section 347(1)

INTRODUCTION AND BRIEF DESCRIPTION

Entering into an agreement or receiving payment of interest at a criminal rate is an indictable or punishable offence.

SECTION WORDING

347(1) Despite any other Act of Parliament, every one who enters into an agreement or arrangement to receive interest at a criminal rate, or receives a payment or partial payment of interest at a criminal rate, is (a) guilty of an indictable offence and liable to imprisonment for a term not exceeding five years; or (b) guilty of an offence punishable on summary conviction and liable to a fine not exceeding $25,000 or to imprisonment for a term not exceeding six months or to both.

EXPLANATION

Section 347(1) of the Criminal Code of Canada deals with criminal interest rates. It makes it an offence for any party to enter into an agreement or arrangement for the receipt of interest at a criminal rate or to accept payment or partial payment of interest at a criminal rate. The section makes no exceptions for any Act of Parliament and applies to all individuals and corporations who are engaged in such activity. The interest rates considered criminal are those that exceed the rates set out in the Criminal Code, which are currently 60% per year. Any interest that exceeds this amount is considered criminal and a violation of this section of the Criminal Code. This provision is in place to protect borrowers from being taken advantage of by predatory lenders who charge excessive interest rates and use exploitative practices. There are serious consequences for violating this section. Those found guilty of such an offence can face up to five years in prison if charged with an indictable offence, or a fine of up to $25,000 or imprisonment for up to six months if charged with a summary conviction offence. Furthermore, any amount of interest paid or owed that exceeds the legal limit may be deemed unenforceable, and lenders may be at risk of losing the principal amount as well. Overall, this section of the Criminal Code of Canada serves as an important protection to safeguard borrowers against predatory lending practices and promote responsible lending.

COMMENTARY

Section 347(1) of the Criminal Code of Canada is a provision that seeks to criminalize any agreement or arrangement whereby a person receives interest at a criminal rate. The provision recognizes that there are situations where individuals or organizations may charge interest rates that go beyond what is legally permissible. Such practices are not only illegal but also have the potential to cause significant financial harm to borrowers. The provision is quite broad in its scope, as it covers both the person who enters into the agreement or arrangement and the person who receives the payment or partial payment of interest at a criminal rate. This provision is significant in that it is applicable despite any other Act of Parliament, indicating the seriousness with which the law treats this offense. Additionally, the provision creates two types of offenses that are punishable by either imprisonment or fines, depending on the gravity of the offense. The offence created under this provision is an indictable offence. This means that the Crown has the discretion to choose to prosecute the offender either summarily or by indictment. If the Crown chooses to indict the offender, the offender will face a maximum of five years imprisonment. Alternatively, if the Crown chooses to proceed summarily, the maximum penalty is a fine of $25,000, or imprisonment for a term not exceeding six months, or both. This provision recognizes that individuals or organizations who charge interest rates that are criminal in nature are often preying on vulnerable members of society who are desperate for financial assistance. These individuals may not have access to mainstream financial services and may have no choice but to turn to loan sharks and other unscrupulous lenders. Therefore, the provision serves as a deterrent to those who may be tempted to engage in such activities, given the severe penalties attached to it. This provision also recognizes that there may be situations where individuals or organizations may be caught in the web of such criminal activities unwittingly. For instance, some individuals may lend money to others without realizing that the interest rates they charge are in excess of what is legally permissible. Therefore, the provision allows for the defense of mistake of fact, whereby an accused can argue that they were not aware that the rate charged was criminal. In conclusion, Section 347(1) of the Criminal Code of Canada is a crucial provision that seeks to protect the most vulnerable members of society from unscrupulous lenders who charge interest rates that are criminal in nature. The provision recognizes the harm that such practices can cause and provides severe penalties to deter individuals and organizations from engaging in such activities. Additionally, the provision allows for the defense of mistake of fact, which recognizes that individuals may be caught in the web of such activities unwittingly. Overall, the provision serves as an essential tool in safeguarding the financial wellbeing of Canadians.

STRATEGY

Section 347(1) of the Criminal Code of Canada is designed to protect borrowers from being charged excessive interest rates. This section is highly regulated, and violations of it can result in serious criminal consequences. In order to avoid running afoul of this section of the Criminal Code, individuals and businesses must take a number of strategic considerations into account. The first strategic consideration when dealing with this section of the Criminal Code is to ensure that any agreements or arrangements made with borrowers are compliant with the law. This requires a thorough understanding of the current interest rate limits set by the federal government, as well as any relevant provincial legislation. Borrowing agreements must be drafted very carefully to ensure that they do not contain any terms that could be seen as circumventing the legal limits on interest rates. Another key strategy is to ensure that all payments of interest are properly documented, recorded, and reported. Lenders must keep accurate financial records that clearly show the amount of interest charged, the date it was paid, and any other details that may be relevant. It is also important to be transparent with borrowers about the terms of the agreement and any associated fees or charges. A third strategic consideration is to be aware of the potential consequences of violating Section 347(1) of the Criminal Code. The penalties for this offence can be severe, and can range from fines to lengthy prison sentences. In addition, lenders found guilty of criminal interest rate charges may face significant reputational damage, which can have a long-term impact on their business. Knowing the potential risks associated with violating this section of the Criminal Code, it is important to take steps to mitigate these risks. One strategy that can be employed is to limit the amount of lending done at high interest rates. This can help reduce the risk of being charged with a criminal offence, and can also help maintain a positive reputation in the lending community. Another strategy is to seek legal advice from a qualified professional before entering into any lending agreements or arrangements. An experienced lawyer can provide valuable guidance and can help ensure that all agreements comply with the relevant legal requirements. Additionally, a lawyer can help if a lender is facing charges under Section 347(1) of the Criminal Code, and can develop a strong defence strategy to fight the charges. Finally, lenders can also take steps to proactively educate themselves about the laws and regulations governing their industry. Staying up-to-date with changes in the law, as well as best practices and industry standards, can help reduce the risk of running afoul of Section 347(1) of the Criminal Code. In conclusion, those engaged in lending activities in Canada must be mindful of the legal limitations governing interest rates. They need to carefully document all transactions, strictly comply with legislative requirements, and take appropriate measures to avoid potential criminal charges. If in doubt, seeking legal advice can be the prudent course of action.