Good morning. Thank you so much for inviting me to come and share my expertise with the committee.
For those of you who don't know me, I'm now retired from the Ministry of the Attorney General after over 30 years, and I was Canada's first director of civil asset forfeiture.
I'm here to talk about subdivision A of Bill C-59, which is proposed section 278 and onward, and specifically changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Criminal Code. However, before I do, I want to give you a bit of brief context and history.
A company, Silver International, operated out of unit 303 in a nondescript building in Richmond, B.C., called the Pacific Business Centre. When a search warrant was executed on that unit, police found two safes with over $2 million in bundled cash, mostly $20 bills, as well as ledgers chronicling the daily in and out transactions of the enterprise. Silver's video security system was also seized, along with an archive of the previous two weeks, and that surveillance provided investigators with a very clear picture of what was going on at Silver International.
Legitimate customers went in to access the money service business, or MSB, of Silver, but at that time, it was not properly registered as an MSB. It registered later with FINTRAC, after the warrants were executed, something that, thankfully, wouldn't happen now in 2024. The legitimate clients went in and did the standard paperwork, say, to exchange currency. They showed ID, confirmed the exchange rate, counted the money carefully and got a receipt. It's a process that might take 15 minutes.
The video archive, however, showed a second group of customers who stayed less than two minutes each, simply dropping a suitcase off in a secure area and leaving immediately, with no receipts and no counting. After those clients left, Silver staff then opened and emptied the suitcase onto the floor, arraying $10,000 bricks of $20 bills for counting and sorting.
The prosecution against Silver and others collapsed on November 22, 2018, when the Crown entered a stay of proceedings. As with most criminal prosecutions that fail, no public reason was provided. The Crown simply told the court there was no reasonable prospect of conviction, but there was clearly a structural problem with this case. In Canada, prosecutors have a constitutionally mandated duty of disclosure to the defence, and the quantum of that disclosure in a case like this is massive. It's almost hard to conceive of how much there is. There were upward of 300 law enforcement personnel working on that project at any given time.
The disclosure needs to be managed very carefully, both by the police and particularly by the Crown. For example, if there's information that might identify a confidential informant, or CI, it must be carefully redacted. Some of that information will be easy to redact, such as the notebook of the CI's handler, but sometimes it's very difficult. For example, there might be a passing reference in a police officer's notebook.
The need to protect confidential informants was affirmed on September 18, 2020, when shots rang out in the parking lot of an elegant but unassuming Japanese restaurant in Garden City, a neighbourhood in Richmond. The principal of Silver was murdered at that scene. Dead men tell no tales.
The Cullen commission determined that Silver was laundering at least $220 million a year, and it was a small part of a larger money-laundering ecosystem in British Columbia. There is one redemptive glimmer in this case. A civil forfeiture case is still ongoing, so even though all the criminal charges have gone, there's still some justice being had in B.C.
I'll move on to my two comments.
Bill C-59 once again tinkers with the money-laundering offence provisions of section 462.31. I take no issue with this, but the amendments, to me, elide a more fundamental problem. There is no stand-alone money-laundering offence. The code still requires prosecutors to link the laundering activity to a specific predicate crime.
As far as we know, Silver International was a pure third party money-laundering service. It was a professional money launderer. Had the prosecution not failed, I'm absolutely certain that defence lawyers would have built a defence around the operators' lack of direct connection to the drug trade. I'm sure they would have argued that they were simply helping business people evade currency controls from the People's Republic of China, which is not a crime in Canada.
My second point is that civil forfeiture law is critical to the fight against money laundering. We have nine jurisdictions—provinces and territories—in Canada with a civil forfeiture law, and any plan, either legislative or operational, to address money laundering must include civil forfeiture. Provinces and territories need to be encouraged to build and strengthen their capacity in this regard.
I will observe to the committee that Canada's financial intelligence unit, FINTRAC, will not provide disclosures directly to a civil forfeiture unit. If a disclosure comes to the unit through the police, FINTRAC is perfectly fine with it being used, but it will not engage directly. The reason for this has never been clear to me, but I might urge this committee to consider an amendment to the Proceeds of Crime and Terrorist Financing Act to mandate and enable such information sharing.
Thank you.