B.C. introduces measures to combat money laundering, includes orders to explain wealth

The B.C. government is creating new measures to combat money laundering, including legislation that could compel owners to explain where wealth came from to purchase assets such as luxury houses and cars.

So-called unexplained wealth orders would have to be applied for in each case through the courts and meet certain tests, but if passed, would put a reverse onus on the alleged perpetrator to explain where money came from to buy their assets where there is a suspicion of criminal activity or corruption.

The information from the orders could then be used to pursue civil forfeiture cases where the province aims to seize assets or money.

The amendments to legislation to enact the orders was introduced Thursday.

“Too many people are recruited into organized crime with dreams of exotic cars, fancy homes and a glamorous lifestyle. … Today’s amendments will make it more difficult for criminals to bank on their illicit assets,” said B.C. Public Safety Minister and Solicitor-General Mike Farnworth.

He added that one of the main drivers of repeat violent offences is the toxic drug crisis, which is fuelled by organized crime. Unexplained wealth orders will help go after the proceeds of criminal criminals profiting from this misery, said Farnworth.

Changes to B.C.’s forfeiture laws also include eliminating the 10-year limitation period on forfeiture proceedings and making it easier to access information from public bodies and organizations such as real estate boards.

The NDP government also announced this week it will start regulating money service businesses that deal in foreign currency exchanges, wire transfers, money orders and traveller’s cheques. These services outside of traditional financial institutions such as banks are viewed as vulnerable to money laundering. Quebec is the only other province that regulates money service businesses.

The B.C. government says it will also create a public registry for beneficial owners of corporations intended to create more transparency and confidence that B.C. companies are not being used to launder money.

The federal government has also announced it will introduce a public corporate beneficial ownership registry, and Quebec has also established such a registry.

Unexplained wealth orders have already been introduced in the United Kingdom, Ireland, New Zealand and in Manitoba, although the province has not yet used the tool.

Unexplained wealth orders have had limited success in the U.K. Several efforts failed to seize luxury London properties owned by residents of central Asian countries that were formerly part of the Soviet Union.

A settlement was reached in one case in which a Leeds businessman, who had links to a convicted murderer, agreed to surrender 45 properties and other assets totalling $15 million.

Since then, the U.K. has made changes to the orders they believe will make them more effective.

Farnworth said they used those U.K. lessons to develop the province’s wealth orders, which he says he believes will make them effective and able to withstand court challenges.

The B.C. Civil Liberties Association opposes unexplained wealth orders.

The association said it is not in favour of taking a tough-on-crime approach to money laundering with the introduction of unexplained wealth orders, the aggressive pursuit of civil forfeiture, increased policing, and broad information collection and sharing. “These invasive measures undermine constitutional rights, have not been adequately tested, and would be expensive to implement,” wrote the BCCLA’s Stephen Chin and Jessica Magonet.

Money laundering has been a hot-button issue in B.C. in the past several years, with far-reaching implications for the economy, the law, policing and trust in institutions.

The B.C. NDP government commissioned several independent reports and launched a public commission into money laundering headed by B.C. Supreme Court Justice Austin Cullen that delivered its recommendations in 2022, including a recommendation for the unexplained wealth order.

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Postmedia News investigations put a spotlight on money laundering. Between 2017 and 2019 its probes revealed that at least $43 million in properties were tied to B.C.’s largest money-laundering investigation.

A Postmedia analysis of 12 money-laundering cases dating back nearly three decades, involving $1.7 billion, found money is laundered in real estate using a number of mechanisms, often with the help of shell companies and involving several countries and banks.

1. New B.C. law to target source of luxury wealth in money laundering crackdown

2. Vaughn Palmer: Cullen report makes it clear B.C. can't wait for Ottawa to move on money laundering

3. Vaughn Palmer: Cullen downplays money laundering as cause of unaffordability, corruption

ghoekstra@postmedia.com

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