CANADA'S NEW "PROCEEDS-OF-CRIME" BILL

The federal government is about to reintroduce one of its potentially most
dangerous legislative initiatives. Left in its present form, Bill C-81 will
try to turn financial managers into police informants, grant Customs
officers the power to strip travellers of undeclared cash and create a new
bureaucracy to sift through

financial records without a targeted individual's knowledge or consent. All
this is supposedly necessary to combat a scourge called "money laundering"
and to help take away from criminals the proceeds of their crimes.

Yet "money laundering" is a contrived offense which has no business in the
criminal code. And there already exists perfectly satisfactory instruments
for stripping criminals of their ill-gotten gains. The current legislation
is driven not by need, but by police hype, political somnambulation and
U.S. pressure for the rest of the world to imitate its mistakes.

The current zeal for chasing "proceeds of crime" emerged in the U.S. out of
frustration with previous crime-control strategies. Until the 1980s the
buzz-word had been "targeting up." Rather than wasting time on street
punks, the police decided to pursue the big boys who really ran things. But
no matter how many "godfathers" wound up in the slammer, just as much weed
got toked up in college frat houses, just as much money got blown in
illegal gambling dens and just as many prim and proper citizens abandoned
wives and children in the dead of night to prowl the streets in search of
forbidden carnal delights.

Some might have deduced that the notion of criminal markets controlled by a
handful of crime-lords whose names were suspiciously hard to pronounce was
Hollywood fiction. Some might have figured that the criminal market-place
was actually a competitive free-for-all. Some might have concluded that as
long as governments made the mistake of criminalizing personal vice, there
would always be people happy to supply the resulting demand.

Instead the consensus became that mob bosses were continuing to run their
rackets from six-room prison suites with gold bars on their seaview
windows. Hence the decision to go after the one thing deemed indispensable
- - the money that formed the motive (profit) and the means (working capital)
for further crimes. Even better, given that era's huge budget deficits and
severe cutbacks in public services, the new strategy promised to load onto
the bad guys the cost

of enforcing criminal justice - by seizing the "proceeds of crimes" and
turning them over to the cops to use.

The results have been appalling. The follow-the-money frenzy has loaded the
U.S. financial system with useless paper work, destroyed traditional
guarantees against self-incrimination and double jeopardy and reversed the
burden of proof. There is no need for the police to even lay charges for a
person's property to be taken. All it takes is a tip-off, which could be
pure hearsay, from an anonymous and paid informant, and the owner then has
to prove the legal origins of his/her property. The police, who are given
performance bonuses based on how much they grab, shifted resources away
from violent crimes towards lucrative ones, seizing cars, jewelry, boats,
planes, houses and bank accounts. Some police forces began running at a
profit, with no further need to submit to civilian oversight by taxpayers.
Since seized proceeds must go to law enforcement, small-town forces came to
boast everything short of full-fledged SWAT teams though there hadn't been
a seriously violent crime in their jurisdiction for years.

Once again, there was no proof it did any good. The U.S. still jailed a
higher percentage of its population than any major country except Russia,
yet remained by far the world's most lucrative market for criminal goods
and services. So the rationalization became that the money chase wasn't
reducing American crime because the big bucks kept escaping abroad.
Meanwhile US banks complained that the reporting requirements were driving
up their costs and driving away their customers to the advantage of their
foreign competitors. The answer to both? Everyone else was to imitate
American folly, or face sanctions ranging from exclusion from the
U.S.-controlled international financial clearing system to loss of trade
privileges.

In response, Canada began to introduce U.S.-style procedures. First came
the criminalization of money laundering and sweeping new asset-seizure
provisions, albeit stopping just short of the grosser forms prevalent in
the U.S. Police investigating drug cases were given the right to fish
through tax records, seriously compromising the confidentiality on which
the entire tax system is premised. To find, freeze and forfeit assets,
special Proceeds-of-Crime units were set up, funded by a federal government
loan repayable out of what the units could seize. The proceeds were then
turned over the provinces to finance criminal justice administration,
giving the police an indirect financial interest in the outcome of their
own investigations. Then came Bill C-81.

The bill does three things. It introduces U.S.-model controls on
cross-border cash movements. Failure to fill out prescribed forms permits
Customs officers here, as they do in the U.S., to grab money, even if its
origin is strictly innocent. The burden of proving that the seizure is
unjustified is then thrown onto the owner. Despite all the rhetoric, the
real purpose of the regulation is to deputize Canada Customs at Canadian
taxpayer expense as part of the U.S. effort to more closely control its own
border.

The bill also introduces Mandatory Suspicious Transaction Reports that
financial managers must fill out in secret - if they inform their clients,
the financial managers can face charges. Yet such reports have been an
abysmal failure elsewhere. It is impossible to create an objective list of
"suspicious" characteristics. Mandatory reports inevitably encourage
over-reporting. And the whole trend of modern banking is towards making
transactions more impersonal. The only "suspicious" transaction reports
that have ever make sense are voluntary and informal, and go from a bank
officer who detects a problem straight to the police.

Finally the bill establishes a new agency to study all the resulting
paperwork. The agency is supposed to decide whether information should be
passed on to a police force (for criminal investigation), to the revenue
authorities (for tax enforcement) or to CSIS (to leave on the back seat of
a car at a Maple Leafs game). The entire process seems to have been
inspired by the children's game called "broken telephone." One kid whispers
a sentence in someone's ear, they whisper it to someone else, and so on,
until it comes out total gibberish at the other end.

And it is all unnecessary. There is no need for a crime called
"money-laundering." Money launderers do not stick guns in people's faces or
pass bum checks. They make deposits, wire money and set up foreign bank
accounts - just like a lot of honest citizens do. Since no one can be
convicted of "money-laundering" without proof that the money came from some
sort of criminal activity, the Crown should simply charge the individual
who handles criminal money with participation in the offense that generated
the money to begin with. Creating a stand-alone offense called
"money-laundering" is about as logical as creating a separate crime called
"driving the getaway car" for bank robbery cases. And it trivializes the
real crime.

Nor, to take away the proceeds of crime, is there any need to turn police
forces into self-financing bounty-hunting organizations. Prior to the
current follow-the-money fad, the task of seizing criminal earnings was
left to the branch of government that already had the legal tools and the
skills. The tax authorities are quite capable of stripping a criminal of
his/her illegal earnings, and a fair chunk of the legal along with it. In
fact the proceeds-of-crime units came up almost empty-handed until Revenue
Canada began participating. And most of the money now reported as seized
"proceeds of crime" was in fact recovered using ordinary tax procedures.

In short, Bill C-81 is superfluous in terms of its supposed criminal law
objectives, and dangerous in terms of its potential impact on hard-won and
easily-lost fundamental rights. It is time to tell the government to tailor
law and policy to genuine need, not to mass media stereotypes and American
police propaganda.