Ban on Financing Cluster Munition Violators

Summary#

This bill amends Canada’s Prohibiting Cluster Munitions Act to ban investments linked to cluster munitions. It adds a new offence for acquiring or holding a financial interest, or providing loans or loan guarantees, to a person who has breached cluster munitions prohibitions, if done knowingly (Bill, Clause 3, new s.6(d.1)). It also updates related attempt, aiding, and conspiracy provisions, and provides a 1-year divestment window for existing holdings.

• Adds a new prohibition on investing in, loaning to, or guaranteeing loans for a person who has committed or aided a breach related to cluster munitions, if done knowingly (Bill, Clause 3, new s.6(d.1)).
• Extends attempt, aiding/abetting, conspiracy, and assistance offences to cover the new investment ban (Bill, Clause 3, amended s.6(e)–(h)).
• Keeps certain existing exceptions (including military cooperation carve-outs), updated to reference the new investment clause (Bill, Clause 4, s.11(3)).
• Gives a 1-year period to divest pre-existing investments, loans, or guarantees after the law comes into force (Transitional Provision).
• Broadens the Act’s purpose to include “other measures” respecting cluster munitions, not only treaty implementation (Bill, Clause 2, s.4).

What it means for you#

• Households and individual investors

  • If you knowingly buy or hold shares, bonds, or other financial interests in a person that has breached prohibitions on cluster munitions, you could commit an offence once the law is in force (Bill, Clause 3, new s.6(d.1)).
  • The ban also covers making a loan to, or guaranteeing a loan for, such a person (Bill, Clause 3, new s.6(d.1)).
  • If you held such investments or guarantees before the law takes effect, you have 1 year after it comes into force to divest without violating the new ban (Transitional Provision).
  • Trying to make such an investment, helping someone else do it, conspiring to do it, or helping an offender escape enforcement is also prohibited (Bill, Clause 3, amended s.6(e)–(h)).
  • The offence requires that you know the person has committed or aided a breach. The bill does not create a public list of covered entities (Bill text).

• Financial institutions, asset managers, and lenders

  • You must not acquire, hold (directly or indirectly), or facilitate a financial interest in a person known to have breached cluster munitions prohibitions, and must not loan to or guarantee loans for such a person (Bill, Clause 3, new s.6(d.1)).
  • “Directly or indirectly” and “as a shareholder, partner or otherwise” signal broad coverage of equity, debt, and other economic interests (Bill, Clause 3, new s.6(d.1)).
  • Pre-existing positions and guarantees must be divested or unwound within 1 year of the law coming into force (Transitional Provision).
  • Attempt, aiding, counselling, conspiracy, and assistance offences apply to facilitation activities tied to the new investment ban (Bill, Clause 3, amended s.6(e)–(h)).

• Pension plans, endowments, and foundations

  • Portfolio holdings, loans, and guarantees are covered if you know the issuer/borrower has breached prohibitions (Bill, Clause 3, new s.6(d.1)).
  • You have a 1-year compliance window for legacy holdings after the law starts (Transitional Provision).

• Businesses

  • If your organization has breached cluster munitions prohibitions, Canadian investors, lenders, and guarantors who know of that breach would be barred from investing or financing you under the amended Act (Bill, Clause 3, new s.6(d.1)).

• Military and government operations

  • Existing carve-outs for certain acts during military cooperation with states not party to the Convention remain, and are updated to reference the new clause (Bill, Clause 4, s.11(3)). These relate to aiding/abetting, conspiracy, and assistance where it would not be an offence for the other person.

Expenses#

Estimated net cost: Data unavailable.

• No explicit appropriations, taxes, or fees are authorized in the bill text (Bill, all clauses).
• Enforcement would occur under the existing Prohibiting Cluster Munitions Act framework; incremental enforcement costs are not estimated. Data unavailable.
• No official fiscal note identified. Data unavailable.

Proponents' View#

• The bill closes a financing gap by barring investments, loans, and guarantees tied to known violators, aligning Canada’s law with the Convention’s aims (Bill, Summary; Clause 3, new s.6(d.1)).
• The broad wording (“directly or indirectly” and “as a shareholder, partner or otherwise”) reduces avoidance through intermediaries or complex structures (Bill, Clause 3, new s.6(d.1)).
• The 1-year divestment window limits disruption for existing portfolios while moving capital away from violators (Transitional Provision).
• Updating attempt, aiding, conspiracy, and assistance offences strengthens enforcement against facilitation, not just direct investment (Bill, Clause 3, amended s.6(e)–(h)).
• Maintaining and updating military cooperation carve-outs keeps consistency with the original Act’s operational exceptions (Bill, Clause 4, s.11(3)).

Opponents' View#

• The term “pecuniary interest” and the phrase “directly or indirectly” may be broad, creating compliance uncertainty for passive holdings, index funds, or layered investments (Bill, Clause 3, new s.6(d.1)).
• The offence hinges on “knowing” a person has breached prohibitions; without a government list, determining knowledge and evidentiary standards may be difficult, raising enforcement and due diligence concerns (Bill, Clause 3, new s.6(d.1)).
• The bill adds mandates but no new resources; enforcement and monitoring capacity under the existing Act may be strained. Data unavailable.
• Extending the military cooperation carve-out to reference the new clause could create uneven application in joint operations contexts and complicate compliance (Bill, Clause 4, s.11(3)).
• The 1-year divestment timeline may be challenging for illiquid assets or complex unwinds, potentially affecting fund performance and beneficiaries during the transition (Transitional Provision).