Forfeiture of suspected illegal sums without criminal prosecution: Are Canadian citizens’ fundamental rights in jeopardy?

Civil forfeitures without criminal prosecution is a hot topic, and we expect Canadian courts to continue dealing with fundamental rights issues raised in the context of such forfeitures. 

In fact, we have observed law enforcement increasingly using civil forfeiture laws to seize assets and cash suspected of being linked to criminal activity. This is notably the case in Quebec and British Columbia, where legislation currently allows the government to confiscate assets without the need for criminal prosecution. This trend raises important questions about potential infringements to individual rights and the balance of power between provincial and federal jurisdictions.

The legal framework in Quebec 

The Act Respecting the Forfeiture, Administration and Appropriation of Proceeds and Instruments of Unlawful Activity (the Act) allows for the civil or administrative forfeiture of property derived from or used in suspected unlawful activities, including real estate, movable property and bank accounts¹. 

As such, the Attorney General may apply to the court for the forfeiture of property if it is established that the property concerned, directly or indirectly, is proceeds or an instrument of unlawful activity or is intended to be used for such activity². Civil forfeiture applications may be made notwithstanding the absence of a previous conviction. The Attorney General may also, at any stage of the proceedings, ask the court to authorize a seizure before a judgment of the assets covered by the application if there are serious grounds for believing these assets are the fruit of illegal activities³.

Bill 54 amended the Act to introduce significant changes⁴. Prior to these amendments, only offences under the Criminal Code, the Controlled Drugs and Substances Act and the Cannabis Act were considered illegal activities, as well as some criminal offences listed in Schedule 1 of the Act. 

Following the amendments made to section 2 of the Act, the law’s scope has significantly expanded to encompass any act or omission that constitutes an offence under Quebec or federal law, or under the law of any legislative authority within or outside Canada, including, for example, offences under the Highway Safety Code⁵. Consequently, civil forfeiture now applies to a broader range of offences and is not limited to the most serious criminal offences. 

Bill 54 also introduced new presumptions that shift the burden of proof onto the property owner. Cash is now presumed to be derived from illegal activities when it is found near prohibited substances or equipment used to traffic in or produce these substances⁶. This is also the presumption if $2,000 or more in cash is found in conditions that do not meet the standards of financial institutions’ usual practices⁷. These recent amendments to the Act now require individuals to justify the legality and integrity of money or property.

British Columbia’s unexplained wealth orders

In British Columbia, a similar regime was introduced in 2006 with the adoption of the Civil Forfeiture Act, which allows the government to seize property believed to be the proceeds or instruments of unlawful activity, even without a criminal conviction⁸. More recently, British Columbia introduced the unexplained wealth orders (UWOs), through amendments to the Civil Forfeiture Act. UWOs compels individuals to explain the origin of their wealth and property when it appears disproportionate to their known income or if there is suspicion of criminal activity⁹. If individuals cannot provide a satisfactory explanation, the assets can be seized.

Since November 2023, several UWOs have been issued in British Columbia targeting assets suspected of being linked to illegal activities. The first UWO involved a global securities fraud scheme operated by a Swiss asset management company that generated over $165 million in illegal stock sales. This UWO involved seizing a house on Salt Spring Island that was purchased for $1 million in cash and was alleged to have been bought with funds linked to this global securities fraud scheme¹⁰. 

Other UWOs were also issued in December 2023, March 2024, and September 2024, and are still pending before the courts.

Author comments

Following the recent amendments to the Act, there is growing anticipation of more frequent civil forfeiture requests from the Attorney General, like the recent case where forfeiture was requested following police discovering $2.1 million in cash hidden behind a false wall in a Montreal businessman’s home¹¹. 

Considering the significant expansion of the Act’s scope, it will be interesting to monitor how the courts will interpret and enforce the Act, especially in cases involving substantial sums of money and potential challenges to the Act’s constitutionality.

Incorporating new presumptions into the Act could, for instance, force individuals to break their silence and provide information to justify the legality of their property. Yet, under this scenario, what if the individual trying to get back his or her confiscated assets is also a defendant in a criminal case, where he or she has been charged for criminal offences? This individual’s fundamental rights could be in jeopardy should he or she decide to testify in the context of a civil forfeiture case. This change raises important issues concerning the balance between effective law enforcement and protecting individual rights. 

In addition, the application of this law and its amendments could give rise to interesting discussions on the distribution of powers. Although the law was adopted by the Quebec government as part of its jurisdiction over property and civil rights, it could encroach on the federal government’s jurisdiction over criminal law. This intersection of provincial and federal jurisdictions could be the focus of legal debate and judicial review by the courts in the years to come.