All right.
Evidence of meeting #27 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rcmp.
A video is available from Parliament.
Evidence of meeting #27 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was rcmp.
A video is available from Parliament.
3:25 p.m.
Liberal
The Chair Liberal Peter Fonseca
—but thank you. I'm sure you'll have an opportunity in another round.
We are moving to the Liberals and MP Chatel for five minutes.
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you, Chair.
Thank you, Ms. Mason and Mr. Hannah, for being with us today. Also, thank you for your hard work in having in Canada such healthy financial institutions.
Just as a point of clarification regarding a concern raised by MP Lawrence, I want to make sure I'm clear on that point. There was immunity for actions that were taken in good faith by financial institutions, but there would be legal consequences for anyone using this legal obligation in bad faith.
3:25 p.m.
General Counsel and Vice-President, Canadian Bankers Association
That is correct.
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you.
The proceeds of crime legislation requires banks and financial institutions to report suspicious transactions.
Ms. Mason or Mr. Hannah, could you tell us exactly what a suspicious transaction is?
3:25 p.m.
General Counsel and Vice-President, Canadian Bankers Association
A suspicious transaction is one that, based on the facts, suggests that money laundering might be occurring.
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Would that suspicious transaction concept, based on which you have to report, change with the Emergencies Act?
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Could you explain a little bit the reporting process through which, under existing rules, you have to report to FINTRAC and the RCMP, and your interaction with those organizations?
3:25 p.m.
General Counsel and Vice-President, Canadian Bankers Association
Sure. When we report to FINTRAC, there are two types of reporting. One involves suspicious transactions, those that suggest money laundering might be occurring. The other kind is threshold reporting, for which we're required to file all types of transactions, regardless of whether they're suspicious or not. Those involve large cash withdrawals, for example, or large EFTs. Those are called “threshold reporting”.
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
You explained that things have changed. Under previous rules, you were not legally obligated to freeze accounts once you had found, for example, a suspicious transaction.
3:25 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
The Emergencies Act was not limited to money laundering. It was covering illegal activities, such as the blockade, as defined within the Emergencies Act, that we could see as expanding, because the previous rules did not require you to report even if you found that there were suspicious transactions that were not necessarily money laundering or terrorist financing but that could be used to finance illegal activities in Canada. Is that correct?
3:25 p.m.
General Counsel and Vice-President, Canadian Bankers Association
That's correct, in the sense that if we were concerned that someone was using an account for illegal activity, we might raise that with the RCMP. In this case we were actually required to validate against the list provided by the RCMP and also to take specific measures, such as applying a risk-based approach, to look for this specific activity.
3:30 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Using a crowdfunding platform is an obvious way of escaping the scope of the proceeds of crime legislation. It doesn't involve reporting activities, so it's an indirect way of financing illegal activities.
To your knowledge, Ms. Mason, are there any additional platforms that are left out of the current reporting that should be covered, but they are ways of supporting that criminal activity or money laundering or financing of illicit activity that are taking place today?
3:30 p.m.
General Counsel and Vice-President, Canadian Bankers Association
There aren't, to my knowledge. I could take that away.
As part of our advocacy within the AML space, we have supported the expansion of reporting entities to address gaps, including cryptocurrency, which was recently included, so I can take that away to see if there are any additional ones that we, as an industry, have supported.
You are right that there are gaps that have been closed.
3:30 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
I would really appreciate you following up on those gaps, I'm very interested in that.
Thank you.
3:30 p.m.
Liberal
The Chair Liberal Peter Fonseca
Thank you, MP Chatel.
That is the end of our second round, members.
We're moving into our third round. I'm looking at the time. This will be our last round of questions from members to our witnesses.
We're starting with the Conservatives and MP Albas for five minutes.
3:30 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Thank you, Mr. Chair.
Thank you to all our witnesses for coming and bringing some light on this study from your perspectives.
I'm going to start with Ms. Mason. Typically, when we're dealing with money laundering or sanctions or whatnot, a court order would be necessary. Do banks find it helpful in that a court order may give you a little more comfort when you're freezing or seizing accounts?
3:30 p.m.
General Counsel and Vice-President, Canadian Bankers Association
With a court order, we are legally obligated to do it. The benefit of the court order is we're not asked to validate anything.
3:30 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
The court identifies where, in this case, the RCMP has a legitimate case or maybe where they think, “Okay, you're just fishing for things”. In this case, though, you were given names and were asked to start freezing assets. Is that correct?
3:30 p.m.
General Counsel and Vice-President, Canadian Bankers Association
We were given names and asked to validate against them. It isn't your typical process. I agree with you. In the case of sanctions, there are prescribed lists that have already been reviewed.
3:30 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
Can you explain that point? Many people are watching right now and seeing what's happening in Ukraine, and it's important that people understand that there's a usual process that has to be followed.
Can you elaborate on that?
3:30 p.m.
General Counsel and Vice-President, Canadian Bankers Association
Sure. In the case of sanctions, we're very familiar with and have a long history of implementing economic sanctions within Canada. It's a known process, so when individuals and entities are named and particular actions are restricted, we've been able to implement those in the past.
Some of the complexity of the Emergencies Act was, because it had never been invoked before, we had a number of questions about various things on how to implement it.
3:30 p.m.
Conservative
Dan Albas Conservative Central Okanagan—Similkameen—Nicola, BC
When the government wants to put in place a sanction, they have to go through a court process so you can have lawful authority. Is that not the case?