B.C. files four unexplained wealth orders so far

In using the order, the province doesn’t need to convict anyone of a crime connected to the asset.

In September, B.C. filed an unexplained wealth order for three properties with a combined value of $5.6 million, $1.4 million in cash, and other assets relating to what the filing stated was an illegal cannabis growing operation that police discovered while investigating a shooting at one of the properties.

A few months earlier, in March, the province filed an unexplained wealth order involving $250,200 in cash, 45 gold bars, four luxury watches and expensive jewelry the filing alleged was related to criminal activity involving the failure of a cryptocurrency exchange.

The two unexplained wealth orders were the third and fourth the province has filed since May 2023, when B.C. amended its civil forfeiture legislation to add the orders, based on a recommendation made in the 2022 Cullen Commission’s Money Laundering in British Columbia report.

Manitoba is the only other province to have unexplained wealth orders, having passed the Unexplained Wealth Act in June, but has yet to file an application for an order.

Unexplained wealth orders represent the most recent expansion of Canadian forfeiture powers, the beginnings of which can be traced to 1991, when the federal government introduced proceeds of crime laws, said Michelle Gallant, professor with the faculty of law at the University of Manitoba.

Then, beginning in the early 2000s, provinces began to introduce civil forfeiture laws, which allowed them to seize assets on a “balance of probabilities” basis without needing a criminal conviction. Provinces later added administrative forfeiture regimes, which allowed them to seize assets without a court order if nobody disputed the seizure.

With unexplained wealth orders, “we’re moving towards making it easier and easier and easier on the state to take assets — assets that are, on some standard, connected to unlawful activity,” Gallant said.

Countries such as the United Kingdom and Australia already have unexplained wealth laws, looking to target organized crime and money laundering.

In April, the European Union also directed its members to pass unexplained wealth order legislation within 30 months.

What makes unexplained wealth orders unique relative to other civil actions, Gallant said, is that they flip the burden of proof to the party defending a claim rather than the party making it.

With an unexplained wealth order, “the state has to prove very little,” Gallant said. The province obtains an order based on reasonable grounds to suspect — a possibility rather than a probability — that a person has been involved in illegal activity.

If the court agrees to the unexplained wealth order, “then it goes basically to me as the person who owns the property to disclose and prove on a balance of probabilities, that [the property] was lawfully acquired,” Gallant said. “If I don’t succeed in doing that, I lose the property.”

Darren Kautz, partner with FH&P Lawyers LLP in Kelowna, B.C. , said he expects unexplained wealth orders may face constitutional challenges for infringing on the right to life, liberty and the security of the person or the right against unreasonable search and seizure embedded in the Charter of Rights and Freedoms.

Gallant said she anticipates an unexplained wealth order case will eventually end up before the Supreme Court of Canada, if only because the actions typically involve high-value property.

“The one that will go to Supreme Court will be the one that involves the most money,” Gallant said.

This article appears in the October issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.