An Update of Bill C-22 Canada's New Proceeds of Crime Act

Its current status
On June 29, 2000 royal assent was given to Canada's new anti-money laundering control legislation, The Proceeds of Crime (Money Laundering) Act. The Act is comprised of 99 Sections distributed across 6 Parts and will be supported by a Regulatory Regime currently under development by the federal Department of Finance.

Schedule of Implementation
Current thinking suggests the Act will be implemented in stages:

1. Regulations published in the Canada Gazette - December 2000 to January 2001.
2. Regulation revised and republished - March/April, 2001.
3. Regulations finalized - May, 2001.
4. Compliance with Act commences - June 2001.

Phasing in the Act
The government intends to phase in various aspects of Bill-22 in the following order to ensure an efficient and effective transition process:

1. Suspicious transactions.
2. Prescribed transactions.
3. Cross-border currency and monetary instruments.

Impact on Financial Institutions and Business Professionals
Bill C-22 impacts directly on financial institutions and business professionals when they engage in the following activities on behalf of a third party:

1. Receive and/or payout funds;
2. Manage securities;
3. The purchase, sale, and/or financing of real properties or of business assets or entities (including the facilitation of these activities); and
4. he opening/management of accounts relating to funds, credit, and securities.

Consequently, financial institutions and business professionals will be expected to comply with the applicable sections of the Act in each of these situations. Failure to do so can result in criminal charges being laid and if convicted, punishments of upwards to five years imprisonment and/or a fine of $2,000,000.

The Requirement for a Compliance Regime
The government has recently proposed that the Regulations include the requirement for every person/entity subject to the Act to develop, implement and monitor a compliance regime. The key elements of that regime include:

1. The appointment of an individual responsible for the implementation of the compliance regime.
2. The development of policies and procedures to ensure compliance.
3. Undertake a review of the policies and practices to test their effectiveness.
4. Develop, deliver and maintain an employee-training program.

This means for Financial Institutions and Business Professionals
Once legislated, this compliance regime will become mandatory and all financial institutions and business professional firms will have to put in place each of the components. This demands that each regardless of size, become fully acquainted with the legislation and its impacts on their various areas of business. Written policies will have to be developed, along with a clear enunciation of the required practices to meet those policies. Training will be mandatory for employees and must be updated on a regular basis. Finally, all will have to review the effectiveness of their policies and practices when required and make the necessary adjustments/improvements.

The foregoing comments are of a general nature, and are not intended nor should they be used as a substitute for legal advice or opinions which can be rendered only when related to specific fact situations.

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