Understanding Financial Fraud in Canada: A Guide to the Legal Consequences

Canada has a robust legal framework to combat financial fraud, with various sections of the Criminal Code outlining the different types of fraudulent activities and their corresponding penalties.

Types of Fraud in Canada

The Criminal Code distinguishes between two main categories of fraud: indictable offences and summary convictions. Indictable offences are more serious crimes that carry a maximum penalty of 14 years in prison, while summary convictions have less severe penalties imposed.

Fraud Over $5,000

If found guilty of fraud over $5,000, an individual can be charged with an indictable offence carrying a maximum sentence of 14 years. The court takes into account aggravating circumstances such as the magnitude, complexity and planning involved in the fraud, as well as the number of victims affected.

Fraud Under $5,000

If the alleged fraud is valued at less than $5,000, the Crown can choose to treat it as a summary conviction. The court considers the same aggravating circumstances as those for fraud over $5,000 when determining a sentence.

Additional Forms of Financial Fraud

Using the Mail to Defraud

Section 381 of the Code makes it illegal to use the mail to deliver letters aimed at deceiving or defrauding the public or to obtain money under false pretences. The maximum penalty for this offence is two years in prison if treated as an indictable offence, with lesser sentences given for summary convictions.

Fraudulent Manipulation of Stock Exchange Transactions

Section 382 of the Code prohibits fraudulent manipulation of stock exchange transactions. If found guilty of an indictable offence, the maximum penalty is 10 years in prison, while summary convictions carry less severe penalties.

Prohibited Insider Trading

The same section also makes it an offence to buy or sell securities using inside information (insider trading). This law applies to shareholders, those involved in a company takeover or merger, and anyone who obtained information from someone in these positions. The maximum penalty for this offence is 10 years in prison if treated as an indictable offence.

Falsification of Books and Documents

Section 397 of the Code makes it an offence to destroy, alter or falsify any documentation related to a security or document. The maximum penalty for this offence is five years in prison if treated as an indictable offence.

Identity Theft and Trafficking in Identity Information

Section 402 of the Code prohibits identity theft, which involves obtaining or possessing another person’s identification with the intention of using it to commit an indictable offence such as fraud. A related charge is trafficking in identity information, which carries a maximum penalty of five years in prison.

Identity Fraud

Section 403 of the Code makes it an offence to impersonate someone else and use their identity information for personal gain or to avoid arrest or prosecution. The maximum penalty for this offence is 10 years in prison if treated as an indictable offence.

Recent Changes to Financial Fraud Laws

In November 2022, Bill C-5 repealed mandatory minimum penalties for certain fraud-related offences, providing judges with more discretion when sentencing individuals convicted of financial fraud.