Vancouver real estate brokerage firm Pacific Place - Arc Realty Ltd. is suing the Financial Transactions and Reports Analysis Centre (FINTRAC), Canada’s anti-money laundering regulator, claiming a $255,000 penalty issued in July 2021 is unconstitutional.
Pacific Place filed a notice of civil claim in BC Supreme Court on November 15, naming FINTRAC and Her Majesty the Queen in right of Canada as defendants. According to the lawsuit, FINTRAC issued an administrative monetary penalty to the firm in January 2021 for six violations of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
FINTRAC claimed the company had “incomplete compliance policies and procedures,” incomplete risk assessments and an incomplete ongoing training program, while the firm allegedly failed to appoint a person responsible for implementing a compliance program. The regulator also claimed Pacific failed to report suspicious transactions under the law. According to the claim, FINTRAC affirmed the $255,750 penalty in July 2021.
But the realty firm claims the provisions under which the penalty was issued are unconstitutional and beyond the jurisdiction of Parliament, because the Constitution Act gives provincial legislatures “exclusive authority to legislate on matters relating to property and civil rights.” The company claims the “impugned provisions” of Canada’s federal anti-money laundering legislation “relate exclusively to matters of property and civil rights.”
“The national prohibition against money laundering is a criminal one,” the claim states. “The Criminal Code created the criminal offence of money laundering.”
Furthermore, federal proceeds of crime legislation regulates industries “vulnerable to abuse by members of organized crime and used to launder money.” In effect, Pacific claims that it is regulated by provincial law, while federal proceeds of crime legislation “superimposes a separate set of rules on reporting entities duplicating the obligations many must bear as entities regulated by provincial law.”
“The impugned provisions do not seek to prevent, prohibit or limit ‘evil’ or injurious conduct,” the claim states. “Administrative monetary penalties under the PCMLTFA are not criminal sanctions.”
Pacific Place - Arc Realty seeks declarations staying and quashing FINTRAC’s decision to penalize the firm and a declaration that the provisions of the act used to issue the penalty are beyond the powers of Parliament under the Constitution.
The allegations in the lawsuit have not been tested or proven in court and both FINTRAC, and the federal government had not responded to the claim by press time.
