Date: 20080110
Docket: T-685-06
Citation: 2008 FC 31
Ottawa, Ontario, January 10, 2008
PRESENT: The Honourable Mr. Justice O'Reilly
BETWEEN:
AHMAD
QASEM
Applicant
and
THE
MINISTER OF NATIONAL REVENUE
Respondent
REASONS FOR JUDGMENT AND JUDGMENT
[1]
In 2003, Mr. Ahmad Qasem presented himself at Pearson International Airport
to board a flight for Amsterdam with a final destination of Amman, Jordan. In
the jetway, just as he was about to board the plane, he was stopped by an
inspector who was assisted by a dog trained to detect currency. A customs
officer asked Mr. Qasem a series of questions and, in due course, it came to
light that Mr. Qasem had over $100,000 in cash in his pockets and carry-on bag.
Mr. Qasem had not reported the fact that he was taking a large amount of
currency out of Canada, as he was obliged to do under the Proceeds of Crime
(Money Laundering) and Terrorist Financing Act, S.C. 2000, c. 17, s. 12(1)
(see attached Annex for relevant statutory provisions). As a result, his money
was seized on suspicion that it represented the proceeds of crime. Mr. Qasem
asked the Minister of National Revenue to review that decision. The Minister’s
delegate confirmed that the money should be forfeited. Mr. Qasem argues that
the delegate erred and asks me to overturn his decision.
[2]
I agree that the delegate erred and must, therefore, allow this
application for judicial review.
I. Issues
1. Did the delegate err in imposing a
burden and standard of proof on Mr. Qasem that was too high?
2. Was the
delegate’s decision reasonable?
[3]
In light of my conclusion on the first issue, I decline to address the
second.
II. Analysis
Did the delegate err in imposing
a burden and standard of proof on Mr. Qasem that was too high?
1. Factual Background
[4]
The customs officer asked Mr. Qasem if he could speak English. He said,
“Not so good”. The officer then asked him if he had more that $10,000 with him.
The officer showed Mr. Qasem some money to help him understand what was being
asked. Mr. Qasem replied that he had $5,000. The officer asked to see it. Mr.
Qasem produced from his front trouser pocket a bundle of bills that the officer
believed to contain more than $5,000. The officer took Mr. Qasem to another
location in the airport where the bundle was counted. It contained $10,000. Mr.
Qasem was then asked if he had any more money on him. He said no. The officer
asked him to empty another pocket. Mr. Qasem produced another bundle of bills containing
$10,000. The officer asked him if he had any more. He said no. The officer
asked Mr. Qasem to empty his shirt pocket, which yielded another wad of bills
containing a mixture of Canadian and United States currency. The officer then
examined Mr. Qasem’s carry-on bag, which he found to contain nine bundles of
money held together with elastic bands. Mr. Qasem was escorted to a search room
where the money could be counted. An Arabic-speaking officer was asked to join
them to help interpret.
[5]
When all the money was counted, it added up to $100,200.00.
[6]
At Mr. Qasem’s request, the officer contacted Mr. Qasem’s son, who
explained that the money was intended to be used to buy land on the West Bank
(not Jordan). It was necessary to carry cash because there were no banks in the
area. Cash transactions are commonplace there.
[7]
Because Mr. Qasem had failed to comply with s. 12(1) of the Act by not
declaring that he was carrying such a large amount of cash, and because the
officer suspected that it represented the proceeds of crime, the money was seized
and forfeited under subsections 18(1) and (2) of the Act.
[8]
In his written report, the officer noted the following circumstances
justifying his decision:
• a large amount of
money was involved;
• Mr. Qasem
initially denied possessing it;
• the money
did not belong to Mr. Qasem;
• Mr. Qasem
had no personal income;
• Mr. Qasem
had no documents to confirm that the funds were legitimately acquired or what
their purpose was;
• Mr. Qasem
had no travel documents confirming that his final destination was the West
Bank;
• the bills
were secured by elastic bands, which is consistent with money laundering
practices;
• Mr. Qasem
possessed bank deposits for the Islamic International Arab Bank;
• Mr. Qasem
possessed multiple sets of identification;
• Mr.
