Plans by the British Columbia government to confiscate suspected proceeds of crime with “unexplained wealth orders” are drawing praise from an expert in financial compliance as a way to make life harder from criminals.
Alexandra Wrage, CEO of Trace International, a global business association focused on commercial transparency and good governance, said unexplained wealth orders would help to redress and deter financial crime in the province, including money laundering.
But she cautioned there should be “realistic” expectations of the financial rewards from such seizures, since “criminals who have amassed substantial assets are going to fight hard to hang on to that money.”
Critics object to the unexplained wealth orders on the grounds they undermine presumption of innocence, placing an onus of proof on the target of the seizure order.
Premier David Eby said on Sunday that legislation to allow unexplained wealth orders would be introduced next spring.
Such orders were recommended in June in the final report of a commission of inquiry into money laundering in B.C. by retired judge Austin Cullen
“Unexplained wealth orders are a tool to go at why organized crime exists, to make money. You will be seizing the assets and going after the proceeds that attract young people to organized crime and gang life, the flashy cars, homes and luxury goods,” Eby said at a news conference.
Removing “the profit incentive for organized crime” would send a strong message, he said.
Such measures have drawn criticism from the B.C. Civil Liberties Association.
A spokesman said the association’s position is unchanged since its response to the Cullen Commission’s report, calling unexplained wealth orders an “invasive” measure that “erodes the presumption of innocence”.
Jessica Magonet, staff counsel at the association, said in a statement in June the group was “extremely troubled” by Cullen’s recommendations to ramp up civil forfeiture and “disturbed” by the prospect of unexplained wealth orders.
In a statement released in April 2021, Magonet said unexplained wealth orders “raise profound civil liberties implications”.
“They erode privacy rights, undermine the presumption of innocence, and subvert the rights that shield people from unreasonable search and seizure,” she said.
Wrage said the orders represented an “extraordinary power” for the government to seize property, and it was therefore important that targets have “recourse to the courts”.
However, unexplained wealth orders could act as a substantial deterrent for criminals, she said.
“We have financial criminals with too few constraints on their behaviour, so I am a fan of expanding our tool kit in any reasonable way that makes life more difficult for them.”
Wrage said B.C. should learn from the example of Britain, which introduced unexplained wealth orders in 2018, giving law enforcement the power to confiscate suspected criminals’ assets without having to prove the property was obtained from criminal activity.
Media reports suggest the potential high costs of failed seizure applications had put investigators off of using them.
“The expense of litigating these cases seems to have taken the United Kingdom by surprise and we shouldn’t make that mistake,” Wrage said.
She said there was a risk that “one or two large cases could deplete resources, that the outcome will be disappointing, and the desired deterrent value won’t materialize.”
Peter German, the author of two NDP government-commissioned reports on money laundering, said he was on leave and not available for an interview about Eby’s plans, but cited what he wrote in one of his reports in 2019.
German, a former RCMP deputy commissioner who is now the president of the International Centre for Criminal Law Reform, described unexplained wealth orders as being “based on a presumption that large, unexplained sums of cash or other liquid assets should be restrained, unless the person in possession is able to satisfy the court that he or she is in lawful possession.”
“(The unexplained wealth orders) remedy the common inability of prosecutors to link proceeds of crime to a predicate offence,” he wrote.
—Nono Shen, The Canadian Press