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 I 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 50% 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 FIRM/ORGANIZATION 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 METHOD OF PAYMENT: BILL ME CHEQUE ENCLOSED VISA MASTERCARD AMEX was expanded by Part 4 of Bill C- defined in that Act. and editor of antiterrorismlaw.ca and charitylaw.ca, 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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