This article appears in the November issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Manitoba could be the second province to introduce legislation requiring people to explain how they acquired property if the government suspects the assets are linked to crime.
The Manitoba NDP government promised in its 2023 platform “to crack down on drug traffickers” by introducing an Unexplained Wealth Act.
“If there’s a gangster driving a $100,000 car, we’re going to ask, ‘How did you get that?’ And if you can’t explain it, we will hold you accountable,” said now-Premier Wab Kinew during a campaign speech in August.
In May, British Columbia amended its existing civil forfeiture legislation, adding unexplained wealth orders based on a recommendation made in the Cullen Commission into Money Laundering in British Columbia report released in June 2022.
That report suggested that B.C. could use the orders to target the assets “of individuals further up the criminal hierarchy” and allow authorities to prevent criminals from putting “unlawfully obtained assets into the hands of a family member or associate in an attempt to insulate them from forfeiture.”
Under an unexplained wealth order, a government seeks a court order to require a person to explain how they lawfully acquired property suspected of being linked to crime. The property is then usually frozen or seized. If the person fails to comply with the order, the property may be subject to civil forfeiture proceedings.
In using the order, the jurisdiction need not convict anyone of a crime connected to the property. However, information gathered under the order can’t be used in a criminal proceeding.
Countries such as the United Kingdom, Australia and Ireland already have unexplained wealth laws. In a notable case, the U.K. used an unexplained wealth order to target the U.K.-domiciled property of the wife of a jailed Azerbaijani banker. The U.K. Supreme Court turned down the wife’s final appeal in December 2020.
In November 2022, B.C. Premier David Eby said he had “no doubt” the province’s unexplained wealth orders legislation would eventually be challenged in court but said B.C. would be successful in countering any challenge.
Most provinces have civil forfeiture legislation.
In the key 2009 decision Ontario v. Chatterjee, the Supreme Court of Canada found civil forfeiture legislation was a valid provincial power consistent with the provinces’ jurisdiction over property and civil law in the Constitution.
In October 2023, the Supreme Court gave provinces another win when it declined an application to appeal a decision by a lower court in B.C. The B.C. Court of Appeal had found that the province was within its jurisdiction in seizing three Hells Angels clubhouses on the grounds that the properties could be used in the future to commit crime.
Critics of civil forfeiture legislation have argued that it blurs the line between civil and criminal law while depriving targeted people from full access to the rights and protections, including freedom from self-incrimination, that they would receive in a criminal proceeding.
B.C’s introduction of unexplained wealth orders represents a significant expansion of civil forfeiture legislation, said Michelle Gallant, a professor with the Robson Hall Faculty of Law at the University of Manitoba, and a departure from how the burden of proof is typically applied.
Under common law, “if you allege something against me, the initial burden is always on you to prove [the allegation] on the balance of probabilities [in a civil proceeding]. Anything less than that and I win,” Gallant said. The unexplained wealth orders are “a complete inversion of the way that civil proceedings work.”
Gallant said she’s “torn” on the merits of unexplained wealth orders to bolster existing civil forfeiture legislation.
On the one hand, increasingly sophisticated criminal activity may “require new methodologies and new tools.” In addition, there is little public sympathy for people benefiting from the proceeds of organized crime.
On the other hand, provinces could use civil forfeiture legislation in actions “having nothing to do with the profits of crime,” Gallant said.
As an example, she cited Ontario’s threat to use civil forfeiture legislation to seize the property of Freedom Convoy protesters in 2022.
“Now the government has this tool, sitting in the background, that it can use against any of us — and that is concerning,” Gallant said.
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