Qasem’s two passports (one Canadian, one Palestinian) had different birth dates
and spellings of his name.
[9]
Mr. Qasem asked to have the officer’s decision reviewed by the Minister.
He was invited to submit further evidence and did so. Mr. Qasem’s son explained
that $98,000 came from the repayment of a loan that he had made to the family
business. He produced statements showing transactions on the company account
that he said were for the purpose of the loan repayment. He was asked for
additional corroborating documents but was only able to produce a copy of the
loan agreement.
[10]
Customs officials also supplied further evidence for the Minister’s
delegate to consider. In particular, officials described money launderers’
techniques for bundling money as compared to the practices of legitimate
financial institutions. Further, they questioned whether one could use Canadian
dollars to purchase property in a foreign country.
[11]
The Minister’s delegate confirmed that Mr. Qasem had violated s. 12 (1) of
the Act by failing to declare that he was carrying more than $10,000 in cash.
Accordingly, the money he was carrying was lawfully subject to seizure under s.
18(1) of the Act. The delegate went on to explain that the money would continue
to be forfeited as suspected proceeds of crime because:
• the amount ($100,200.00) was a very large sum to be
transporting to another country, considering the risks of theft and loss; and
• Mr. Qasem had provided insufficient evidence to confirm his
assertion that the money represented proceeds from the sale of a business.
[12]
The delegate also had before him the opinion of an adjudicator, who had
reviewed all of the evidence and advanced a recommended outcome on the review.
The adjudicator’s reasons are considered to form part of the delegate’s
decision (Dag v. Canada (Minister of Public Safety and
Emergency Preparedness), 2007 FC 427, [2007] F.C.J. 591 (F.C.) (QL)). The
following passage formed a key part of the adjudicator’s analysis:
Where there is a failure to
report, the claimant must establish by reliable proof that the reasons for
suspicion are groundless, namely that the suspicion of proceeds of crime is
without reason. It is my opinion that the claimant has not provided in
sufficient detail and with enough credible, reliable and independent evidence
to establish that no other reasonable explanation is possible. (emphasis
added)
[13]
The delegate authorized the return of $5,000.00 to Mr. Qasem, as he had
initially told the officer that this was the amount he was carrying. The rest
was forfeited.
2. Burden and
Standard of Proof
[14]
The Minister’s delegate must determine whether the evidence discloses
reasonable grounds to suspect that the funds in issue represent the proceeds of
crime: Sellathurai v. Canada (Minister of Public Safety and
Emergency Preparedness), 2007 FC 208, [2007] F.C.J. 280 (F.C.) (QL). In
effect, then, the delegate must determine whether there is reliable and
objective evidence to support that suspicion.
[15]
Mr. Qasem argues that the delegate imposed on him a burden and standard
of proof that, in effect, is impossible to meet and unwarranted by the
governing legislation. The leading case on this issue is Sellathurai,
above. There, Justice Sandra Simpson stated:
With regard to the burden of
proof on an applicant who wishes to dispel a suspicion based on reasonable
grounds, it is my view that such an applicant must adduce evidence which proves
beyond a reasonable doubt that there are no reasonable grounds for suspicion.
Only in such circumstances will the evidence be sufficient to displace a
reasonable suspicion.
I have reached this conclusion
because, if a Minister’s Delegate were only satisfied on the balance of
probabilities that there were no reasonable grounds for suspicion, it would
still be open to him to suspect that forfeited currency was proceeds of crime.
The civil standard of proof does not free the mind from all reasonable doubt
and, if reasonable doubt exists, suspicion survives. (At para. 72-73).
