charities face risks from wave of new anti terrorism laws by housework


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									6                                                                                                                                                                          THE LAWYERS WEEKLY July 12, 2002

Charities face risks from wave of new anti-terrorism laws
By Terrance S. Carter                                  “internationally protected per-                  “controlled access military            include terrorist financing.)         exempted from the registration

       t is becoming increasingly                      sons.” The bill extends the “inter-              zones.” The bill limits the use of        Part 4 of Bill C-36 includes a     requirements in issuing and
       important for charities,                        nationally protected persons”                    such zones to the protection of        number of reporting obligations       trading securities. Specifically, s.
       particularly those that                         status to foreign representatives,               defence establishments, Canada         on specified persons or entities      35(2)7 states that registration
operate internationally, to be                         including diplomats and other                    Forces property outside a defence      that are to be phased in during       under the Act is not required to
aware of the developing plethora                       officials. The definition of “inter-             establishment or property of vis-      2002.                                 trade in securities if the issuer is
and complexity of anti-terrorism                       national organization” is widen-                 iting forces. The designation of          Bill C-55 strengthens the          organized exclusively for educa-
legislation in Canada that                             ed to include an “inter-govern-                  such zones is now subject to judi-     ability of FINTRAC and other          tional, benevolent, fraternal,
impacts the charitable sector.                         mental conference,” such as a                    cial review, with an objective test    government agencies to collect        charitable, religious or recre-
   Bill C-35, An Act to Amend the                      meeting of the WTO or the G-8.                   of being “reasonably necessary”        and share compliance-related          ational purposes and not for
Foreign Missions and Interna-                              The means of transportation                  to ensure the safety and security      information with various agen-        profit, where no commission or
tional Organization Act, has                           for and the areas in which the                   of Canadian or visiting forces         cies that regulate and supervise      other remuneration is paid in
been proclaimed in force as of                         “internationally protected per-                  property, rather than the pre-         banks, trust companies, securi-       connection with the sale. As a
April 30. Bill C-42, An Act to                         sons” are to meet are also pro-                  vious subjective test in Bill C-42     ties dealers, lawyers, and            result, in Ontario, where a
Amend Certain Acts of Canada                           tected under Bill C-35. Any                      of “in the opinion of the Min-         accountants, as well as to expand     charity fulfills exemption-qualifi-
and to Enact Measures for Imple-                       threatening or commission of                     ister.”                                FINTRAC’s power to collect            cations requirements under the
menting the Biological and Toxin                       acts against such “internation-                                                         information from federal and          Securities Act, it is arguable that
Weapons Conventions in order to                        ally protected persons,” “official                                                      provincial government agents for      it may, in some situations such
Enhance Public Safety, was                             premises” or “means of trans-                                                           purposes related to law enforce-      as raising funds by issuing
withdrawn on April 24, amidst a                        port” that will likely endanger                                                         ment or national security. The        bonds, have become “authorized
deluge of criticism that the                           the lives or liberty of such per-                                                       bill also has a corresponding         to engage in the business of
breadth and ambiguity of its                           sons would meet the definition of                                                       amendment to the Office of the        dealing in securities.” If so, a
measures could pose a serious                          a “terrorist activity” under Bill C-                                                    Superintendent of Financial           charity in Ontario, and possibly
threat to the liberty and freedom                      36. Protesters blocking a road to                                                       Institutions Act which will           in other provinces with similar
of Canadians. A modified version                       a WTO conference or G-8                                                                 permit the Superintendent to          legislation, may be subject to the
was introduced on April 29 as                          Summit now run the risk of com-                                                         disclose FINTRAC information          mandatory recording and
Bill C-55, the Public Safety Act                       mitting a “terrorist activity.”                                                         related to compliance by a finan-     reporting obligations imposed
2002. Despite some improve-                               Section 10.1 of Bill C-35 gives                                                      cial institution. This means FIN-     under the Proceeds of Crime Act.
ments over Bill C-42, a number                         the RCMP power to ensure the                                                            TRAC is permitted to collect             Charities may also be included
of concerns remain that may                            “proper functioning” of an “inter-                                                      information from government           in the expanded definition of
