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Canada: Money Laundering Update

NCJ Number
174893
Journal
Journal of Financial Crime Volume: 4 Issue: 3 Dated: January 1997 Pages: 265-268
Author(s)
L Smith
Date Published
1997
Length
4 pages
Annotation
This paper reviews and critiques two recent appellate decisions regarding money laundering provisions under Canada's Narcotic Control Act and the Food and Drugs Act.
Abstract
In R v. Hayes (1995), the accused took $300,000 in cash into a bank and exchanged it for three bank drafts, each in the amount of $100,000. The money was not his; he was paid $900 by his friend McCully to perform this transaction on behalf of a third party. He was indicted for committing the laundering offense defined by s. 19.2(1) of the Narcotic Control Act and also for conspiring to commit that offense. At trial, he was convicted on both counts. He appealed on four different grounds, and was successful on one ground; the court held that the conviction did not meet one of the law's criteria for guilt: that the accused must know that the property was derived from illegal activities. The trial court had held that the defendant engaged in "willful blindness" in not recognizing that he was participating in the laundering of money from some type of illegal enterprise (the defendant claimed he thought the money was from legal video gaming as claimed by his friend). The Court of Appeal stated that willful blindness is applicable only when the accused has a suspicion as to the matter at issue and chooses not to inform himself of the truth. The author concludes that if this interpretation of the law is followed elsewhere, it may be difficult to secure convictions for money laundering through third and fourth parties. In R v. Tejani (1995) the accused was the part owner of a foreign exchange business. A police informant, who was a former drug trafficker, visited the offices of this business. He let it be known that a friend of his had been arrested for drug trafficking, although apparently not until after he had initiated a transaction to exchange Canadian currency into U.S. currency. The police intervened before the transaction was complete, and the accused was charged with attempting to launder proceeds under the Narcotic Control Act and with the possession of such proceeds. At trial, he was convicted on both counts and sentenced to 8 years of imprisonment and a fine of $125,000. The Court of Appeal overturned the conviction for attempt. This was done in application to its decision in the extradition case United States of America v. Dynar, in which it held that the laundering section of the act cannot support a conviction in a "sting" operation. 16 references