[16]
This approach has been followed in numerous other decisions of the
Federal Court: Ondre v. Canada (Minister of Public Safety and
Emergency Preparedness), 2007 FC 454, [2007] F.C.J. No. 616 (F.C.) (QL); Hamam
v. Canada (Minister of Public Safety and Emergency Preparedness), 2007
FC 691, [2007] F.C.J. No. 940 (F.C. (QL); Yusufov v. Canada (Minister
of Public Safety and Emergency Preparedness), 2007 FC 453, [2007] F.C.J.
No. 615 (F.C.) (QL); Majeed v. Canada (Minister of Public Safety and
Emergency Preparedness), 2007 FC 1082, [2007] F.C.J. No. 1394 (F.C.) (QL).
[17]
I accept the logic and symmetry of Justice Simpson’s approach – a reasonable
suspicion that funds represent the proceeds of crime can be displaced only by
evidence that is sufficiently cogent to put the legitimate source of the funds
beyond reasonable doubt. However, I have concerns about the application of this
approach in practice, both in general terms and in the case before me.
[18]
First, I believe it would be wrong to insist that there is a legal
burden of proof on the person whose funds were seized to produce evidence
beyond a reasonable doubt that the funds were not generated from criminal
activity. As I interpret the scheme of the Act, the person concerned can simply
ask for a Ministerial review of the decision of the customs officer on the
issues of non-compliance with the Act and the disposition of the seized funds
(ss. 25, 29). The review amounts to a fresh assessment of the evidence. A
request for a review does not, in itself, create a legal burden and certainly
not one on the criminal standard of proof beyond a reasonable doubt. As a
practical matter, of course, if the person cannot marshal enough evidence to negate
a reasonable suspicion, he or she will fail to persuade the delegate to return
the seized funds. But that reality reflects an evidentiary burden, not a legal
one, and it is important to keep the two distinct. If a party fails to discharge
a legal burden, the decision-maker must, as a matter of law, decide against him
or her. If a party fails to discharge an evidentiary burden, he or she simply
takes the risk that the decision-maker may make a finding against him or her.
[19]
It appears to me, in fact, that the legal burden under the Act falls on
the officials who seek to have the seized funds forfeited. Under s. 18(2), an
officer has a duty to return the seized funds, less a penalty, unless he
or she has reasonable grounds to suspect that they represent the proceeds of
crime. This provision creates a presumption that most of the funds will
normally be returned to the person from whom they were seized unless there is
good reason to suspect that they were derived from criminal activity. It
suggests that officials must prove the presence of those reasonable grounds in
order to justify retaining the funds. The same burden and standard of proof
would appear to apply equally in respect of proceedings before a Minister’s
delegate (under ss. 25 and 29).
[20]
Second, I believe that an emphasis on this evidentiary burden may distract
the delegate from the actual determination that must be made; that is, whether
there is reliable and objective evidence supporting a suspicion that the funds
were generated from criminal activities. If the delegate focuses unduly on the
evidence produced by the person concerned and measures it against the standard
of “proof beyond a reasonable doubt”, he or she may lose sight of the real
issue. In fact, a reasonable doubt about the origins of the funds may not
amount to the same thing as a reasonable suspicion that the funds come from
crime. The delegate must evaluate the evidence as a whole, both the evidence
supporting a suspicion that the money came from crime, as well as the evidence presented
by the person concerned showing that the funds have a legitimate provenance.
The Act creates a low standard for seizing what may be a very large sum of
money, possibly representing a person’s entire life savings. The evidentiary
standard for these seizures (“reasonable suspicion”) is even lower than the
threshold that applies to searches for evidence of crime (“reasonable grounds
to believe”). While I accept and respect Parliament’s intentions and the overarching
purposes of the Act, I see no reason to make the scheme more onerous than it
already is by imposing an excessive standard of proof on the person whose funds
have been seized.
