House of Commons Hansard #68 of the 39th Parliament, 1st Session. (The original version is on Parliament's site.) The word of the day was opposition.

Topics

Royal Canadian Mounted Police
Petitions
Routine Proceedings

1:10 p.m.

Conservative

Mike Allen Tobique—Mactaquac, NB

Mr. Speaker, I rise today to present a petition on behalf of a number of residents in the riding of Tobique—Mactaquac, who wish to bring to the House's attention their concerns with regard to a fraudulent investigation that went on after the death of Guy Bellefleur, son of Mr. Réjean Bellefleur. Therefore, they request that all hon. members of Parliament and the Minister of Public Safety call upon the RCMP to rectify this situation by conducting a full inquiry into this case.

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Regina—Lumsden—Lake Centre
Saskatchewan

Conservative

Tom Lukiwski Parliamentary Secretary to the Leader of the Government in the House of Commons and Minister for Democratic Reform

Mr. Speaker, if Question No. 88 could be made an order for return, this return would be tabled immediately.

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Conservative

The Acting Speaker Andrew Scheer

Is that agreed?

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Some hon. members

Agreed.

Question No.88
Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Bloc

Gilles Duceppe Laurier—Sainte-Marie, QC

What percentage of unemployed people in Quebec have exhausted their weeks of regular employment insurance benefits, by employment insurance economic region and by fiscal year, from 2001-2002 to 2004-2005?

(Return tabled)

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Conservative

Tom Lukiwski Regina—Lumsden—Lake Centre, SK

Mr. Speaker, I ask that the remaining questions be allowed to stand.

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Conservative

The Acting Speaker Andrew Scheer

Is that agreed?

Questions Passed as Orders for Returns
Routine Proceedings

1:10 p.m.

Some hon. members

Agreed.

The House resumed from October 23 consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Government Orders

1:10 p.m.

Conservative

The Acting Speaker Andrew Scheer

The hon. member for Etobicoke North has eight minutes left in his speech.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Government Orders

1:10 p.m.

Liberal

Roy Cullen Etobicoke North, ON

Mr. Speaker, I am pleased to continue. Yesterday across the floor the Conservative members were laughing and heckling on a very important topic, money laundering. I am hoping they will pay closer attention today, because money laundering is not done by ordinary citizens; it is done by criminals and terrorists. It is a very serious matter.

First of all, I should say that our finance critic is generally in support of what is being proposed in terms of amendments. After all, this builds upon the anti-money laundering legislation that our government brought in in 2001. We have now had the benefit of a few years and the government is reviewing the feedback and the experience to date. It is very timely to bring in some amendments.

I would like to touch on one point that I made yesterday which is that one of the amendments actually removes lawyers from the list of those financial intermediaries who need to report suspicious transactions to FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada. This is something that the committee should look at very carefully.

What we contemplated when the government brought in this law was that, for example, a citizen would sit down with his or her lawyer and say, “I would like you to keep this $300,000 in cash in safe keeping for me”. The lawyer under the law as we have it would then say to the person, “Do you realize that I am required under the law to report this to FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, as a prima facie suspicious item?” The client would either say, “Yes, I understand that. Therefore, I will take my $300,000 back”, or “Yes, you may proceed”.

On that basis the lawyers in this country have challenged that this takes away from solicitor-client privilege and an appeal court has agreed with them. This amendment takes the lawyers out of the loop of the money laundering reporting, the suspicious transactions reporting.

We know that the vast majority of lawyers in this country are honest people. The small minority of people who would take part in money laundering transactions will now find this loophole. The committee should carefully look at that. There are not many realistic options. Finance Canada and FINTRAC are negotiating with the legal profession to see what can be done. This is a serious matter.

There are other amendments. For example, it is a requirement by financial intermediaries to report suspicious transactions to FINTRAC. As it now stands, the law has some criminal sanctions if the financial intermediaries do not report. What these amendments call for is a lesser level of sanction for lesser violations of the reporting requirements under the act. That seems to be a reasonable request.

There is one issue that is difficult and I know that the House committee, the Auditor General and the committee in the other place have highlighted this, and that is Parliament's oversight over FINTRAC. How do we know that FINTRAC is operating within the mandate that it was given by Parliament? How do we know that the privacy rights of citizens are not being violated? How do we know that it is getting results? Has the information that it is providing to the RCMP and CSIS led to any arrests or convictions? That is something the committee should look at as well.

There are other aspects in terms of these amendments that warrant careful examination by the committee. As I said yesterday, when the legislation was introduced, the focus was put on monetary instruments. In other words, all laundered money eventually finds its way or should find its way into a bank account or into cash of some kind. The reality is that the money launderers become more clever and there is a chance that they could be dealing in precious metals or minerals, or items that are not monetary instruments. That has to be looked at. The proposal here with respect to currency traders, for example, is that they be brought under a regulatory ambit that would be managed by the federal government.

The typical exchange dealers one would find in airports, and I am not going to give any commercial names, but many would be familiar with these operations, right now they are required to report suspicious transactions to FINTRAC. They are considered to be financial intermediaries but it is not a very defined or regulated sector. These amendments propose to bring that under tighter scrutiny.

