Remediation Agreements And Other Recent Developments In White Collar Crime

Recent events highlighted in the media have shone a spotlight on Canada's efforts to address white collar crime. These events are shaking our Federal Government to its core. The discussion has centered primarily on legislative amendments made to the Criminal Code in 2018, giving prosecutors the power to enter into remediation agreements. This new tool for corporate accused will continue to be in the spotlight as we all learn when prosecutors will be prepared to allow the use of remediation agreements and how their use will be received by the voting public.

The attention on remediation agreements has also generated heightened interest in white collar crime enforcement more generally. The past year has seen some noteworthy advancements in the white collar crime space. A number of important securities, corruption, and anti-money laundering cases were released in 2018, some of which are likely to have significant implications in their respective legal areas going forward. Amendments were proposed to Canada's anti-money laundering and terrorist financing regulations, and released for consultation. Notable policy changes, such as enhancements to Public Services and Procurement Canada's Integrity Regime and the Competition Bureau's Immunity and Leniency Programs were also implemented by the Canadian government over the past year. This article provides an overview of recent white collar crime developments.

1. New Remediation Agreement Regime

   In September 2018, Canada introduced its long awaited remediation agreement regime through amendments to the Criminal Code. The regime will allow prosecutors to negotiate remediation agreements (better known as "deferred prosecution agreements") for certain corporate criminal offences of an economic character, where it is in the public interest to do so. Applicable offences include, fraud, bribery, municipal corruption, secret commissions, fraudulent manipulation of stock exchange transactions, laundering the proceeds of crime, and certain offences under the Corruption of Foreign Public Officials Act. The purpose of the new remediation agreement regime is to:

   promote voluntary disclosure of corporate criminal wrongdoing; denounce wrongdoing and provide reparations to victims; impose proportionate penalties that deter further wrongdoing; ensure the implementation of corrective measures by the organization and the development of a culture of compliance; and minimize negative collateral consequences for innocent stakeholders, such as employees. Where the accused organization enters into a remediation agreement with the Crown, and a judge approves the agreement, the organization will obtain a stay of charges in return for the fulfillment of its obligations under the agreement. Once an agreement has been reached between the accused and Crown, a judge will only be permitted to approve a remediation agreement where the terms are "fair, reasonable and proportionate to the gravity of the offence". The requirement of judicial approval will insert some uncertainty into the decision making matrix for organizations that are contemplating self-reporting.

   Prosecutors in the U.S. have used their deferred prosecution agreement regime to great effect since it was instituted in the early 1990s, which has resulted in a substantial increase in revenue generation from financial penalties levied against accused who voluntarily self-report wrongdoing. Only time will tell how readily prosecutors in Canada will use this new tool and agree to enter into remediation agreements. Already in one high-profile white collar crime case, the Crown has refused to enter into a remediation agreement, which suggests prosecutors may be reluctant to enter into such agreements unless the accused has self-reported their wrongdoing, regardless of whether the accused has revamped its internal controls and implemented corrective measures. It will be some time before organizations have a clear understanding of how likely prosecutors are to use remediation agreements, and whether their voluntary disclosure of potential corporate criminal wrongdoing will actual result in a remediation agreement.

2. Corruption

   Canada is returning to its roots and again being perceived as a laggard in its enforcement against foreign corruption. Transparency International is an international organization that releases reports ranking countries for, among other things, their efforts to comply with the OECD Anti-Bribery Convention by cracking down on bribery of foreign public officials. In the last report from 2015, Canada ranked in the "Moderate" enforcement category, which is the second highest category (just behind "Active" enforcement) out of four. In the new 2018 report, Canada fell in its ranking to "Limited" enforcement, which is a category it now shares with France, Netherlands, Austria, Hungary, South Africa, Chile, Greece, Argentina, New Zealand, and Lithuania. The limited activity of note in the past year is as follows:

   Corruption of...