Anti-Terrorism/Money Laundering Update
Jun 2018 Charity & NFP Law Update
On June 9, 2018, proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2018 (the “Proposed Regulations”) were published in the Canada Gazette. The accompanying statement from the Department of Finance Canada (the “Statement”) states that regulatory changes are required to address the deficiencies identified by the Financial Action Task Force’s (“FATF”) evaluation of Canada’s Anti-Money Laundering and Anti-Terrorist Financing regime in 2015-16, discussed in Anti-terrorism and Charity Law Update No.47, as well as to implement the legislative efforts to strengthen this regime through amendments introduced in the Economic Action Plan 2014 Act, No. 1 and the Budget Implementation Act, 2017, No. 1.
Recognizing that the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “Proceeds of Crime Act”) was not originally conceived for financial services and institutions in the digital world, the Statement highlights the following changes introduced by the Proposed Regulations: new customer due diligence requirements and beneficial ownership reporting requirements; new regulations for businesses dealing in virtual currency; updated schedules to the regulations; regulation of foreign money service businesses; and a number of technical amendments. The Statement also indicates that the proposed amendments would help improve the efforts of the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”).
In this regard, the Proposed Regulations state that virtual currencies “are vulnerable to abuse for money laundering and terrorist activity financing purposes because they allow greater levels of anonymity, or in some cases complete anonymity, when compared to traditional non-cash payment methods.” As such, the Proposed Regulations introduce new requirements to financial entities, money services businesses, real estate brokers, accountants and other persons and entities, such as registered charities running a lottery scheme in the permanent establishment of a casino in certain circumstances described in the Proceeds of Crime Act, to keep “large virtual currency transaction records” indicating the receipt of amounts of $10,000 or more in virtual currency in a single transaction.
Charities and not-for-profits accepting donations in virtual currency, or otherwise considering fundraising or investing options available to them with regard to virtual currencies should carefully monitor these Proposed Regulations and any associated developments in the coming months.
Amendments to the Criminal Code in Bill C-74, Budget Implementation Act, 2018, No. 1
Bill C-74 introduces a new Part XXII.1 to the Criminal Code establishing a new remediation agreement regime that will come into force on September 19, 2018 (ninety days after June 21, 2018, the date on which Bill C-74 received Royal Assent). A remediation agreement is defined as an “agreement, between an organization accused of having committed an offence and a prosecutor, to stay any proceedings related to that offence if the organization complies with the terms of the agreement.” The term organization is defined as a body corporate, society, company, firm, partnership, or an association of persons.
The amendment also includes a Schedule to Part XXII.1 which provides a list of offences in respect of which a remediation agreement may be entered into subject to court approval, including offences under the Corruption of Foreign Public Officials Act, namely bribing a foreign public official (section 3) and maintenance or destruction of books and records to facilitate or hide the bribing of a foreign public official (section 4). In this regard, it applies to offences alleged to have been committed by an organization outside Canada.
This new regime is a reminder to charities and not-for-profits with operations outside Canada to consider reviewing their internal policies and procedures and any practices that involve dealings with foreign officials. This has become particularly important since, as discussed in the November 2017 Anti-Terrorism/Money Laundering Law Update, the facilitation payments exemption in the Corruption of Foreign Public Officials Act was repealed last Fall.
Anti-Terrorism/Money Laundering Update
Supreme Court Upholds Religious Autonomy in Wall Decision
Jun 2018 Charity & NFP Law Update
On May 31, 2018, the SCC released its decision in Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v Wall (“Wall”) concerning the courts’ jurisdiction to review the decision of the Highwood Congregation of Jehovah’s Witnesses (“Congregation”) to expel Mr. Wall from membership. The Wall decision overturns the Alberta Court of Queen’s Bench and the Alberta Court of Appeal’s decisions, which had both held that courts had the jurisdiction to review decisions made by religious groups regarding the discipline or expulsion of members where such decision was made in a manner that did not reflect principles of natural justice. While the SCC did not entirely rule out the courts’ jurisdiction over decisions made by religious groups and other voluntary associations over membership matters on the basis of procedural fairness, it held that this jurisdiction was restricted to a defined set of circumstances.
For the balance of this Bulletin, please see Church Law Bulletin No. 54.
Legislation Update
Jun 2018 Charity & NFP Law update
Bill C-74, Budget Implementation Act, 2018, No. 1 Receives Royal Assent
On June 21, 2018, Bill C-74, Budget Implementation Act, 2018, No. 1 (“Bill C-74”) received Royal Assent. Bill C-74 implements certain measures proposed in the 2018 Federal Budget (“Budget 2018”), some of which impact the charitable and not-for-profit sector, as discussed in March 2018 Charity & NFP Update and in Charity & NFP Law Bulletin No. 417. The amendments introduced by Bill C-74 include amended definitions of “eligible donee” under s. 188(1.3) of the Income Tax Act (“ITA”) and of “qualified donee” under s. of the 149.1(1) ITA.
Federal Safe Food for Canadians Regulations Published
On May 30, 2018 new Safe Food for Canadians Regulations (the “Regulations”) were published in the Canada Gazette. Subdivision C of the Regulations contains a prohibition on the purchase, sale, conveyance and import of fresh fruits and vegetables from one province to another, but it also contains an exception for registered charities as defined in s. 248(1) of the ITA as well as clubs, societies or associations described in s. 149(1)(l) of the ITA.
Pre-Budget Consultations for 2019 Budget
On June 4, 2018, the House of Commons Standing Committee on Finance (the “Committee”) published a News Release launching its annual pre-budget consultations in advance of the 2019 Federal Budget. The 2019 Federal Budget focuses on the theme of “Economic Growth: Ensuring Canada’s Competitiveness.” Written submissions and recommendations can be made online to the Committee until Friday, August 3, 2018.
Mandatory Breach Reporting under Alberta’s Health Information Act Coming into Force
On May 8, 2018, Alberta’s Lieutenant Governor’s Order in Council 120/2018 set August 31, 2018 as the date for the coming into force of the mandatory breach notification requirements pursuant to the Health Information Amendment Regulation enacted under Alberta’s Health Information Act (“HIA”) previously passed under the Statutes Amendment Act, 2014 in May 2014. Once in force, Alberta’s health custodians will be required to notify individuals whose health information has been subject to a privacy breach, as well as notify the Information and Privacy Commissioner and the Minister of Health if there is a risk of harm to the individual. The regulations set out the factors that must be considered by health custodians in determining whether there is a risk of harm to an individual. These factors include whether there is a reasonable basis to believe that the information has been or may be accessed by or disclosed to a person, that it has been or will be misused, that it could be used for identity theft or fraud, that it will cause embarrassment or harm, that it will damage the individual’s reputation, or that it could adversely affect the provision of a health service to the individual.