Countries, such as North Korea, Iran and Russia, may attempt to hide activities by using cryptocurrencies (such as Bitcoin). While the underlying activity of selling controlled goods or dealing with designated persons is illegal (under Canadian export laws) without an export permit/ministerial authorization, a secondary issue is enforcement. Enforcement tools directed at “following the money” are rendered less effective by the availability and use of cryptocurrencies.
This begs the question, should there also be books and records provisions within the Export and Import Permits Act, the United Nations Act, the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act (Sergei Magnitsky Law)?
Canada recently (2013) added books and records provisions in the Corruption of Foreign Public Officials Act (Canada’s anti-corruption law). Subsection 4(1) of the CFPOA provides as follows:
“Every person commits an offence who, for the purpose of bribing a foreign public official in order to obtain or retain an advantage in the course of business or for the purpose of hiding that bribery,
(a) establishes or maintains accounts which do not appear in any of the books and records that they are required to keep in accordance with applicable accounting and auditing standards;
(b) makes transactions that are not recorded in those books and records or that are inadequately identified in them;
(c) records non-existent expenditures in those books and records;
(d) enters liabilities with incorrect identification of their object in those books and records;
(e) knowingly uses false documents; or
(f) intentionally destroys accounting books and records earlier than permitted by law.”
If a person offends the accounting rules, the penalty is imprisonment for a term up to 14 years.
Should there be a similar provision in the export controls and economic sanctions laws? While Canada could prosecute a person in Canada or a Canadian outside Canada for the underlying infraction, would the additional charges of hiding the transaction in the books and records add a further disincentive? Could the books and records provision be improved to cover the cryptocurrency providers and brokers or is the “aiding and abetting” provision sufficient?
If you would like to know more about Canada’s export controls and economic sanctions laws, please contact Cyndee Todgham Cherniak at 416-307-4168 or at email@example.com.