impact charities. But as of the                        governmental conference” and                                                            databases related to national         entities required to report as
date of writing, Bill C-55 has not                     protection of “internationally                                                          security just as it may from other    described in the regulations
been passed into law.                                  protected persons.” Citing this                                                         law enforcement databases.            under the Proceeds of Crime Act
                                                                                                                Terrance Carter
   Part 4 of Bill C-36, which                          legislation, an RCMP news                                                                   The expansion of the federal      released on May 9. The regula-
amended the predecessor to the                         release June 21 announced cre-                      What is missing in Bill C-55,       government’s power to share and       tions now include definitions of
Proceeds of Crime (Money Laun-                         ation of an “access control area”                however, are legislative safe-         collect compliance information        “financial entity” and “money
dering) and Terrorist Financing                        in downtown Calgary, nearly 100                  guards that will restrict the use      may have a significant indirect       services business,” which in some
Act, refers to regulations elabo-                      km from the G-8 Summit in Kan-                   of the “controlled access military     impact on charities. A charity        instances may include charities.
rating on the definitions of spe-                      anaskis. In a news release enti-                 zones” so that such designation        that funds international pro-         For instance, the definition of
cific entities within that Act and                     tled “Information for Protesters,”               is not used, among other things,       grams may unwittingly become          “financial entity” includes “a
giving guidelines for reporting                        the force warned it could limit                  to quell legitimate political dis-     the subject matter of a reported      company to which the Trust and
obligations. These regulations                         the Charter-guaranteed rights                    sent.                                  transaction without being aware       Loan Companies Act applies.” In
were issued on May 9.                                  and freedoms of protesters in the                   Charities, such as hospitals,       of it. For example, its bank, its     some circumstances a charity
   The ramifications for charities                     interest of the RCMP’s responsi-                 that might provide medical assis-      lawyers or its accountants are        may be involved in trust activi-
from Bill C-35 are evident when                        bilities outlined in Bill C-35.                  tance, or churches that might          now required by law to report to      ties that would require it to be
viewed in the light of the amend-                         Bill C-42, the predecessor to                 offer accommodation or other           FINTRAC suspicious or large           registered under that Act.
ments to the Criminal Code by                          Bill C-55, proposed to amend the                 forms of help to protesters who        cash transactions of the charity.        Also, the definition of “money
Bill C-36, specifically the defini-                    National Defence Act by empow-                   infringe on a “controlled access          As well, under Part 6 of Bill C-   services business” is in part
tion of “terrorist activities.”                        ering the Minister of Defence to                 military zone” will need to be         36, Charities Registration (Secu-     defined as a “person or entity
   Under the new s. 83.01(1)(a) of                     proclaim a broad “military secu-                 aware of the consequences that         rity Information) Act, the Solic-     that is engaged in the business of
the Code, the definition of “ter-                      rity zone.” Many feared the pro-                 could result from aiding or facili-    itor General and the Minister of      remitting funds, or transmitting
rorist activities” includes actions                    posed law could be used to                       tating protesters in these situa-      National Revenue are given            funds by any means, or through
taken against “internationally                         subdue legitimate democratic                     tions. In addition, Canadian           extremely broad power to revoke       any person, entity or electronic
protected persons.” Bill C-35                          dissent. This concern remains                    charities that are involved in         or refuse to grant charitable         funds transfer network.” For
amends the Foreign Missions                            with regard to Bill C-55, notwith-               humanitarian or civil libertarian      status to a charity based on          instance, Canadian charities
and International Organization                         standing some improvements in                    issues and decide to hold public       information collected domesti-        that transfer funds to a health-
Act and expands several impor-                         the legislation.                                 demonstrations at a govern-            cally and internationally. In this    care or relief organization inter-
tant definitions, including “inter-                       Part 11 of Bill C-55 replaces                 ment-sponsored summit may              regard, information collected by      nationally or even domestically,
national organization” and                             “military security zones” with                   become subject to martial law          FINTRAC may be made avail-            might fall under this definition
                                                                                                        imposed on those caught in a           able to and used by the Solicitor     and be required to report.
                                                                                                        “controlled access military zone.”     General or the Minister of               If charities do fall within the
                                                                                                        The creation and enforcement of        National Revenue in considering       definitions of entities that are

