Finance Committee on Feb. 8th, 2024

[Adam Chambers, Conservative, Simcoe North, ON]

For my last question, have you heard of Bill C-289?

[Julien Brazeau]

Yes. It's a private member's bill.

[Adam Chambers, Conservative, Simcoe North, ON]

I would be very curious to know what the advice was to the government on moving forward with that bill.

[Julien Brazeau]

Again, we can take that back.

[Adam Chambers, Conservative, Simcoe North, ON]

Sure. I don't need it now.

[Julien Brazeau]

I will just say that the bill was more criminal in nature and the Department of Justice provided the advice. We can take that back, but to the extent that you will be meeting with the Department of Justice, I would encourage you to ask them the question as well.

[Adam Chambers, Conservative, Simcoe North, ON]

I look forward to meeting with the Department of Justice.

Thank you very much for your time.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

Now we'll go to MP Thompson.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

Could you speak to the interplay between sanctions enforcement and anti-money laundering?

[Julien Brazeau]

We're happy to.

It's an area of ongoing reflection for us, I would say, especially given the unprecedented scope and scale of the Russian sanctions. We see sanctions and sanctions evasion as an emerging threat for the financial system. We've seen that a lot of the hallmarks that are common to sanctions are also common to money laundering and financial crimes.

As you know, sanctions policy, especially as it relates to the Special Economic Measures Act, lies with Global Affairs. We've passed in past budgets and fall economic statements a number of amendments that would allow FINTRAC to play a bigger role in being able to leverage its intelligence products and in sharing that information with Global Affairs so they can target and identify sanctions evasion.

It's definitely an area of concern. That's another area where we would certainly welcome the committee's views, as it's looking to undertake its study, on the nexus between financial crimes and sanctions evasion.

[Joanne Thompson, Liberal, St. John's East, NL]

Thank you.

This is clearly not just a Canadian problem. All western democracies have to deal with this. I'd be really interested in some international comparators, if you could speak about some of the unique challenges other countries are facing.

[Julien Brazeau]

Sure. As I said, Canada is just one country in the global regime. The Financial Action Task Force is the first and foremost authority when it comes to creating standards.

I think other countries have similar challenges to us. Beneficial ownership is an issue that's shared among jurisdictions. The prevalence and development of technology and how that technology is being used to perpetrate crimes are issues as well.

Those issues are not unique to Canada. The federated nature of Canada, as Erin has said, comes with benefits, but also some complications as they relate to the coordination between the federal and provincial regime for law enforcement and the like. However, many of the risks identified in the NIRA that we've spoken about today are common across the globe.

[Joanne Thompson, Liberal, St. John's East, NL]

I do not have further questions, but I really appreciate your being here today and very quickly accommodating the two-hour request. Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Thompson.

Go ahead, MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Some time ago, a hard-hitting report about fraud on social media was broadcast on La facture. It reported on a case that had happened on Facebook.

A young retiree in the Gatineau region had seen a very convincing advertisement on Facebook that urged him to invest in cryptocurrency and Bitcoin because there were big returns. The individual in question, who was intelligent and level-headed, decided he was going to do a test. He invested small amounts and then withdrew them. It worked. There was a return. Everything went well.

He then decided to manage his retirement fund himself. He invested all the savings he had accumulated over his lifetime. Once the money was transferred, radio silence. The money had been transferred out of the country. There was no longer any way to recover his money. Having lost all the savings he had accumulated over his life, this retiree was obliged to go back to work.

Artificial intelligence is increasingly being used to get access to celebrities and make them say anything you like.

What is the federal government doing so that this kind of thing never happens again?

[Julien Brazeau]

Thank you for your question.

The issue of fraud goes well beyond the scope of these discussions today, which deal with money laundering and terrorist financing.

First, the Department of Finance is examining precisely these issues, relating to virtual currencies and how they will be used in the future.

A number of discussions concern the regulatory agencies, including how to decide what measures we should put in place to protect Canada. What is called the Financial Consumer Agency of Canada, the FCAC, has published statements designed to make Canadians aware of the risks inherent in these practices.

As I have said, this is an area that we are looking at giving further consideration to.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you.

I am thinking of one element in particular that needs to be examined: financial institutions that allow hundreds of thousands of dollars to be transferred out of Canada. At that point, there are no longer any guarantees for that money. The regulations in place should be taken into account and the verifications to be done should be doubled or even tripled before allowing that kind of transfer.

On an entirely different subject, Mr. Brazeau, a little earlier you mentioned the Supreme Court judgment dealing with protection of solicitor-client privilege.

Can you explain in more detail what impact that judgment has when it comes to combatting money laundering?

How does the situation compare with other countries?

[Julien Brazeau]

Thank you for your question.

I think all these problems related to the legal profession are important.

The Supreme Court decision says that adding lawyers as reporting entities for the purposes of the act is not legal. That being said, the Supreme Court nonetheless left the door open to finding a mechanism that aligns with the Canadian constitution.

Since that decision was handed down, the Department of Finance has been working closely with the Federation of Law Societies of Canada.

Because it is the federation that publishes the guidelines, we are working with it to make sure those guidelines are harmonized with the recommendations of FATF, the Financial Action Task Force, to make sure the profession is properly regulated, in a sense, when it comes to international standards.

Even though lawyers are not reporting entities for the purposes of the act at present, there are initiatives and measures in place to take into account the risks inherent in the profession.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now we'll go to MP Collins.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

I just wanted to follow up on some of the questions about far-right terrorist financing and in particular on the terrorist financing threat assessment. The Proud Boys, the Russian Imperial Movement and the Aryan Strikeforce are neo-Nazi and neo-fascist organizations that we have seen become more of a threat in recent years.

I am curious as to how this has changed the landscape and what kinds of financing mechanisms they are using, whether it's as corporations, real estate agents or developers. What does this new landscape look like?

[Julien Brazeau]

We have talked about this. The landscape is changing, and the latest national inherent risk assessment identified these extremists and ideological groups as an area of risk. I think our intelligence agencies would probably be better placed than we would to tell you which mechanisms and how these agencies are using these mechanisms, but there is no doubt that some of these groups are engaged in activities that further foment terrorism.

In identifying them in the NIRA, the goal is to prioritize and work on these key vulnerabilities in the Canadian context, but again, I would suggest that our intelligence partners would probably be better placed to tell you exactly how they're leveraging those things.

[Laurel Collins, NDP, Victoria, BC]

I also wanted to follow up on the question from my colleague about the IRGC. I noticed that it was not on the March 2023 list. I'm curious. Is that because it wasn't listed as a terrorist organization at that point? If we were to update that list, do you have a sense of whether it would appear?

[Charlene Davidson]

Any of the specific groups named in the 2023 document are those that were listed under the Criminal Code as a terrorist group at that time.

[Laurel Collins, NDP, Victoria, BC]

Do you look into other groups like the IRGC, groups that might not fall on that list in the 2023 assessment? Would you have been recognizing other groups that might not fall on that list and tracking them?

[Charlene Davidson]

No. The report focuses on those that are listed entities only. I think the question of what's being followed and new trends or emerging threats would for our intelligence partners.