What Does Recklessly Laundering The Proceeds Of Crime Mean?
In the 2019 federal budget released by Finance Minister Bill Morneau on March 19, the government announced its intention to amend the Criminal Code prohibition against money laundering (s. 462.31(1)) by adding to it “reckless” as a third, alternative, fault requirement. Subsequently, on April 9 the government tabled its omnibus Bill C-97 intended to bring into effect the amendment in addition to other budget measures. If amended as intended, s.462.31(1) would read as follows:
462.31(1) Every one commits an offence who uses, transfers the possession of, sends or delivers to any person or place, transports, transmits, alters, disposes of or otherwise deals with, in any manner and by any means, any property or any proceeds of any property with intent to conceal or convert that property or those proceeds, knowing or believing that, or being reckless as to whether, all or a part of that property or of those proceeds was obtained or derived directly or indirectly as a result of
(a) the commission in Canada of a designated offence; or
(b) an act or omission anywhere that, if it had occurred in Canada, would have constituted a designated offence.
Presently, the prohibition requires that the Crown prove beyond a reasonable doubt that the dealer intended to conceal or convert the property or proceeds. That intention can be inferred from the dealing. But it does not complete the fault requirement for the offence. The Crown must also prove one of two other fault requirements.
The first is “knowing”. In the criminal law, it means both actual knowledge and so-called wilful blindness. The latter is a state of mind wherein the dealer, knowing that some questioning is required, deliberately refrains from an inquiry, because it does not wish to know the truth. Both states of mind are considered one and the same.
Knowing does not include so-called constructive knowledge, commonly phrased as “ought to have known” permitting an after the fact objective measurement of the information that was available to the dealer it failed to request due to its own negligence. Constructive knowledge has been described as having no place in the criminal law.
The second is “believing”. In another context, it was recently defined by the Court of Appeal for Ontario:
A belief is a state of mind. It is an acceptance of the truth of something, without necessarily having personal knowledge of its truth. It can be contrasted with suspicion, which is based on supposition. A belief suggests a higher level of certainty than suspicion….
“Reckless”, as the proposed third alternative, is concerned with one’s advertence to risk. It is intended to refer to the state of mind of a person who, aware that there is a danger that his/her conduct could bring about the result prohibited by the criminal law, nevertheless persists, despite the risk.
Recklessness is not to be confused with wilful blindness. They are separate concepts. The latter is a state of preferred ignorance. The former, on the other hand, is an uncaring awareness of the risk of unlawfulness. Nor is recklessness a belief. It is a firm conclusion based on a person’s subjective interpretation of the information available to him/her. But recklessness, being concerned with risk, does not require any such conclusion.
The foregoing may appear to be a legal exercise in hair-splitting, but the following examples may assist:
1. Knowing: A dealer personally knows that a client who frequently engages in substantial cash transactions is engaged in the illegal drug trade;
2. Believing: A dealer regularly completes substantial cash transactions for a client, yet reports each transaction to FINTRAC because the dealer suspects that the client is not a contractor as claimed; and,
3. Reckless: A dealer who undertakes a substantial cash transaction involving dishevelled notes reeking of cannabis smoke.
One can see a clear distinction between 1 and 2. The former arises from personal knowledge. But the latter arises from cumulative suspicious transactions, which, over time, because of their size and frequency, cause the dealer to come to believe rather than just suspect money laundering.
As to 2 and 3, the distinction may not be as clear. The former may also fit with the definition of reckless because the dealer continues to engage in transactions that it reports as suspicious; that is, despite the risk. But 3 does not lend itself easily to belief (or knowledge for that matter). There is probably not enough in 3 to cause one to believe with the certainty it requires that the client is involved in the drug trade. However, there may be enough to cause concern about the source of the cash and that to proceed with the transaction risks money laundering.
The foregoing speaks to the exposure of individuals acting as a dealer. The exposure of the employer organization is more complicated. In order for the unlawful acts of the employee-dealer to be attributable to the employer, a senior officer, with the intent of at least partially benefitting the organization:
1. Is a party to the offence, meaning that the senior officer and employee-dealer are one and the same or the senior officer aids or abets the employee dealer in the commission of the offence;
2. With the requisite fault (knowing, believing or recklessness), and acting within the scope of his/her authority, directs the employee-dealer to conduct the unlawful transaction; or,
3. Knowing that the employee-dealer is about to conduct an unlawful transaction, he/she does not take all reasonable measures to stop the employee.
The use of the term “senior officer” is somewhat deceiving. It is defined to include the senior positions one would typically expect, but also less senior positions; specifically, those responsible for managing an important aspect of the organization’s activities. Not too many organizations would consider any of their activities to be unimportant. For that reason, perhaps, the Ontario courts have accepted that a construction foreman can be a senior officer for the purpose of establishing his employer’s criminal liability.