Finance Committee on March 19th, 2024

[The Chair, Liberal, Peter Fonseca]

Thank you for that, MP Chambers.

Yes, it has been distributed to all members. They shall receive it. Thank you, clerk.

We now go to MP Weiler, for five minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Chair. I want to thank all of our witnesses for being here today. I'll ask some questions of our witnesses who are sitting here.

I really appreciate the renewed interest of our Conservative Party members on this committee to look into money laundering. Unfortunately, it was the budget cuts that Stephen Harper brought in that cut $500 million from the integrated proceeds of crime unit. That helped create the conditions we see today with money laundering. It's actually mentioned by the Cullen commission, which identified that as one of the factors that led to the amount of money laundering we're seeing in real estate.

Obviously, there have been many changes since then. It's great to see that the Province of B.C. has brought in a land ownership registry, and, just recently, announced it's going to make it free for individuals to access it.

Of course, over the last four years, there have been many very important changes made to our anti-money laundering regime, including in Bill C-59. I was hoping that the witnesses might be able to share with this committee how Bill C-59 will improve the operational effectiveness of our AML regime, and, specifically, how is it going to address some of the ongoing enforcement issues that have been identified within the regime?.

[Erin Hunt]

Excellent. Thank you, Mr. Chair.

Thank you for that question.

I'm happy to walk through some of the areas that will be put forward in this bill.

Operational effectiveness is obviously a broad consideration, so I would like to talk a bit about the different elements of the bill, because I think they will all contribute to operational effectiveness.

The proposal will help combat sanctions evasion, which is something that we see is a growing concern, particularly emerging from Russia's unjust war on Ukraine. This will allow for better information gathering and for our colleagues at FINTRAC to be able to provide intelligence, both tactical and strategic, to the enforcement partners and others to better combat sanctions evasion.

There are changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as well as to the Customs Act, to better enable our colleagues at the CBSA to identify and pursue more effectively trade-based money laundering, which is one of the largest ways that money is laundered internationally. This will provide additional tools to the CBSA to be able to do that.

It will also capture white-label ATMs, which are ATMs that do not belong to a bank or credit union. They make up about half of all ATMs in Canada. These are seen as a very high risk for money laundering and terrorist financing.

It will also enable additional information sharing. We spoke about environmental considerations earlier. Environmental crime is obviously a very lucrative crime. It's one of the most lucrative crimes internationally. This will allow FINTRAC to be able to share intelligence directly with ECCC—Environment and Climate Change Canada—and the Department of Fisheries and Oceans so that they can leverage this information in their activities enforcing environmental and other related standards.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you for that.

Beyond the changes you mentioned to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Customs Act, there are some changes being made to the Criminal Code, particularly because these are offences that are very difficult to prove when you need to prove knowledge of some of these things.

I was hoping you might be able to speak a bit to that and how those standards are going to be addressed through Bill C-59.

[Erin Hunt]

Excellent. I will turn this over to my colleague from Justice Canada. The other Erin at the table is better placed to respond.

[Erin Cassidy]

Thank you, Erin.

Thank you for the question.

Bill C-59 proposes three types of amendments to the Criminal Code that are intended to address operational aspects of the anti-money laundering and anti-terrorist financing regime.

The first proposed amendment targets the laundering of proceeds of crime offence. What we have heard through our consultations and our engagement with provincial and territorial partners is that this offence is particularly challenging to prosecute and to obtain sufficient evidence on to go to prosecution. This is because, among other things, the offence requires that the accused have the knowledge or belief, or be reckless as to whether the property was obtained or derived from the commission of a designated offence.

In the case of money laundering committed by third parties—persons who are not engaged in the underlying offence that gave rise to the proceeds—it can be particularly challenging to establish that mental element, which is that knowledge or belief, or recklessness.

The amendments proposed some changes specifically to address third party money laundering. They establish a statutory inference—

[The Chair, Liberal, Peter Fonseca]

Mrs. Cassidy, I'm going to interject. You're going to have to be very quick and very brief. We're already past the time.

[Erin Cassidy]

Okay.

[The Chair, Liberal, Peter Fonseca]

I know you said you have a few amendments, but you're going to have to be very quick.

Thank you.

[Erin Cassidy]

Absolutely.

They establish a statutory inference that may be drawn and some changes to the extent to which the details must be established in relation to the predicate offence.

The second amendment will streamline and modernize certain aspects of the seizure and restraint of proceeds of crime provisions.

The third amendment will address a production order for financial information to better respond to digital assets, or cryptocurrency.

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Weiler.

