Evidence of meeting #142 for Finance in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was cash.
A video is available from Parliament.
4:50 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Okay.
If someone wanted to do that, would they be able to, or are there current regulations to prohibit the use of ATMs to exchange cryptocurrency into Canadian dollars?
4:50 p.m.
Executive Director, Canada Region, ATM Industry Association
I think the regulations would be developed further than what they are today.
Is it possible? We don't know yet, only because we haven't had a cryptocurrency operator get to the point where it has a turnkey.
4:50 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
I would just imagine that if financial institutions aren't offering it, then other intermediaries will, and whether or not we have regulations that can make sure that we understand that type of activity.
I think that's my time.
4:50 p.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
First of all, let me thank our guests for coming here today.
I have a question for Mr. Tassé, but it might actually be for the other witnesses here today.
Thank you all for your testimony.
Thank you very much, Mr. Tassé. If you don't mind me saying so, this is like asking: “apart from that, Mrs. Lincoln, how was the play?” Everyone around you is saying that nothing is wrong and they all know their clients very well.
You have talked about the problems associated with beneficial assets. You have an advantage in that you can look at things with some hindsight, and with your expertise in the area. Do we have to make more effort to know our clients better, so that the money can be traced?
4:55 p.m.
Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual
I think so, yes. Clearly.
In all the research and reporting into the matter internationally, everyone agrees that Canada is one of the best places to launder money. It has almost become one of our economic claims to fame. You just have to think of Vancouver and Toronto, where the real estate market has been interesting, to say the least.
It is disgraceful; there is nothing to be proud about. Certainly, in our everyday work, we deal with different companies and we do not always realize that money laundering is going on. Let us not forget that people who launder money are fraudsters and they are very friendly. As we are used to doing business with them, we let our guard down and we do less research because we trust them. Everything is based on trust. We may not want to be bad ourselves, but we do not necessarily do the diligence that is due.
If it was only one report coming out from time to time, the situation would not be so serious. But the World Bank, the United Nations and journalist groups all come to the same conclusion: Canada really is one of the best places to launder money. It will keep people like me employed for a very long time still, but it is unfortunate. We could be working at something more proactive.
4:55 p.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
As you know, we live in a federation made up of a number of provinces and many jurisdictions. As regards beneficial ownership, each province has its own list, and so do the feds.
From your expertise, could you recommend ways to bring those two systems together so that we can establish a reasonably high standard that will tell us exactly who owns these companies?
4:55 p.m.
Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual
I think Ms. Saperia talked about that earlier. We have to work together with other countries. We are not the only ones facing this problem. England, the United States and Australia have much stricter rules than ours. We have to work with others to determine the best practices. There is also ISO 37001:2016, which deals with anticorruption management systems. Given that context, it is becoming worthwhile to look at what the current best practices are.
We must also not forget that some provinces have rules that are perhaps stricter. Quebec was mentioned earlier. Stricter rules are often put in place after a scandal, but it is better not to wait for situations to reach the point of being a problem. That said, there is guidance to be found in the recommendations made by the Charbonneau Commission.
4:55 p.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
Representatives from the Federation of Law Societies of Canada appeared before us and told us that, in order to maintain lawyer-client privilege, there was scarcely any possibility to require more transparency. However, they indicated that, even in their profession—and I believe they were right to point this out—they had ways of making sure that their members behave appropriately.
What is your opinion about that?
Do you feel that some practices could be improved?
4:55 p.m.
Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual
Lawyer-client privilege will always be with us, of course, and there are reasons for that. However, as you mentioned, law societies are considering how they could impose internal regulations on their members, especially by following their code of conduct.
One distinction needs to be made. You can go along with something, but you can also do more than go along with it when you see it in terms of integrity and ethics. We have codes of ethics precisely because the objective is more than simply to comply with the law. We have to see this a little more in ethical terms.
5 p.m.
Liberal
Greg Fergus Liberal Hull—Aylmer, QC
My last question will be for Mr. Jason, Mr. Gibbs, and probably Mr. MacDonald and Mr. Binns.
You've all mentioned that you have taken measures within each of your sectors to know your clients or to make sure that transactions of a certain amount are conducted in a way that allows for some greater transparency. If you feel, therefore, that you have established those norms, even if they were to be principle-based, why would you then perhaps be reluctant to want to be regulated in some way to make sure that you do meet those norms and international standards.
5 p.m.
Counsel, Cassels Brock and Blackwell Limited Liability Partnership, As an Individual
The small bank community is fully regulated. We comply or are subject to the exact same rules the largest of banks are subject to. The only issue for us is really when the law becomes too prescriptive, when it says you must do something, particularly when it's constructed in such a way that the drafter of the legislation had the largest institution in mind. That's what creates the extraordinary burden and what we're most concerned about.
There is one comment I wanted to make because I think it's relevant to what a lot of the other witnesses have said today. To put it in crass commercial terms, the institutions are interested. If we're spending a lot of money, we want to see the bang for the buck, if I can put it that way.
I think a lot of people have pointed out today that it's as if we constructed the front end without paying enough attention to the back end. By the “front end” I mean the institutions, the banks that are charged with collecting the information, with supervising the transactions, identifying the suspicious transactions, and providing that information into the system so that something can be done with it. The frustration that many of the banks feel is that they don't see enough being done with it. The cost burden is there, but we're not getting the results from the money that's being spent. If it's not providing a direct benefit to the institution—which it's not, other than avoiding reputational risk—if we could at least see more of a payoff in terms of the greater social good, then that would balance the equation better for the institutions that have subjected to the burden.
