On March 23, Bill C-61, the Freezing Assets of Corrupt Foreign Officials Act, was given Royal Assent and came into effect. The Act allows the federal government to freeze the assets of "politically exposed foreign persons" in cases where the person has allegedly misappropriated the property of a foreign state or inappropriately acquired property by virtue of office or personal or business relationships. Orders and regulations may also be made to prohibit Canadians from dealing with any property of a politically exposed foreign person, facilitating financial transactions related to such property or providing financial or other related services in respect of such property.
Further, certain domestic entities are now under a duty to determine, on a continuing basis, whether they are "in possession or control of property that they have reason to believe is the property of a politically exposed foreign person" who is the subject of an order or regulation made under the Act.
Notably, this duty to determine is imposed on, among others,
- entities that engage in any activity described in paragraph 5(h) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (which includes those engaged in the business of foreign exchange dealing) if the activity involves the opening of an account for a client; and
- entities authorized under provincial legislation to engage in the business of dealing in securities or to provide portfolio management or investment counseling services.
Meanwhile, all Canadians have a duty to report to the RCMP the existence of property in their possession or control that they have reason to believe is the property of a politically exposed foreign person subject to a government order described above.
Wasting no time in making use of the new legislation, the government adopted the corresponding Freezing Assets of Corrupt Foreign Officials (Tunisia and Egypt) Regulations on March 23 in order to respond to requests by Tunisia and Egypt to freeze the property of certain of their nationals accused of misappropriating property.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.