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

Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets.

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British Columbia plans to introduce a new law that will allow authorities to seize houses and luxury cars if the owners cannot explain the source of the money to pay for them.

New Premier David Eby announced on the weekend legislation will be introduced this spring to create unexplained wealth orders, which are meant to target the proceeds of crime.

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Such measures have been in place in a few jurisdictions such as the United Kingdom since 2017.

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The unexplained wealth order is a tool recommended by B.C.’s Cullen Commission on money laundering that delivered its findings this summer and a 2019 B.C.-government commissioned report on money laundering in real estate.

James Cohen, executive director of Transparency International Canada, a global anticorruption advocacy group, said the effectiveness of unexplained wealth orders will depend on how the new legislation is crafted.

Taking into consideration concerns on privacy and personal intrusion, targeting higher-level crime and making it a civil rather than criminal measure would be helpful, he noted.

“There’s definitely guidance from the Cullen Commission on how to go forward with this. So let’s see what the B.C. government does,” said Cohen, whose organization has been an advocate of unexplained wealth orders.

Instead of a presumption of innocence, under an unexplained wealth order, the onus falls on the alleged perpetrator to explain where money came from to purchase their assets.

If the alleged perpetrator fails to produce the information and does not rebut the presumption the property was purchased with illicit funds, the property will be forfeited.

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James Cohen, executive director of Transparency International Canada, a global anticorruption advocacy group, said the effectiveness of unexplained wealth orders will depend on how the new legislation is crafted.
James Cohen, executive director of Transparency International Canada, a global anticorruption advocacy group, said the effectiveness of unexplained wealth orders will depend on how the new legislation is crafted. PNG

The Cullen commission recommended that unexplained wealth orders will only be used in civil proceedings for the forfeiture of property. The information provided in response to an unexplained wealth order cannot be used in a criminal prosecution.

The B.C. Civil Liberties Association (BCCLA), of which Eby was the head before he turned to politics, opposes unexplained wealth orders.

The BCCLA said it’s 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.

On Sunday, Eby said the introduction of unexplained wealth orders are meant to remove the profit incentive for organized crime.

He acknowledged the proposal is a departure from existing civil forfeiture rules in B.C. and Canada and said he had no doubt the new law would be challenged in court.

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But he said he does not want British Columbia to be a place where organized crime is welcome, money laundering is tolerated and people flaunt luxury goods earned through the misery of exploiting people on the streets. “We want to send a strong message,” said Eby.

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.

In a forum on unexplained wealth orders on Tuesday hosted by the University of B.C.’s anticorruption law program, panelists also noted that how the unexplained wealth orders are constructed is important and they can’t stand on their own in combating money laundering.

“If you pass an (unexplained wealth order law) and you don’t resource law enforcement, it will fail and it will fail spectacularly,” said Jeffrey Simser, one of the panelists and a former legal director of the Ontario Ministry of the Attorney General.

ghoekstra@postmedia.com

twitter.com/gordon_hoekstra

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