[21]
Third, reliance on the language of the criminal law is not particularly
helpful in this context. The standard of “proof beyond a reasonable doubt” is
notoriously difficult to describe and explain, as the Supreme Court of Canada
has repeatedly stated (see, e.g., R. v. Lifchus, [1997] 3
S.C.R. 320). Accordingly, the Supreme Court has urged trial judges to take
great care in charging juries on the meaning of proof beyond a reasonable doubt
in order to reduce the likelihood of wrongful convictions. I am doubtful
whether it helps those who must make decisions under the Act to try to apply
the criminal standard of proof, instead of simply determining whether a
reasonable suspicion exists.
[22]
To my mind, these concerns arise on the facts of this case. As
mentioned, the adjudicator concluded (and the delegate appears to have
accepted) that Mr. Qasem had “not provided in sufficient detail and with enough
credible, reliable and independent evidence to establish that no other
reasonable explanation is possible.” This language is actually a particularly
strict form of the criminal standard of proof beyond a reasonable doubt that is
sometimes used where the Crown’s case is made up entirely of circumstantial
evidence. It cautions jurors to use extreme care before convicting on the
strength of circumstantial evidence alone (see, e.g., CRIMJI, Canadian
Criminal Jury Instructions (4th ed.), (Vancouver: The Continuing
Legal Education Society of British Columbia, 2005) at 4.15, para. 3); Ontario
Specimen Jury Instructions (Criminal), (Toronto: Thomson/Carswell, 2002) at
Final 18, footnote 1). It is no longer strictly required in criminal cases (see
R. v. Cooper, [1978] 1 S.C.R. 860).
[23]
I agree with Mr. Qasem that the effect of this approach was to impose on
him a burden and standard of proof that was too high. The standard applied by
the adjudicator was even more demanding than the usual criminal standard which,
as I have already explained, is of questionable value in this context. In
effect, it required Mr. Qasem to prove that his explanation of the source of
the funds was the only one possible. This approach imposed a burden on Mr.
Qasem to do more than present evidence to dispel a reasonable suspicion that
the funds came from crime. I see no basis for that requirement either in the
Act or in the cases cited above.
[24]
Further, it seems to me that the adjudicator’s approach was to place
undue emphasis on Mr. Qasem’s inability to show that his was the only possible
explanation for the source of the funds, rather than focusing on the question whether
there was a reasonable suspicion that the money came from crime. A
decision-maker could find that the person’s explanation for the source of the
funds was not the only one possible and still conclude that the evidence as a
whole does not support a reasonable suspicion that the money came from crime.
The two are not mutually exclusive. This differs from the criminal context
where, if the Crown fails to discharge its burden of proof, there will, by
definition, be a reasonable doubt about the accused’s guilt. Again, this
suggests to me that reliance on the language and requirements of the criminal
law is not apt in this context.
3. Conclusion
[25]
Based on the foregoing, I find that the delegate made an error of law in
imposing a burden and standard of proof on Mr. Qasem that was too high.
Further, I have general concerns about the use of the criminal standard of
proof beyond a reasonable doubt in this context. Reliance on that standard may
distract decision-makers from the real issue – whether there is a reasonable
suspicion that the funds in issue represent the proceeds of crime.
[26]
While I see that there was evidence before the delegate that could have
satisfied the reasonable suspicion standard in any case, I believe it would be
prudent to send the matter back to another delegate for reconsideration. It is
not clear to me that the conclusion of the delegate would inevitably have been
the same if the error of law had not been made. The matter should be
reconsidered by a different delegate in keeping with these reasons. The
application for judicial review is allowed, with costs.
JUDGMENT
THIS COURT’S JUDGMENT IS
that
- The application for
judicial review is allowed, with costs.
- The matter should
be reconsidered by a different delegate of the Minister.
“James
W. O’Reilly”
Annex
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Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, S.C. 2000, c. 17
Currency
and monetary instruments
12. (1) Every
person or entity referred to in subsection (3) shall report to an officer, in
accordance with the regulations, the importation or exportation of currency
or monetary instruments of a value equal to or greater than the prescribed
amount.
