Anti-Terrorism/Money Laundering Update
Oct 2018 Charity & NFP Law Update
FATF Plenary Prioritizes Virtual Assets
The first Plenary meeting of the 2018-2019 Financial Action Task Force (“FATF”) took place in Paris from October 17 to October 19, 2018. The Plenary meeting follows the stated objectives of the incoming president of the FATF, the US Department of the Treasury’s Assistant Secretary, with regard to prioritizing how the FATF standards apply to virtual currency providers and related businesses.
In this regard, while recognizing that virtual assets and related financial services have the potential to improve financial inclusion, which is of concern to charities and not-for-profits operating in certain parts of the world with inadequate financial services infrastructure, the Plenary released a Statement indicating how the FATF will provide clarification to its various member states in managing the money laundering and terrorist financing risks of virtual assets.
The Statement explains that the FATF has adopted changes to its FATF Recommendations and Glossary by adding new definitions of “virtual assets” and “virtual asset service providers” (“VASP’s”) that clarify how the FATF Recommendations apply in case of financial activities involving virtual assets, including crypto currencies. “Virtual assets” refer to “digital representations of value that can be digitally traded or transferred and can be used for payment or investment purposes, including digital representations of value that function as a medium of exchange, a unit of account, and/or a store of value”, and VASP’s refer to cryptocurrency exchanges, certain types of wallet providers, and providers of financial services for Initial Coin Offerings.
The Statement further encourages member states to take urgent legal and practical steps to prevent the misuse of virtual assets and clarify that FATF recommendations require monitoring and supervision only for purposes of anti-money laundering and counter-terrorism financing.
Managing Cannabis in the Workplace in Ontario
Oct 2018 Charity & NFP Law Update>
On October 17, 2018, federal Bill C-45, the Cannabis Act (the “Federal Act”), came into force as proclaimed by Order in Council, after having received Royal Assent on June 21, 2018. Each province and territory has its own legislation to regulate the recreational use of cannabis in their respective jurisdiction, similar to each province’s authority to regulate the sale of alcohol. This Charity & NFP Law Bulletin provides a brief overview of the relevant federal and Ontario legislation with a focus on its impact on the workplace. Charities and not-for-profits, as employers, need to be aware of their legal rights, as well as obligations under the new legislative regime and develop or modify their workplace policies accordingly.
For the balance of this Bulletin, please see Charity & NFP Law Bulletin No. 431.
New Toronto Office Opening
Oct 2018 Charity & NFP Law Update
Carters is pleased to announce the opening of its new Toronto office on November 30, 2018 to support its growing team in providing expanded services for our clients in Toronto. The new office is located at 67 Yonge Street, Suite 1402, Toronto, Ontario.
Corporate Update
Oct 2018 Charity & NFP Law Update
New Online Service for Not-For-Profit Corporations
On October 4, 2018, Corporations Canada announced that it is now possible to obtain a certificate of compliance or a certificate of existence for a not-for-profit incorporated under the Canada Not-for-profit Corporations Act (“CNCA”) through Corporation Canada’s Online Filing Centre. These certificates are often required by third parties to evidence that a corporation exists and has not been dissolved. A certificate of compliance shows that the corporation exists under the CNCA, it has not been dissolved or amalgamated into another corporation, or continued under another corporate statute, has filed the required annual returns with Corporations Canada and paid all required fees. A certificate of existence shows that the corporation exists (i.e., it is not dissolved, amalgamated or discontinued) as of a specified date or for a specified period, but does not certify whether the corporation has filed its annual returns or paid all required fees to Corporations Canada. Additional information is available on the Corporations Canada webpage Obtaining a certificate of compliance or certificate of existence.
New Services for Cooperatives
Also on October 4, 2018, Corporations Canada introduced its new “Annual Return Notification Program for Cooperatives”, whereby cooperatives will be mailed a reminder to file their annual return.
Corporations Canada also announced the recent creation of two new webpages providing information for cooperatives. The webpage, Your reporting obligations under the Canada Cooperatives Act, explains reporting obligations to keep a cooperative in good standing, including filing annual returns, changes to the address of the registered office, changes to the board of directors, and articles of amendment. The webpage, Guide on dissolving a cooperative, provides information on how to prepare a request to dissolve a cooperative, as well as information regarding the effect of dissolution on the property and liabilities of the cooperative.
Initial Order Involving the Humboldt Broncos’ Crowdfunding Campaign
Oct 2018 Charity & NFP Law Update
On August 15, 2018, the Saskatchewan Court of Queen’s Bench released an “Initial Order” in the application by the Humboldt Broncos Memorial Fund Inc. (“HBMFI”) in accordance with Saskatchewan’s The Informal Public Appeals Act (“IPAA”) and the Canada Not-for-profit Corporations Act (“CNCA”). The Initial Order dealt with the allocation of over fourteen million dollars raised through the GoFundMe online crowdfunding campaign (the “Campaign”), net of fees and other deductions, for the benefit of the victims of the accident of April 6, 2018 involving twenty-nine individuals, including members of the Humboldt Broncos junior hockey team, team coaches, team staff, the bus driver and other individuals associated with the team.
Saskatchewan was the only province in Canada to follow the recommendations of the Uniform Law Conference of Canada to enact legislation comparable to its Uniform Informal Public Appeals Act (“Uniform IPAA”). Therefore, the proceedings involving the HBMFI and the Campaign, which the Court stated constitutes a “public appeal” within the meaning the IPAA, are an important precedent. The Uniform IPAA defines “informal public appeals” as:
…any message, disseminated by whatever means, requesting donations from the public generally or from a section of the public in order to fulfill a personal purpose or a purpose of private or social utility, whether the donations are made in the form of a sum of money, including sums derived from a sale, the provision of a service, or a lottery, contest, entertainment or other event, or in the form of movable or immovable property.
The Initial Order included various declarations under the IPAA, including a declaration that the funds from the Campaign are subject to a “trust” within the meaning of the IPAA, that the object of the Campaign, as expressed in the GoFundMe platform, are the “object of the trust”, and that HBMFI is the trustee within the meaning of the IPAA. Because there is no trust document in regard to the trust and such document is not required under the IPAA, the Court also made a declaration that the Initial Order is the “governing authority” of the trust, consistent with clause 2(1)(c) of the IPAA.
The Initial Order further authorized and directed the investment of the funds from the Campaign in high interest savings accounts managed by a named financial services firm at no cost to HBMFI, the interim distribution of no more than ten percent of the funds to the twenty-nine affected individuals and their families, the appointment of an advisory committee, three information resource persons and legal counsel to HBMFI, as well as a declaration that a contractual indemnity in favour of certain named individuals is valid and enforceable under section 151 of the CNCA. The advisory committee was ordered to use its reasonable best efforts to submit its report on the proposed distribution of the funds on or before the hearing to be held on November 15, 2018.
Although no other province has comparable legislation, and the IPAA, as well as the Uniform IPAA, do not apply to qualified donees as defined under the Income Tax Act (Canada), registered charities relying on supporter-driven crowdfunding campaigns should consider the directions set out in this Initial Order in updating their own fundraising policies and any fundraising agreements they may be negotiating with third parties involving crowdfunding campaigns. Charities and not-for-profits in other parts of Canada will also want to monitor whether other provinces adopt comparable legislation to that currently in place in Saskatchewan in the coming years.