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Transparency International’s Criticism of Canada’s Anti-Bribery and Corruption Enforcement: Protect your Company from the Expected Increase in Enforcement Risk

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International Trade & Investment Law Bulletin

Canada has been subject to ongoing criticism by NGOs, the Organisation for Economic Co-operation and Development ("OECD"), and others for lagging behind peer countries regarding its commitment to anti-bribery and corruption enforcement. Canada’s ranking as being among the least corrupt places to do business is falling. The release of a new report by Transparency International (“TI”) continues this trend, highlighting Canada’s poor record of enforcement activities and key shortcomings in its anti-bribery and corruption regime.

Given increasing negative international scrutiny of Canada’s enforcement of its anti-bribery and corruption laws and pressure on the Canadian government to elevate enforcement activity, companies with operations in Canada should anticipate increased investigation and prosecution activity. To assist companies to prepare for the risk of increased enforcement activity, we summarize Canada’s foreign anti-corruption and bribery law, discuss TI’s latest report, its implications for Canadian companies and best practices to minimize bribery risk.

Canada’s Foreign Corruption and Bribery Regime

In 1998, Canada enacted the Corruption of Foreign Public Officials Act (“CFPOA”) to implement the OECD’s Anti-Bribery Convention that Canada signed in 1997.

The CFPOA, among other prohibitions, criminalizes directly or indirectly bribing or offering to bribe foreign public officials to obtain or retain a business advantage, as well as certain accounting practices employed to conceal the bribes.

Convictions under the CFPOA can result in severe punishments, potentially up to 14 years imprisonment for individuals and fines in any amount at the discretion of courts for companies. Other consequences can include debarment under the federal government’s Integrity Regime, rendering companies ineligible to win federal contracts. Further, involvement with corrupt foreign officials elevates national security review risk of the foreign acquiror’s intended acquisition as one of the criteria for such review is the potential of the investment to involve or facilitate the activities of corrupt foreign officials. Even an allegation of bribery or corruption can cause irreparable reputational and commercial harm and material loss of shareholder value.

Key Findings: CFPOA Enforcement Activities are Sub-Standard

TI identified the following issues concerning Canadian enforcement of the CFPOA:

  • Canada carried out only “limited enforcement” activities under the CFPOA between 2018-2021. This rating is below peer countries like the United States, Germany, United Kingdom, and Australia.
  • Canada does not sufficiently fund its enforcement agencies, which contributes to the limited enforcement.
  • Canada has inadequate ‘whistleblower’ protection. TI considers that whistleblowers are crucial to detect foreign bribery and other crimes and therefore that whistleblower protection is essential for enforcement.
  • Canada’s remediation or deferred prosecution framework has weaknesses in its provisions regulating settlements. TI considers such non-trial resolution important because it may make companies more willing to disclose wrongdoing or related evidence to enforcement authorities.

TI did commend Canada for improvements in beneficial ownership transparency. Canada has publicized plans to create a national public beneficial ownership registry system, which TI and others consider critical for detecting foreign bribery and other forms of international corruption.

Anticipated Increase in CFPOA Enforcement

TI’s report adds to the growing criticism of Canada’s limited record of enforcing Canadian anti-bribery and corruption laws, both in Canada and abroad. Combined with the decline in Canada’s standing as one of the least corrupt places to do business, companies can expect increased CFPOA enforcement activity. Indeed, the Royal Canadian Mounted Police (“RCMP”)—the agency enforcing the CFPOA—has recently said that it is actively investigating Canadian corporate business practices in Africa, Eastern Europe and South America.

Best Practices to Minimize Bribery Risk

Given the possibility of damaging bribery investigations by the RCMP arising from increased RCMP scrutiny, companies can  minimize bribery risk by having and implementing a strong anti-bribery compliance program that the board, company officers and employees closely follow.  Core best practice elements include:

  • A clear policy prohibiting bribery and corruption and addressing key business risk areas
  • Processes to address and mitigate the risk posed by business partners
  • Quality internal controls on record keeping
  • Confidential whistleblower protocols to report potential violations
  • Robust processes for detecting and addressing violations
  • Periodic audits to identify compliance gaps
  • Ongoing training

To learn about how to implement a strong anti-bribery and corruption compliance program or to identify gaps in company anti-bribery protection contact Clifford Sosnow or Christopher Little.

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