5.3 Proceeds of Crime

Public Prosecution Service of Canada Deskbook

Guideline of the Director Issued under Section 3(3)(c) of the Director of Public Prosecutions Act

Revised March 1, 2018

Table of Contents

1. Introduction

This guideline offers an overview of the practice and policies of the Director of Public Prosecutions relevant to proceeds of crime, money laundering and offence-related property cases. It also addresses the practice and policies regarding property associated with terrorist activities.Footnote 1 This guideline must be read and applied taking into account other chapters of the PPSC Deskbook, in particular, the chapters dealing with the decision to prosecute and resolution discussions.Footnote 2 In dealing with these matters, it is important for Crown counsel to also consider the Seized Property Management Act (SPMA),Footnote 3 which is the statute governing seized, restrained and forfeited property.

2. Involvement of Public Services and Procurement Canada (PSPC)

Under the SPMA, after being appointed by a Court Order to do so, the Minister of Public Services and Procurement Canada (PSPC) is responsible for managing:

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

Since PSPC is responsible for the payment of damages arising from all undertakings given by the Attorney General of Canada under the SPMA, SPMD personnel must be consulted prior to the signing of an undertaking, any seizure, restraint or forfeiture of property. Such consultation serves to notify the SPMD that a particular property will be put under its management, allows SPMD personnel to make comments on draft orders and to have input as to the feasibility or advisability of the seizure, restraint or forfeiture.

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

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

Consultation with the SPMD must continue after the seizure or restraint as circumstances require (e.g. prior to an amendment to the order) to ensure the implementation of the proposed amendment.

3. Undertakings

As a prerequisite for the issuance of a search warrant or restraint order under s 83.13 (Terrorism) or Part XII.2 (Proceeds of Crime) of the Criminal Code, the Attorney General of Canada must undertake to pay any damages or costs that could arise from their issuance and execution. This undertaking must be filed with the application for the warrant or order under s 83.13 or Part XII.2 of the Criminal Code.

3.1. Authority to sign the undertaking

3.1.1. Prosecutions related to proceeds of crime

Where the property in question is neither a business nor a property or properties whose seizure or restraint might reasonably affect the operation of a business, Crown counsel must obtain the approval of the Chief Federal Prosecutor (CFP) or the Deputy Chief Federal Prosecutor (DCFP) before signing the undertaking. At the option of the CFP or the DCFP, the undertaking may be signed by the CFP or the Crown counsel.

Where the property in question is a business, or a property or properties whose seizure or restraint might reasonably affect the operation of a business, the approval levels for the undertaking are as follows:

  1. where the estimated aggregate value of the business, property or properties is $1,000,000 or less, the CFP;
  2. where the estimated aggregate value of the business, property or properties exceeds $1,000,000, a Deputy Director of Public Prosecutions (DDPP).

The undertaking may be signed by the approval authority or at the option of the approval authority by counsel handling the file.

3.1.2. Terrorism ProsecutionsFootnote 4

In these prosecutions, the prosecutor must obtain the approval of a DDPP before signing the undertaking. At the option of the Deputy Director of Public prosecutions, the undertaking may be signed by the DDPP or the Crown counsel.

3.1.3. Briefing note

Where approval is required, a briefing note must be submitted.

The briefing note must contain the following information:

A copy of the affidavit in support of the proposed application as well as the proposed order must be attached to the briefing note.

4. Offence-Related Property

Approval for the restraint of offence-related property under the CDSA or the Criminal Code must be obtained in all cases from the CFP or the DCFP, regardless of the estimated value and nature of the property involved. The briefing note described above for undertakings must also be prepared for any requests for approval of a restraint order.

As for a management order, its approval may be obtained from Crown counsel if the value of the property is below $25,000.00. Otherwise, the approval must be obtained from the CFP or the DCFP.

Before obtaining a management order, Crown counsel must be satisfied that an order of forfeiture is feasible in respect of the property.Footnote 5

5. Inter-Provincial Special Warrants, Restraint and Forfeiture Orders

As set out in ss 462.32(2.1) and (2.2), 462.33(3.01) and 462.371 of the Criminal Code, a special warrant, restraint order or forfeiture order can be obtained for execution in another province.

