a vast quantity of personal information about Canadians’ financial and other activities.
Federal law requires a wide variety of government agencies, individuals and businesses to collect personal information about their clients and certain financial transactions (for example large cash transactions) and report the information to FINTRAC. FINTRAC also receives voluntary reports from people and entities in various financial sectors. As of March 31, 2016, there were approximately 212 million reports containing personal information in FINTRAC’s databases.
Audits of FINTRAC by the Office of the Privacy Commissioner of Canada have consistently shown a deeply troubling over-collection and retention of personal information – and a failure to protect sensitive information. In a 2013 audit of FINTRAC, former federal privacy commissioner Jennifer Stoddart found numerous voluntary disclosures to FINTRAC were made, “where there were no reasonable grounds to suspect money laundering or terrorist financing activities.” For example, one young professional who purchased three bank drafts worth $100,000 was reported because “the amount of money simply did not match his age,” while a shopkeeper who deposited into a bank account a grand total of $570 in 100, 50, 20 and 10 dollar bills was similarly reported, though with no explanation.
Financial privacy is important for the same reasons the privacy of phone calls, instant messages, and web browsing is important. When the government and police have easy access to this information, we lose more than just privacy and control over our information. Free speech, security, and equality also suffer.Jessica Magonet, Staff Counsel, BCCLA
The Commission is considering recommendations to increase the amount and type information that is collected and shared between FINTRAC and private businesses and other government surveillance agencies, such as the RCMP, CBSA and CSIS.
Two federal inquiries (the O’Connor and Iacobucci Commissions) that critiqued the creation and subsequent sharing of inaccurate and inflammatory information, leading to the overseas detention and torture of four Canadian citizens, are reminders of how the over-collection and disclosure of personal information can have dire consequences in terms of respect for human rights as well as racial, ethnic and religious profiling.
A report commissioned by the government which is being considered by the Commission has suggested the government introduce unexplained wealth orders. These orders would allow the government to seize money and property from people if they are not able to provide an explanation of where that money came from. As one columnist wrote, “It’s like, ‘Your papers, please,’ but for things you own.”
These orders go a step beyond civil forfeiture laws, which let police seize your property on suspicion of crime and make you go to court to get it back. Unexplained wealth orders could be made without any evidence that the target of the order committed a crime. The target has to prove they are innocent rather than the government having to prove they are guilty—a clear violation of due process rights and the presumption of innocence.
The province already has the ability to seize proceeds of crime through civil forfeiture. Civil forfeiture allows police to seize, and then keep or sell, any property they allege is involved in a crime. Owners need not ever be arrested or convicted of a crime for their cash, cars, or even real estate to be taken away permanently by the government. It is notoriously difficult and expensive for people whose property has been seized to challenge the government. British Columbians should be deeply troubled that this flawed practice could be expanded even further to target people who are not even suspected of crime.
We are concerned that many of the recommendations before the Commission could have a disproportionate impact on racialized and other marginalized people, subjecting them to increased scrutiny by police and government agencies like the Canadian Revenue Agency (CRA). The BCCLA also recognizes that racism against East Asian-Canadians has animated public discussions about money laundering.
The over-collection and sharing of personal information by surveillance agencies can result in racial, ethnic and religious profiling. Further, it has been well documented that some technologies, such as face surveillance technology, are prone to error – and that the error rates are higher for women and people with darker skin.
Racialized and other marginalized people, including poor and low-income Canadians, are less likely to have a bank account and more likely to work in sectors that deal in cash. They are more likely to be “unbanked” — meaning they have no formal relationship with a bank—or “underbanked”— meaning they do not have access to incremental credit or have limited engagement with the financial sector. This makes it more likely they will be unfairly targeted by anti-money laundering laws, and harder for them to prove ownership of their income and assets when they are targeted.
Racialized and marginalized people are disproportionately without bank accounts, so anti-money laundering laws put them in a no-win situation. Their transactions are more likely to attract suspicion, and the lack of a paper trail makes it harder to prove their innocence. Any new rules should promote financial inclusion, not further marginalization.Megan Tweedie, Senior Counsel, BCCLA
Newcomers to Canada often come from countries with weak banking systems, or from countries with regimes that intentionally make it harder for people leaving the country to bring their money with them legally. They are also more likely to send money internationally, risking being reported for making suspicious transactions. Anti-money laundering laws risk having a disproportionate impact on these people, making even innocent transactions seem suspicious and creating a financial system that further marginalizes people who are already excluded.
We will press the Commission to explore the root causes of money laundering and organized crime. At a time when people are taking to the streets to protest police abuses, the government should not give police aggressive new powers to investigate and prosecute money laundering without first investigating the underlying conditions that give rise to crime.
Casinos and real estate play a central role in the so-called “Vancouver Model” of money laundering. Those industries have a history of weak regulation and failed oversight regimes. We will encourage the Commission to consider the role those industries play in money laundering and to close loopholes that allow money laundering to take place.
Organized crime reaps massive profits as a result of drug prohibition and decades of failed policing built on the Nixon-era “war-on-drugs.” Ending drug prohibition would take money out of the pockets of organized crime, reducing the demand for money laundering and bringing the profits into the legitimate financial system. In addition to addressing money laundering, ending drug prohibition would reduce the systemic over-policing of marginalized and racialized communities, provide a safer, regulated supply of potentially dangerous drugs, and provide tax dollars for harm reduction and treatment.
Law enforcement agencies need sufficient information to do their work — but when governments demand new surveillance powers, especially in the context of law enforcement, the BCCLA always has several questions. First, will the surveillance be effective at solving the problem? If the government can show efficacy, will the surveillance do too much harm to our freedoms? And third, if the government shows efficacy, and the harm to our freedoms is not excessive, are the safeguards sufficient?
We will encourage the Commission to recommend new oversight regimes to match any new powers granted to government or police. Any expansion of police powers should come with meaningful oversight. Government bodies given the power to collect and share personal information should have to report publicly on what information is collected, how much is collected, how long it is kept for, who it is shared with, and how often it is shared.
Left unchecked, money laundering has significant social and political consequences. However, recommendations proposed to combat money laundering call for the significant expansion of police and regulatory powers and the mass collection of sensitive, private information – all without evidence that such methods will yield results.
As the only civil liberties group at the Commission, we will work to ensure that civil liberties, privacy rights, and human rights are upheld.