Money Laundering & Proceeds of Crime

The Charge Nobody Expects

Money laundering charges are almost never the first problem. They arrive attached to something else: a fraud investigation that followed the money out the far side, a drug file where cash was deposited or a vehicle bought, a bank that filed a report with FINTRAC, or a business whose accounts were used by someone else.

The laundering count is usually the smaller legal problem. The larger one is restraint — the orders that freeze a house, an account, a vehicle, or a business while the prosecution runs. They can be obtained early, often without notice, and they do not wait for a verdict. People who would have fought the underlying charge for two years find by month three that they cannot pay a mortgage, meet payroll, or retain counsel.

We defend these charges alongside the underlying offence, and we treat the asset side as a parallel proceeding needing its own strategy from day one.

The Offences

Laundering Proceeds of Crime — s.462.31

Section 462.31 of the Criminal Code makes it an offence to deal with property or its proceeds — using, transferring, sending, transporting, altering or disposing of it — with intent to conceal or convert it, knowing or believing, or being reckless as to whether, all or part of it derived from a designated offence.

Three features drive most of the litigation:

• The property must be proceeds of a designated offence. The Crown need not prove a conviction for the predicate offence, but it must prove the property’s criminal origin.
• The mental element is broad. Knowledge or belief is not the only route to liability — the fault element also reaches recklessness, which captures the person who suspected the money was dirty and dealt with it anyway. “I didn’t ask” is not the defence people assume it to be.
• Intent to conceal or convert. Ordinary dealing with money is not laundering. The Crown must prove a purpose of concealment or conversion, and that purpose is usually inferred from patterns — structured deposits, nominee accounts, layered transfers — rather than proved directly. Those inferences are contestable.

The offence is hybrid, so the Crown elects how to proceed. On indictment the maximum term of imprisonment is a lengthy one, placing laundering among the more serious property offences in the Code; summary proceedings carry a much lower ceiling. The election shapes the mode of trial and the realistic sentencing range.

Possession of Property Obtained by Crime — s.354

Section 354 is the more commonly laid charge and the easier one for the Crown to prove. It requires possession of property, knowing that all or part of it was obtained by the commission of an offence. No concealment or conversion is needed — having the property, with knowledge, is enough.

The penalty structure turns on the value of the property: above a statutory threshold the offence carries a significantly higher indictable maximum, and below it the exposure is much lower. That makes value a live issue — how the property was appraised, and whether items have been aggregated that should be counted separately, are both worth litigating.

The real battlegrounds are possession and knowledge. Possession requires knowledge and control, and joint or constructive possession — property in a shared home, a shared vehicle, a jointly held account — is often the whole case. Knowledge of criminal origin is rarely proved directly; it is argued from circumstances, and wilful blindness is often the Crown’s real theory.

These counts commonly travel with fraud under s.380, theft, drug trafficking, and firearms charges. See Fraud & White-Collar Defence and Drug Trafficking.

Restraint, Forfeiture and Management Orders

This is the part of the file that does the damage.

Restraint orders

A judge can restrain property believed on reasonable grounds to be proceeds of crime or offence-related property, prohibiting any dealing with it while the prosecution runs. Applications are brought frequently ex parte, on an affidavit setting out the grounds. There are parallel powers — one aimed at proceeds generally, another at offence-related property — with different notice requirements, and which one the Crown used determines who must be served and what can be challenged. Special search warrants can also be used to seize suspected proceeds. A restraint can cover a principal residence, operating and investment accounts, vehicles, and business assets.

Management orders

Where restrained property needs to be maintained or administered, a court can appoint a manager to take custody of it. In federal matters that role is generally performed by a government body established to administer seized property, which maintains assets, pays carrying costs, and — where property is perishable or depreciating quickly — can be authorized to sell it before trial. Management costs are charged against the property, and an asset sold mid-proceeding is not coming back in its original form if you are acquitted.

Forfeiture

On conviction, the court may order forfeiture of property proved to be proceeds of the offence. Where that property cannot be located or has been transferred, a fine in lieu of forfeiture may be imposed instead — an order carrying a term of imprisonment in default, which is how an asset question becomes a custody question years later. Contesting the value the fine is calculated on is part of the defence. Forfeiture can also be pursued in rem, against the property itself, where charges did not proceed — on a civil standard rather than proof beyond a reasonable doubt.

