CBA Comments on Bill C-12 - An Act respecting certain measures relating to the security of Canada’s borders and the integrity of the Canadian immigration system

Introduction

Bill C‑12 proposes some significant measures intended to further strengthen Canada’s regime to combat money laundering, terrorist financing and sanctions evasion (AML Regime). These include mandatory enrollment with FINTRAC for all reporting entities and new and enhanced compliance tools, including significantly increased penalties for non‑compliance. Targeted changes to the Bill (which do not change the substance of the Bill) and new regulations are needed to mitigate adverse outcomes that would undermine the Bill’s intended policy goals.

Recommendations

• Provide clarity in the application of Bill C‑12’s proposed supervision and compliance powers that will reinforce a risk‑based approach that preserves the efficacy of recent enhancements to the AML Regime (e.g., private‑to‑private information sharing) and avoids over‑reporting (generating high‑volumes of low‑value reporting that do not drive increased prosecutions):
  
  • Defer coming into force of the increased administrative monetary penalties (AMPs) until regulatory criteria are established to ensure their transparent and predictable application, reserving the highest AMPs for egregious or systemic issues¹
  • Add a regulation making power to establish and provide certainty on the criteria for assessing if a compliance program is reasonably designed, risk-based, and effective²
  • Remove the one‑year limit to extending a compliance remediation agreement to prevent the arbitrary application of significant additional fines (e.g., where a delay is outside the control of a reporting entity)³
  • In determining if a client’s name is "obviously fictitious", rely solely on the judgement of the reporting entity, as this is a highly subjective standard⁴
  • Exempt banks from mandatory FINTRAC enrollment due to existing oversight⁵
  • Amend the proposed false information offense to reflect "intent to deceive" (consistent with other similar provisions in the Criminal Code) to avoid triggering the offence when providing information (or not) in good faith⁶
  • Clarify that, like a violation, an offence alleged to have been committed before the coming into force of the proposed new provisions in Bill C-12 will not be subject to them⁷

Please see proposed language in the Appendix of this submission below.

Benefits to Canadians and the Canadian Economy

Adopting these measures will help ensure a fit‑for‑purpose, risk‑based AML Regime that more effectively targets risks, focusing resources on tangible outcomes such as investigations, prosecutions, and the protection of Canadians.

¹ Bill C-12 Part 9, Sec. 116
² Bill C-12 Part 9, Sec. 79, PCMLTFA Sec 9.6 (1.1)
³ Bill C-12 Part 9, Sec. 100, PCMLTFA Sec 73.16(3)
⁴ Bill C-12 Part 9, Sec. 78, PCMLTFA Sec 9.2 (1) & (2)
⁵ Bill C-12 Part 9, Sec. 82, PCMLTFA Sec 11.4001(1) & 2
⁶ Bill C-12 Part 9, Sec. 108, PCMLTFA Sec 77.1 (1)
⁷ Bill C-12 Part 9, Sec. 123

Appendix

1. Defer coming into force of new administrative monetary penalties (AMPs) until regulatory criteria are established to ensure transparent and predictable application, reserving the highest AMPs for egregious or systemic issues

Additional penalty criteria should be added to section 6 of the PCMLTF AMP Regulations to help ensure AMPs are applied in a transparent and predictable manner and that the highest AMPs are appropriately applied to only systemic and egregious violations, including but not limited to:

• [added: The size and sophistication of the RE]
• [added: The total volume of transactions / reports of the RE, with attention given to the apparent violations as compared with the total volume]
• [added: Remedial responses taken by the RE upon learning of the apparent violation]

The Government should also consult on the additional regulatory criteria.

2. Add a regulation making power to establish and provide certainty on the criteria for assessing if a compliance program is reasonably designed, risk-based, and effective

To help ensure this new requirement is applied in a transparent and predictable manner the following amendment should be made to Bill C-12, s.79:

• Program requirements
  9.6 (1.1)The person or entity shall ensure that the program is reasonably designed, risk-based and effective [added: in accordance with criteria prescribed by regulation].

The Government should consult on these regulatory criteria.

3. Remove the one-year compliance remediation limit to prevent the arbitrary application of significant fines (e.g., where a delay is outside the control of a reporting entity)

The one-year limitation is concerning as reporting entities may face potential delays and the risk of significant fines for various reasons outside of their control (e.g., outages of Government of Canada technical systems). The following amendment to C-12, s.100, will create the flexibility to mitigate this risk:

• Extension of deadline
  73.16(3) The Centre may amend the agreement by extending the deadline referred to in paragraph (2)(b) [deleted: by a maximum period of one year] if it is satisfied that the person or entity is making substantial progress in meeting the terms of the agreement, such that an extension would encourage compliance with this Act.