5 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Thank you.
My question relates to this matter of solicitor-client privilege. While I'm not a lawyer, my understanding is that privilege is not upheld in cases where a person was communicating with a lawyer to orchestrate a crime. If the two were talking or corresponding to commit a crime, then they cannot privilege their conversation on the basis that one of them just happens to be a lawyer and was advising the other on how to carry out a crime and participating in it.
Ms. Saperia, how would you recommend we address that problem when we deal with the issue of structuring that you mentioned earlier?
5 p.m.
Director of Policy for Canada, Foundation for Defense of Democracies
First, I don't have specific recommendations on this area other than to say that this committee should maintain the pressure on the law associations to come up with a solution. They will be able to find a constitutional solution. It really is a question of will. I think in some other countries, the issue has come and gone. It's a dead issue now, and no one will be able to touch it. Right now, because of the fact that there is this review, I think the law societies are seized with the importance of coming up with a solution that will meet the criteria that the Supreme Court of Canada has set out. I would say don't give up on it. Keep the pressure on. That's number one.
Number two, it's true what you say, that lawyers can't be involved in something criminal regardless of the lawyer-client privilege. I think part of the issue may have to do with determining whether there is something criminal going on in the first place. I think there are quite severe limitations about auditing and being able to just take a look at some of the records as a random thing to see if everything is being done properly. Personally, I'm fascinated by this issue. I'd be happy to look into it a little bit more and get back to you.
5:05 p.m.
Director of Policy for Canada, Foundation for Defense of Democracies
My understanding is that it's a gaping loophole. Whether or not that means a ton of lawyers in Canada are doing illicit things, I simply couldn't speak to, but to the extent that we can create legislation and create a framework that tries to be as strong as possible, I think this is an area that does need attention.
5:05 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
What more could we be doing to address Iran's role in financing terrorism? You mentioned that it is a leading state sponsor of terror and an extremely corrupt regime. As part of this review, what specific measures in the statute would help combat that?
5:05 p.m.
Director of Policy for Canada, Foundation for Defense of Democracies
First of all, I would say it's really important that Iran continue to be listed here in Canada as a state sponsor of terror. I think the issue comes forward every two years that it has to be reviewed. It's absolutely imperative that it continue. Even President Obama, who was, we know, extremely keen on reaching an international nuclear deal with Iran, was just as clear about the fact that Iran was continuing to sponsor terrorism. Forget about under President Trump right now, because lots of things seem to be changing, but even under President Obama, when we were looking at removing lots of nuclear-related sanctions, at the same time they were very clear that Iran would continue to be listed as a state sponsor of terror and that there would be sanctions in place for things like human rights abuses and ballistic missiles.
Here in Canada, our only sanctions are under the Special Economic Measures Act. They relate only to Iran's nuclear behaviour. We're kind of outdated. As I mentioned, the Magnitsky law would allow human rights abuses to be sanctioned as well, so I think we should be using that.
I know we're under time constraints, so I'll mention only one more thing. It has to do with the purported deal between Iran and Bombardier. It's a bizarre situation, in my view, because Iran's unfree media is giving us more information about this deal than the Canadian government or Canadian media is. I don't really understand. There's alleged to be a deal worth at least $100 million for Bombardier to sell at least 10 planes to Iran. Iran has a very clear history, which I'd be happy to share with you later, of using its civilian planes to ship weapons to Syria to help Assad continue to murder his civilians, and to boost Hezbollah's arsenal in Lebanon. They're using civilian planes for that purpose, so something is going wrong. We don't know what this deal is. The Canadian government won't acknowledge it one way or another.
I'm concerned that Export Development Canada, EDC, may be involved as well. A previous witness, Ms. Mora Johnson, came to speak to you. She talked about EDC and about how it's actually at risk for handling the proceeds of crime, because it could be “repaid with proceeds of corruption”. I would be concerned about that potentially happening here.
Again, I could be very wrong. EDC may not be involved. I don't know what the deal is, because I'm only reading about it in Iran's media, but that's something that would be really worth exploring.
5:05 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
Can I ask one more question?
The possibility that a taxpayer-funded or taxpayer-owned Canadian government body would be helping to facilitate either the financing or the transaction of assets for the regime in Iran is outrageous, and if you can provide us with any more information to ascertain whether that is the case, it would be very helpful.
5:05 p.m.
Conservative
Pierre Poilievre Conservative Carleton, ON
As you know, Bombardier received $400 million in taxpayer-funded loans from the federal government alone in the last two years. As you also know and mentioned, EDC facilitates the transactions of Canadian companies abroad. I think this committee has to send the signal that Canadian tax dollars and the economic development bodies they own should not be facilitating transactions with state sponsors of terror under any circumstances.
April 16th, 2018 / 5:05 p.m.
Director of Policy for Canada, Foundation for Defense of Democracies
I agree and I am opposed to this deal for the very reason that Iran has a long history of using civilian planes for terrorism purposes.
For me, at the very least, I would just want more transparency. I just want to know if the deal is in fact taking place or not, because right now it's just not clear.