Before obtaining such a warrant or order, Crown counsel from the regional office where the property is located must be consulted to ensure that its terms are consistent with the relevant provincial legislation so as to avoid any execution problems. Crown counsel from the regional office must also oversee the execution of the warrant or order.

It is also essential to coordinate obtaining and executing the warrant, the restraint or forfeiture order with Crown counsel from the regional office where the property is located so as to limit the delay between issuance of the instrument and its execution in the other province.

Last, Crown counsel who obtained the warrant or order continues to be responsible for the process and must therefore ensure that the document has been duly registered or renewed under s 462.35 of the Criminal Code as appropriate.

6. Motion by Third Party Before and After Forfeiture and Role of the Department of Justice

One of the underlying principles of the offence-related property or proceeds of crime regime is protecting innocent third parties who have an interest in the property. Their rights may be recognized before or after forfeiture, depending on their nature.

Given that the rights claimed by third parties are civil in nature, Department of Justice counsel may be required to address the issues that arise. It is therefore important to contact the SPMD in your region as soon as possible to determine what steps to take to respond to these issues.

It is essential to keep a detailed account of all discussions in the file in relation to the rights of third parties and seized property due to the complexity of questions, the potential for many people to be involved and the multiple overlapping discussions that may arise.

Crown counsel must not take a third party’s claim into account nor agree to reimburse them in resolution discussions. Only SPMD can decide whether to recognize a third party’s claim after the forfeiture.

7. Forfeiture Order

Before requesting forfeiture of any property, any update of the briefing note described in section 3.1.13, in particular in relation to the property being seized and any third party rights, must be prepared for the authority who will be approving a restraint order. If restraint is not being sought, a briefing note is required before any forfeiture.

In addition, in the context of resolution discussions, it is important to ensure that an agreement includes the facts which support, as much as possible, a future request for forfeiture. Without these facts, it can be difficult to proceed with forfeiture.

Once property is forfeited, it belongs to the federal Crown, subject to the 30 day appeal period. Forfeited property is governed by the SPMA. The procedure for selling a forfeited property and using the proceeds of sale are set out in the Regulations adopted pursuant to the SPMA. It is important to consult the SPMD prior to obtaining a forfeiture order to ensure that it complies with the SPMA. If the order does not comply, Crown counsel will have to apply to the court, on behalf of SPMD, to amend the order so as to bring it into compliance.

7.1. Partial forfeiture

In R v Craig,Footnote 6 the Supreme Court of Canada held that partial forfeiture of offence-related real property under the CDSA can be ordered. However, forfeiture of the equity or part of the equity, physical division of a property or partial forfeiture subject to conditions are not allowed.

It is important to point out that partial forfeiture is not a negotiation tool. If the facts justify an application for total forfeiture, Crown counsel may not, as part of negotiations, suggest partial forfeiture.

When certain conditions are met, alternatives to partial forfeiture are possible, in particular, the immediate payment of a sum of money equivalent to forfeiture. This amount is not a fine but should be considered offence-related property in lieu of partial forfeiture. Another option is selling the property by way of judicial sale prior to forfeiture and considering the proceeds of sale in lieu of the real property. The proportionality criterion would then apply to the sum of money, and Crown counsel could request a partial forfeiture.

8. Relationships Between Proceeds of Crime (POC) Counsel and Headquarters Counsel Group (HCG)

The HCG manages the Integrated Proceeds of Crime initiative. It decides on the strategic direction of the initiative within the Public Prosecution Service of Canada (PPSC), coordinates proceeds of crime matters and participates in the development of prosecution policies.

HCG counsel are also resource persons who provide advice on a range of proceeds of crime, money laundering, offence-related property and other related issues.

Crown counsel should contact the HCGFootnote 7 on 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 PPSC's position on the matter is consistent across the country.

9. Civil Forfeiture

In recent years, almost all the provinces have enacted legislation on the civil forfeiture of criminal property. In Chatterjee,Footnote 8 the Supreme Court of Canada recognized the validity of such a forfeiture scheme in Ontario. In cases where it is decided that seized or restrained property will be transferred to the province for civil forfeiture, it is incumbent on Crown counsel first to ensure that all orders obtained by the PPSC affecting the property are set aside. Orders that have been registered on title must be removed. If the management orders are not set aside, the SPMD will continue to be responsible for the property, and it cannot be turned over to the province.

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