Federal budget includes ‘game changer’ for civil forfeiture
B.C.’s civil forfeiture office says access to Fintrac’s intelligence will let it more aggressively go after dirty cash. (CP/Jonathan Hayward)
Canada’s financial crimes watchdog will soon be allowed to share secret intelligence to help provincial and territorial governments find and seize dirty money.
The federal government’s latest budget says the Financial Transactions and Reports Analysis Centre of Canada, or Fintrac, will soon be authorized “to disclose financial intelligence to provincial and territorial civil forfeiture offices to support efforts to seize property linked to unlawful activity.”
Proponents say it is an overdue change that will help those offices seize the assets of accused criminals through the civil court system.
“If we’re going to be successful in the future in disrupting criminal organizations through asset forfeiture, having access to this financial intelligence is imperative,” said Phil Tawtel, the director of B.C.’s civil forfeiture office. “Or you’re fighting really with one arm tied behind your back.”
But the B.C. Civil Liberties Association, or BCCLA, argues the civil forfeiture regime undermines civil rights by allowing the government to seize a person’s assets without proving they are guilty of a crime. Vibert Jack, the BCCLA’s litigation director, said allowing Fintrac to share data with those offices further undermines Canadians’ privacy rights.
“The Fintrac regime, we say, has questionable constitutional validity already. And one of the important protections is that Fintrac is meant to be independent from law enforcement,” Jack said. “The more that independence gets undermined, the more easily they can share information with law enforcement, the greater the risk is to the privacy rights of Canadians.”
Fintrac, Canada’s financial intelligence agency, parses millions of financial transaction reports to connect cash to crime. It then sends tips to police and securities regulators, helping them catch alleged drug dealers, human traffickers and money launderers. Last fiscal year Fintrac says it received more than 36 million financial transaction reports and sent 2,085 disclosures to law enforcement.
But Fintrac is not allowed to send similar reports to provincial or territorial civil forfeiture offices, which use civil court proceedings to try and seize cash, cars and other property they believe is either derived from crime or used to commit it.
For example, Tawtel’s office recently applied to seize a 2017 Dodge Ram that contained four bricks of cocaine, guns, $1,510 in cash and “Hells Angels propaganda.”
Jeffrey Simser, a former legal director at the Ontario Ministry of Attorney General who helped shape that province’s civil forfeiture system, said those applications are often based on information from police who can already request data from Fintrac.
But by the time the civil forfeiture office is on a case, Simser said, that data may be stale.
“If you have someone who is really good at what they’re doing and they’re a professional money launderer, the trails will go cold,” Simser said.
Tawtel said civil forfeiture offices cannot ask police to request Fintrac data on their behalf, which can create gaps in what the offices know about someone suspected to have profited from crime.
“Imagine a case where a Fintrac report wasn’t requested by the police department, or was only requested in regards to one target, but not in regards to another target,” Tawtel said.
“There’s a glaring miss in the package, and it’s not the police’s fault.”
But if civil forfeiture offices could make the request directly, Simser said, they would have access to Fintrac’s vast network of financial intelligence to unearth new information about where a suspected criminal has placed their money. He called that a “game changer.”
“Let’s say you’ve got a drug trafficking organization and police intercept one of their money couriers. He’s got $200,000 in the trunk. Police are not likely to know a lot about this case … but this will allow civil forfeiture to say [to Fintrac], ‘What do you know about the courier?’” Simser said.
Tawtel said it is also possible Fintrac will be able to send “proactive” tips to his office, allowing them to open up new investigations.
“We’re still early days. We would have to see the wording in any changes to the act,” Tawtel said, referring to the federal Proceeds of Crime and Money Laundering Act.
A statement sent by federal Ministry of Finance spokesman Benoit Maynard said the announced change was in line with the findings of the 2022 Cullen Commission on money laundering in British Columbia, which recommended the civil forfeiture office “expand its operational capacity” and go after assets beyond those identified by police.
The statement did not answer a question about when the change would come into force.
“It’s been a long journey, but we understand that sometimes important things take time to get there,” Tawtel said.
Fintrac data could be boon for ‘unexplained wealth orders’
Civil forfeiture offices have always been controversial.
Often, targets of civil forfeiture lawsuits have not been convicted of a crime — or even charged with one. And the burden of proof for such cases is lower than it is in criminal court, making it easier for the government to seize assets they believe to be the assets or instruments of crime.
“The civil forfeiture process undermines the presumption of innocence that is a fundamental principle of our democracy,” Jack said.
Simser said civil forfeiture is increasingly seen as a key response to crime, in part because of the high bar to prove criminal culpability for money laundering.
Between the 2016/17 and 2021/22 fiscal years, B.C.’s civil forfeiture office initiated 1,051 civil lawsuits to seize assets. They also completed 5,240 administrative forfeiture seizures that were not filed in court, according to data provided by B.C.’s Ministry of Public Safety and Solicitor General.
Not all civil forfeiture cases involve alleged money laundering. But they are far more common than criminal prosecutions for that crime. Between the 2016/17 and 2021/22 fiscal years, British Columbia prosecutors approved just seven criminal charges for money laundering in the province, of which just one resulted in a guilty conviction, according to data provided by Statistics Canada.
“We’re at a really interesting inflection point for civil forfeiture,” Simser said. “Up until now, it’s been relatively novel. And what’s happening I think now is that offices like B.C’s are starting to say, ‘Hey, we’re not just going to be sitting back.’”
B.C. and Manitoba have introduced so-called “unexplained wealth orders,” which require respondents to prove they obtained an asset legally, effectively reversing the usual onus of proof.
B.C. has used those orders to target a house on Salt Spring Island, gold bars in a safe in Vancouver and millions of dollars connected to an alleged money launderer.
Tawtel said the newly announced changes could help B.C. pursue more of those orders. He said Fintrac reports could give the office “a more robust analysis” on whether to apply for unexplained wealth orders.
And if the target of an unexplained wealth order responds with an explanation of how they got the money, Tawtel said Fintrac data could help his office fact-check them.
“If the respondent does provide the information, Fintrac reports will assist us in verifying in certain cases whether the information we’re receiving is accurate,” Tawtel said.
That has civil rights advocates like Jack worried about how that information will be shared, and how it could be used to bolster the civil forfeiture system.
“It’s step after step of the government taking away important protections, Charter rights and civil liberties from individuals to make it easier and easier to essentially punish people for alleged criminal activity,” Jack said.
Tawtel anticipates fresh opposition after the Fintrac announcement. But he said other non-police investigative groups like the B.C. Securities Commission can already request Fintrac data.
He also believes there is both a domestic and global shift towards civil forfeiture. The Financial Action Task Force, a G7 group that combats money laundering and terrorist financing, announced last year that “non-conviction based forfeiture” was a requirement for the group’s members.
FATF is set to evaluate Canada’s anti-money laundering and terrorist financing regime in December 2025, something Tawtel and Simser believe spurred the recent announcement.
“I think Canada is simply lining itself up for the best possible outcome as part of this examination,” Tawtel said.