Seizure
and forfeiture
18. (1) If an
officer believes on reasonable grounds that subsection 12(1) has been
contravened, the officer may seize as forfeit the currency or monetary
instruments.
Return of seized currency or monetary instruments
(2) The officer shall, on payment of a penalty in the
prescribed amount, return the seized currency or monetary instruments to the
individual from whom they were seized or to the lawful owner unless the
officer has reasonable grounds to suspect that the currency or monetary
instruments are proceeds of crime within the meaning of subsection 462.3(1)
of the Criminal Code or funds for use in the financing of terrorist
activities.
Request for Minister's decision
25. A person from whom currency or monetary instruments were
seized under section 18, or the lawful owner of the currency or monetary
instruments, may within 90 days after the date of the seizure request a
decision of the Minister as to whether subsection 12(1) was contravened, by
giving notice in writing to the officer who seized the currency or monetary
instruments or to an officer at the customs office closest to the place where
the seizure took place.
If there is a contravention
29. (1) If the Minister
decides that subsection 12(1) was contravened, the Minister may, subject to
the terms and conditions that the Minister may determine,
(a) decide
that the currency or monetary instruments or, subject to subsection (2), an
amount of money equal to their value on the day the Minister of Public Works
and Government Services is informed of the decision, be returned, on payment
of a penalty in the prescribed amount or without penalty;
(b) decide
that any penalty or portion of any penalty that was paid under subsection 18(2)
be remitted; or
(c) subject
to any order made under section 33 or 34, confirm that the currency or
monetary instruments are forfeited to Her Majesty in right of Canada.
The Minister of Public Works and Government Services shall
give effect to a decision of the Minister under paragraph (a) or (b)
on being informed of it.
|
Loi
sur le recyclage des
produits de la criminalité et le financement des activités terroristes, L.R. 2000, ch. 17
Déclaration
12. (1) Les personnes ou entités visées
au paragraphe (3) sont tenues de déclarer à l'agent, conformément aux
règlements, l'importation ou l'exportation des espèces ou effets d'une valeur
égale ou supérieure au montant réglementaire.
Saisie et confiscation
18. (1) S’il a des motifs raisonnables
de croire qu’il y a eu contravention au paragraphe 12(1), l’agent peut saisir
à titre de confiscation les espèces ou effets.
Mainlevée
(2) Sur réception du paiement de la pénalité
réglementaire, l'agent restitue au saisi ou au propriétaire légitime les
espèces ou effets saisis sauf s'il soupçonne, pour des motifs raisonnables,
qu'il s'agit de produits de la criminalité au sens du paragraphe 462.3(1) du Code
criminel ou de fonds destinés au financement des activités terroristes.
Demande de révision
25. La
personne entre les mains de qui ont été saisis des espèces ou effets en vertu
de l'article 18 ou leur propriétaire légitime peut, dans les quatre-vingt-dix
jours suivant la saisie, demander au ministre de décider s'il y a eu
contravention au paragraphe 12(1) en donnant un avis écrit à l'agent qui les
a saisis ou à un agent du bureau de douane le plus proche du lieu de la
saisie.
Cas de contravention
29. (1) S’il
décide qu’il y a eu contravention au paragraphe 12(1), le ministre peut, aux
conditions qu’il fixe :
a) soit
restituer les espèces ou effets ou, sous réserve du paragraphe (2), la valeur
de ceux-ci à la date où le ministre des Travaux publics et des Services
gouvernementaux est informé de la décision, sur réception de la pénalité
réglementaire ou sans pénalité;
b) soit
restituer tout ou partie de la pénalité versée en application du paragraphe
18(2);
c) soit
confirmer la confiscation des espèces ou effets au profit de Sa Majesté du
chef du Canada, sous réserve de toute ordonnance rendue en application des
articles 33 ou 34.
Le ministre des Travaux publics et des Services
gouvernementaux, dès qu’il en est informé, prend les mesures nécessaires à
l’application des alinéas a) ou b).
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