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Criminal Interest Rate: The crime of loan sharking involves lending someone money then charging them 60 percent or more in interest on that loan. Any interest rate above 60 per cent is described as a “criminal rate” in the Criminal Code. Since loan sharks do not keep detailed or publicly available records, it is difficult to secure a conviction. Those who are found guilty are sentenced to a maximum of two years less a day in jail.
Table of Contents:
What is Loan Sharking?
Although the term "loan sharkingLending money at criminal interest rates" does not appear in the Criminal Code, s.347 (1) makes it illegal to enter into an agreement or arrangement to receive interest at a criminal rate, or to receive a payment or partial payment of interestThe aggregate of all charges when advancing credit at a criminal rate.
According to a Department of Justice (DOJ) document (A Typology of Profit-Driven Crimes) loan sharking is when you lend someone money and the effective interest rate exceeds 60 per cent a year. The other characteristic is the unique nature of the collateral the borrower's own person. The DoJ document adds "that would suggest it should be seen as a predatory offence falling into the grey area between legitimate business and criminal activity more typical of commercial crimes."
What the Crown Must Prove
To show that a loan agreement is loan sharking, the Crown prosecutorLawyers who prosecutes charges on behalf of the Crown has to prove that an interest rate of about 60 percent was charged. The problem is that people who engage in the practice of being loan sharks generally do not keep detailed record books.
The (DOJ) document A Typology of Profit-Driven Crimes also notes that while loan sharking was the “second most important source of criminal earnings” decades ago, today it is “largely, although not entirely, forgotten.” It adds that unless violence or threat are used, there is not a “clear case for the traditional criminal justice system to take much heed.”
Loan Sharking Charges are Hybrid Offences
Canadian courts deal with offences in two ways depending on the charge under the Criminal Code. A Summary offenceLess-serious criminal offences is for less serious crimes such as thefts under $5,000, while an indictable offenceIndictable offences are more-serious criminal offences includes murder, sexual assault and aggravated assault. The Crown will decide whether loan sharking will be prosecuted as an indictable offence or by summary conviction.
Penalties for Loan Sharking
If the charge is treated as an indictable offence the maximum penalty is five years in prison. If the charge is prosecuted as a summary conviction, the maximum penalty is a fine of $25,000 and/or two years less a day in jail.
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Bitzer Criminal Law
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Glossary of Legal Terms
Crown prosecutor
Lawyers who act for the federal, provincial and territorial governments and prosecute people accused of crimes on behalf of the Crown.
Indictable offence
Indictable offences are the most serious offences under the Criminal Code and they come with more serious punishments, up to a maximum penalty of life in prison.
Interest
The aggregate of all charges and expenses – whether in the form of a fee, fine, penalty, commission or other similar charge or expense – paid or payable for the advancing of credit under an agreement or arrangement.
Loan sharking
Lending money at an interest rate above 60 percent. Sometimes threats of harm or extortion are used to get repayment.
Summary offence
Summary offences are less-serious criminal offences such as disturbing the peace or unlawful assembly