We're going to MP Ste-Marie, please.

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

Thank you, Mr. Chair.

My questions are still on amendments to part 5, division 6 of the Competition Act.

Having said that, first I'd like to thank the clerk of the committee, Mr. Roger, for getting the commissioner's letter to us so quickly. We have the best clerk of all the House and Senate committees.

Mr. Simard, I expect that a gag order will be issued on the study of Bill C‑59, which would limit the length of our study. We're going to invite the commissioner and representatives of other organizations to appear. We may propose amendments to the bill. After the commissioner and the other witnesses have testified, if you have any additional information for us before we vote on the amendments, send it to us so that we can make a well-informed decision.

I want to come back to the second recommendation, which concerns greenwashing. My colleague Daniel Blaikie mentioned it. A number of organizations are telling us that prohibition of greenwashing products as part of the amendment to the Competition Act should also apply to environmental statements in general made by companies, such as allegations about the sustainability of their operations.

Can you comment on this amendment that could be proposed?

[Mark Schaan]

Thank you for your question.

I'm going to turn it over to my colleague, Mr. Simard.

[Martin Simard]

Mr. Schaan touched on this a little earlier. He mentioned the legal aspect.

The government wanted to use all the tools at its disposal to fight greenwashing. There was already a mechanism in the Competition Act that required evidence to make a claim about a product in the context of a transaction, as Mr. Schaan said. For example, if they said that a product washed whiter than the competitor's product, they needed evidence of that, they had to have tested it. The government took this pre-existing tool and decided to apply it to claims about a product's environmental benefits, such as saying that a product is greener. The difference is that, if they say that a product washes whiter but it doesn't, that affects the consumer. That's the test currently being used. However, if a product pollutes a lake, it doesn't affect consumers themselves. However, a product can be tested too. We can test whether or not a product leaves phosphorus in a lake, for example.

When they move away from that and make a broader claim, like when companies say they're green, there's no longer a pre-existing mechanism in the Competition Act. For example, if companies make blanket statements that they are fair or that they treat their employees well, there's no mechanism that requires them to already have proof of that. Such assertions are only subject to the general prohibition against breach of trust. The reason the government stopped there was that the Competition Act already had a mechanism that worked. However, more general statements stray from the scope of that mechanism.

Mr. Schaan said there was also a practical aspect. If a company says it's greener, what should it test to prove that? If it's greener in terms of a certain aspect, is that enough to make a general statement?

The European Union came up. The Competition Act is general legislation that applies to everyone. It has no sectoral provisions. In some countries, and even in Canada, when it comes to plastics in particular, recommendations are made on a more sectoral basis. Conditions can be set for the right to use the recycling symbol, for example. So there are other more sector-specific tools to combat greenwashing. We talked about statements like saying that a company is carbon neutral. The mechanism increasingly being put in place is climate disclosures in companies' annual reports. Perhaps other tools would make it possible to combat specific greenwashing activities. However, the Competition Act may be a limited tool for framing such broad statements.

If a company says it's greener, what should it test to prove that?

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Simard.

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

Thank you.

I'll have more questions in the next round.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie. Yes, you can do that in the next round.

We'll go to MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

My question is for the folks who can talk about the Canada water agency.

[The Chair, Liberal, Peter Fonseca]

We have a transition of witnesses.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Ms. Boag, I understand that the government has announced that the new headquarters for the Canada water agency will be in Winnipeg, Manitoba. I see that's not specifically in the legislation, so I wanted confirmation today that this is indeed the plan.

[Gemma Boag, Director General, Freshwater Policy and Engagement, Department of the Environment]

The legislation indicates the headquarters will be designated by order in council. In budget 2023, which you probably saw, the government indicated the plan is to set up the headquarters in Winnipeg.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Is there any statutory funding for the new Canada water agency, or is that all going to be done on an ad hoc basis through appropriations?

[Gemma Boag]

There's a combination of existing funding for activities that are taken care of by Environment and Climate Change Canada now but will be moving into the agency, and then budget 2023, as you may have seen, announced additional funding that would also be for the Canada water agency. That includes $85 million over five years and $21 million ongoing to create the Canada water agency, and a total investment of $650 million over 10 years for investments in eight water bodies across the country. The Canada water agency would deliver the majority of that investment in water bodies.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

How much of that funding would be statutory, which is to say it's in the legislation for the Canada water agency and it's regular without the government having to come back to Parliament, and how much of that funding would be approved through the estimates process every year?

[Gemma Boag]

I'll have to come back with the specifics of that, but a fair portion will be coming through the estimates.