Ontario also maintains a separate civil forfeiture regime under provincial legislation, run in civil court on a balance of probabilities and independently of the criminal charge. It can proceed even where the criminal matter ends in acquittal or withdrawal: different statute, different court, different burden. Limitation periods apply and are worth checking rather than assumed.

Relief from restraint

A restraint order can be varied — for reasonable living expenses, legal fees, and the ordinary operation of a business — but relief is discretionary, requires disclosure of the source and use of the funds, and takes time. Moving early matters more here than almost anywhere else.

The Third-Party Problem

The most common injustice in these files has nothing to do with the accused. A spouse who co-owns the matrimonial home, a business partner whose operating account is frozen, a parent who holds title to a vehicle, a lender with a registered security interest — none of them charged, all of them immobilized.

The Criminal Code lets a person with a legitimate interest in restrained or forfeited property apply for relief, on the basis that they are innocent of any complicity in the offence. Those applications run on their own timelines, and a third party who waits for the criminal case to end may find the opportunity has passed. Succeeding requires evidence: how the interest was acquired, what was paid, and what was known.

We act for third parties in this position, separately from the accused — the conflict analysis on our White Collar & Corporate Defence page applies.

FINTRAC and Where the Referral Comes From

Many of these investigations begin with a report, not a complaint.

The Proceeds of Crime (Money Laundering) and Terrorist Financing Act requires banks, money services businesses, casinos, securities dealers, real estate brokerages, accountants and others to report large cash transactions, electronic funds transfers at or above a prescribed amount, and — most importantly — suspicious transactions to FINTRAC. That last obligation has no dollar floor: a report can be triggered by a pattern a compliance officer finds odd, whatever the amount.

FINTRAC analyzes those reports and, where the statutory test is met, discloses designated information to police. Two points matter for the defence:

• A FINTRAC disclosure is an investigative starting point, not evidence of an offence. It reflects a pattern flagged by a compliance system, and those alerts fire on entirely lawful conduct all the time.
• The path from report to charge is reviewable. What FINTRAC may give police without judicial authorization is limited by statute, and the constitutional boundaries of the scheme have been contested. Whether police obtained more than the framework permits, and whether they used it to build grounds they did not otherwise have, is a proper subject of a Charter challenge — one we examine on the documents rather than assume.

Our Defence Strategy

1. Attack the predicate

No proceeds without a crime that produced them. If the underlying fraud or trafficking allegation fails, or the Crown cannot connect the property to it, the laundering and possession counts fail with it.

2. Break the tracing

These are accounting cases. We work with forensic accountants to test the Crown’s tracing: commingled funds, legitimate income, loans, gifts and pre-existing assets are routinely swept into a total that badly overstates the case.

3. Litigate knowledge, not conduct

The transactions are usually not in dispute. What the accused knew is. We test whether the Crown has genuine knowledge or an argument for wilful blindness built on hindsight.

4. Fight the restraint as its own case

We seek variations for living expenses, counsel fees and business continuity, challenge the grounds in the affidavit, and where appropriate move to set the order aside. Preserving the ability to fund a defence is itself an objective.

5. Resolve the asset side and the charge side together

Where resolution is right, the forfeiture and fine-in-lieu terms matter as much as the sentence. They are negotiated together or not at all.

Collateral Consequences

• Banking. Institutions close accounts on the basis of a charge alone, often extending to family members and related businesses.
• Business operations. A restrained operating account ends a business long before a trial date is set.
• Immigration. These offences carry serious criminality consequences for non-citizens.
• Professional licensing. Regulators treat them as offences of dishonesty.
• Civil forfeiture. The provincial claim continues independently of the criminal outcome.

Related Resources

• Fraud & White-Collar Defence — the predicate offence in most laundering prosecutions
• Drug Trafficking — the other common predicate
• White Collar & Corporate Defence — corporate exposure and separate counsel for co-owners
• Securities & OSC Enforcement — funds moved through registrants or capital markets
• Bail Hearings & Reviews — release conditions where assets are restrained

If property has been restrained or seized, or you have been charged with laundering or possession of proceeds, the asset side of the file moves faster than the charge. Contact Mor Fisher LLP at 705-721-6642 or through our contact page to discuss the restraint order and the defence together.