Under new legislation aimed at a host of emerging threats, including cyberbullying, terrorism and theft of Internet and cable services, financial services institutions are likely to face more court orders compelling them to release clients’ account information. And while such orders sometimes are made under other laws, such as tax statutes, a new federal law makes obtaining these orders easier.<\/p>\n
Under Bill C-13, commonly called “Canada’s cyberbullying law” and also known as the Protecting Canadians from Online Crime Act, financial services institutions must provide customer information when served with a production order, which is signed by a judge and is similar to a search warrant.<\/p>\n
This expanded power to access financial information is designed to assist law enforcement officials tracking crime related to the Internet. To obtain a production order for financial data under the new statute, law enforcement officials must demonstrate reasonable grounds only to suspect<\/em> an offense has or will be committed, not the more onerous duty of belief<\/em> that usually accompanies police requests for a search warrant.<\/p>\n “The threshold has been lowered,” says David Fraser, a privacy law expert and partner at law firm McInnes Cooper LLP<\/em> in Halifax.<\/p>\n Under the new act, in force as of March 9, financial services institutions served with a production order must provide account information, including the account number, the name of the accountholder, the type of account and the date on which the account was opened or closed. As well, financial services institutions may be ordered to provide personal information about the accountholder: date of birth, current address and previous addresses. The penalties for non-compliance are steep: a fine of up to $250,000 or six months’ imprisonment.<\/p>\n While financial services institutions will be forced to provide identifying information about an accountholder, transactional information will not be required to be disclosed. “The information being sought is not about the details of the account,” notes Fraser.<\/p>\n The Toronto-based Canadian Bankers Association<\/em> (CBA) has taken no position on the new legislation, although CBA spokesperson Kate Payne told Investment Executive<\/em> that the CBA has “monitored the progress of Bill C-13.” Compliance will be standing operating procedure, she says: “Banks always comply with the law and abide by production orders and warrants to help police with investigations. That will not change after the passage of Bill C-13.”<\/p>\n Banks, before handing over any information, should first take a close look at what information the production order specifically requests, cautions Fraser: “Be very sure you’re only handing over the information that is required. If you hand over more than required, this violates privacy laws.”<\/p>\n Because the act establishes new legal ground, seeking legal advice before responding to a production order is prudent, especially while the legislation remains unchartered territory.<\/p>\n “None of this [new legislation] has been tested,” says Sunny Handa, an expert in information technology and partner with law firm Blake Cassels & Graydon LLP<\/em> in Montreal. “We don’t know how any of this will play out. We’re going to see if this thing does erupt.”<\/p>\n Reputation is one of the key considerations for financial services institutions. If banks give away account and personal information without resistance and if someone later is shown to be innocent following the release of such information, that could be a black mark for banks, says Handa. “You don’t want to be the bank that doesn’t fight,” he says. “People want privacy.”<\/p>\n Despite the uncertainty posed by the new legislation, there is not likely to be a flood of new access requests, at least initially. “[Financial services firms] might see a slight uptick in volume, but [they] are already familiar with receiving requirements for information as part of an investigation,” says Fraser.<\/p>\n Money laundering-related legislation, the Criminal Code of Canada<\/em> and the Income Tax Act<\/em>, for example, have provisions that require financial services institutions to provide information when ordered to do so by a court.<\/p>\n \u00a9 2015 Investment Executive. All rights reserved.<\/p>\n","protected":false},"excerpt":{"rendered":" Under new legislation aimed at a host of emerging threats, including cyberbullying, terrorism and theft of Internet and cable services, financial services institutions are likely to face more court orders compelling them to release clients’ account information. 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