Part of our Customs, Trade & Indirect Tax Practice is dealing with matters arising out of Canada’s Anti-Money Laundering legislation (more formally, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act).

A recent case from the Federal Court of Appeal (“FCA”), dealing with an Administrative Monetary Penalty (“AMP”) issued under this legislation, got us thinking about the secrecy shrouding the old English Star Chamber, and whether the current government’s predilection for hiding unfavourable information has been slowly filtering down through Canada’s vast government administration, and potentially to our judicial system – and the huge detrimental effects that might entail for our country.

Château D'Ivoire Stores Decision

In Château D'Ivoire Stores the Director of Canada’s federal Financial Transactions and Reports Analysis Centre (“FINTRAC”) issued a $200,000 AMP to Château D’Ivoire for five alleged violations found during the course of a compliance examination. But according to Château D'Ivoire, the Director’s decision “rubber stamped” a prior FINTRAC’s Administrative Staff decision. Château D'Ivoire thus asked the Federal Court for full disclosure of all documents used by the Staff, even if not before the Director. The Federal Court rejected the request under Rule 317, ruling that prior case law established that only materials actually before the decision-maker had to be disclosed – albeit noting the potential for a Kafkaesque result:

[i]t would be rather Kafkaesque for an administrative decision-maker to be able to shield the material relevant to an application for judicial review or a statutory appeal by delegating decision-making authority to staff who would then simply place limited material before the decision-maker with a draft decision, ready to be signed without question.

The FCA ultimately upheld that decision and that last bit above, got us thinking about the old English Star Chamber.

The Dangers of Secrecy in Canadian Government

The Star Chamber was an English court that sat at the Royal Palace of Westminster from 1487 to 1641, and which was established to ensure the “fair enforcement of laws against socially and politically prominent people”. Historically, it has been criticized as lacking safeguards, reaching arbitrary punishments and fraught with secrecy and unfairness – all used to persecute and punish political opposition.

While the Federal Court’s decision in CDS is not political in nature, one should be troubled by the “secrecy” inherent in FINTRAC’s process – and indeed in any government process.

When dealing with potential fraud and criminal action, one is taught in law school about the metaphorical “bright light test”: shine a bright light on it and see what that level of detailed scrutiny uncovers. (In other words, where are the rats scurrying to?)

Should government action – especially where it is alleged to be irregular – not be subject to the same bright light test? We think so. If you were saddled with a significant monetary penalty, wouldn’t you want full disclosure on all information underlying it? We would.

Takeaways

A narrow reading of Rule 317 is troublesome and perhaps endemic of other government action and judicial decisions denying full disclosure to the aggrieved. It is difficult to see why shining the bright light on all levels of government action is a bad thing. Denying anything less than full government disclosure is not good for public policy and is contrary to the general rule in most litigation (where full disclosure is required by all litigants).

What do Canada’s various levels of government and administration have to hide?

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