The Supreme Court of Canada released its anticipated decision in Guindon v. Canada on July 31, 2015, which held that administrative monetary penalties (“AMPs”) in the Income Tax Act  are not offences that trigger constitutional protections such as the right to be presumed innocent. You can read more about the case in this alert for Global Compliance News.

There are five essential elements of internal compliance programs that can be applied in the AMPs context:

  1. The compliance program must be founded upon strong leadership.The tone from the top should signal the importance of compliance regimes and that these will include the wider administrative ambit now recognized by the Supreme Court of Canada.
  2. A proper risk assessment should be completed. Risk management techniques are central to establishing a defence of due diligence and rebutting any suggestion of wilful blindness.
  3. Sufficient standards and controls should be developed and carefully implemented. In the past, organizations may have focused on financial regulatory requirements or the avoidance of criminal sanctions. Further standards and controls must now be developed in areas that may be subject to AMPs.
  4. Timely training and communication protocols ought to be rolled-out. Training must now include education about administrative regimes and penalties.
  5. The program must be properly monitored, audited, and updated as necessary. The level of monitoring and auditing will be linked to the risk assessment conducted under step 2.