                                                          FAX TOLL-FREE TO: 1-800-461-3275.
                                                                                                        such zones may pose a real             whether to revoke a charity’s         required to report, there will be
                                                                                                        threat to members and volun-           charitable status or to deny a        serious consequences if those
     Save                                                 OR CALL TOLL-FREE: 1-800-668-6481.
                                                          OR MAIL YOUR ORDER TO: 75 CLEGG ROAD,
                                                          MARKHAM, ONTARIO, L6G 1A1.
                                                                                                        teers of charitable organizations
                                                                                                        who operate and provide assis-
                                                                                                                                               charitable status application,
                                                                                                                                               notwithstanding that under Part
                                                                                                                                                                                     charities fail to report as
                                                                                                                                                                                     required by the Proceeds of
                         off the cover price              Regular cover price $432 (1 yr) $864 (2 yr)   tance within these potential the-      6 of Bill C-36, the charity may be    Crime Act. Charities will there-
                                                          *GST, QST and HST extra.                      atres of confrontations or conflict.   denied a chance to review or          fore need to be diligent in moni-
                                                                                                           Bill C-55 also contains amend-      cross-examine such information.       toring whether they have become
                    YES!                                                                                ments to the Proceeds of Crime            Bill C-36 and Bill C-55 will       involved in circumstances which
    Please sign me up for a subscription                    1 years (48 issues) @ $215*                 (Money Laundering) and Ter-            also have a direct impact on          might unwittingly expose them
    to The Lawyers Weekly!                                  2 years (96 issues) @ $370*                 rorist Financing Act. The orig-        charities to the extent that they     to a duty to report.
                                                                                                        inal Act, the Proceeds of Crime        are included in the definition of        Charitable organizations must
                                                                                                        (Money Laundering) Act, was            entities to which the Proceeds of     become familiar with the
    NAME                                                                          TITLE                 created to combat organized            Crime Act applies. Section 51(g)      increasing body of anti-terrorism
                                                                                                        crime and establish the Finan-         in Part 4 of Bill C-36, states that   legislation in Canada and
                                                                                                        cial Transactions and Reports          persons and entities “authorized      develop a proactive response.
    ADDRESS                                                                                             Analysis Centre of Canada (FIN-        under provincial legislation to          Terrance S. Carter of Carter & Associ-
                                                                                                        TRAC) to assist in the detection,      engage in the business of dealing     ates, Orangeville, Ontario, is counsel on
    CITY                                                  PROVINCE                 POSTAL CODE          prevention and deterrence of           in securities” have a statutory       charity law for Fasken Martineau
                                                                                                                                                                                     DuMoulin LLP in Toronto. He is chair of
                                                                                                        money laundering. However,             obligation to record and report       the National Charity and Not-for-Profit
    TEL. NO.                                                                  FAX NO.
                                                                                                        after September 11, its mandate        the financial transactions as         Section of the Canadian Bar Association
                                                                                                        was expanded by Part 4 of Bill C-      defined in that Act.                  and editor of and
                                                                                                                                                                           , on which fuller treatment of
    CREDIT   CARD NO. _________________________________________________________EXPIRY DATE     ______   36 to include terrorist financing.        Under the Ontario Securities       the subject can be found as Charity Law
    Sole Practitioner discount available - call for details.                        Room No. 2588       (Bill C-36 renamed the Act to          Act, charities are generally          Bulletin No. 14.

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