In 2001 when the Liberal government brought in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, we laid out the objectives of the act: to facilitate the detection, investigation, and prosecution of money laundering and terrorist activities financing offences, and to deter money laundering and terrorist financing activities; to respond to the threat posed by organized crime, while protecting personal information; and to assist in fulfilling Canada's international commitments.

One of the issues that was dealt with at the time is the balance of the type of information and the reason that certain information could be passed from FINTRAC to the law enforcement agencies and to CSIS. There is always a careful balance between the need for Canadians to be protected from money launderers but also the need for their privacy to be protected. The amendments proposed here call for an added level of information that could be provided by FINTRAC to law enforcement agencies and CSIS to decide if there is a trend that they want to analyze and pursue further.

The law still requires that if CSIS, the RCMP or other law enforcement wish to take the issue further, they would have to go to a court and get a judge's permission for FINTRAC to release information above and beyond what we call boiler plate information or basic raw data. Those provisions still stand, although there are increasing abilities to provide additional information under the proposals before us.

The other aspect of these amendments reinforces the need for the banks and financial intermediaries to know their customers. Knowing one's customers is key because that is the way to deal with money laundering activities before they begin.

There are some other elements to the amendments, but I have touched on the major ones. Having been involved in a modest way in 2001 in the design and set-up of the original legislation and the establishment of FINTRAC, my view would be that these are worthy amendments. They should be debated and witnesses should be brought forward with respect to some of the amendments, but generally I believe they should receive the support of the House. Certainly I will be voting for the bill to go to committee for further evaluation.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Government Orders

October 24th, 2006 / 1:20 p.m.

Bloc

Thierry St-Cyr Jeanne-Le Ber, QC

Mr. Speaker, on behalf of the Bloc Québécois, I am pleased to state our position on Bill C-25, which is now before us.

At the outset, I would reiterate that the Bloc Québécois plans to support this bill. Obviously, we will take all necessary measures, in committee and elsewhere, to ensure that the right of citizens to protection of personal information is respected.

That said, with respect to the principle underlying the bill, the Bloc Québécois has always felt that fighting terrorist activity funding is one of the greatest challenges in fighting terrorism. The provisions in this bill will also apply to the fight against organized crime, which has been a Bloc Québécois priority for a long time now.

We have introduced a number of bills to make things more difficult for organized crime. As you know, one of our colleagues in this House, the member for Saint-Hyacinthe—Bagot, has been working for a long time now to protect Quebec farmers who have been taken advantage of by organized crime groups that used their land to grow illegal crops. We will continue to pursue our long-standing fight against organized crime.

We also think that this bill will enable Canada to comply with the recommendations of the Financial Action Task Force on Money Laundering.

I will begin by providing some background on the bill to put it into context.

On December 15, 1999, the then Secretary of State, the hon. member for Willowdale, tabled, on behalf of the Minister of Finance, Bill C-22, to combat money laundering. It was quite similar to Bill C-81, presented earlier in 1999, which simply died on the order paper when that session of Parliament prorogued.

The broad purpose of the bill was to remedy shortcomings in Canada’s anti-money laundering legislation, as identified by the G-7’s Financial Action Task Force, FATF, on Money Laundering in its 1997-1998 report.

In addition, the FATF recommended that reporting requirements in Canada be made mandatory—rather than voluntary, as is currently the case—and that a financial intelligence unit be established to deal with the collection, management and analysis of suspicious transaction reports.

Bill C-22 was passed and since then it has been mandatory for regulated financial institutions, exchange offices, casinos and other financial intermediaries to report suspicious financial transactions.

Another of the bill's objectives was to put in place, together with the Canada Customs and Revenue Agency, a system for reporting large cross-border movements of currency. The bill also provides for the creation of a new independent agency, namely the Financial Transactions and Reports Analysis Centre of Canada, which will receive and administer the information reported.

Bill C-22 was enacted on June 29, 2000, and replaced the Proceeds of Crime (Money Laundering) Act then in effect.

We are now going from Bill C-22 to Bill C-25, with which we will try to go further than we did at the time.

The Conservative government is proposing to amend Bill C-22 with the bill we are debating in this House today to increase financial institutions' duties to keep records and report suspicious transactions, with a view to eliminating money laundering and funding for terrorist organizations.

I will come back to that in further detail later in my presentation, but first, the bill extends the application of the act to all organizations that, in addition to dealing in securities, deal in other financial instruments.

So we are also going to add persons and entities that transmit funds by any means or through any intermediary.

Previously, this obligation to report information was provided for in section 83.01 of the Criminal Code, which stipulated that the RCMP or CSIS should be notified of the existence of property belonging to a terrorist group. So we will be going a bit further for any transaction that seems suspicious.

The other new thing in this bill is the prohibition against anyone opening a bank account for a person or an agency if the client’s identity cannot be established; this seems logical. Under this bill, any financial institution dealing with a politically exposed foreign person—I shall come back to this a little later on—should make sure that senior management has given its approval before undertaking a transaction with this type of individual.

We will take the necessary steps to make sure that, if a Canadian bank is dealing with a bank or another institution, it is a real bank, not a fictitious one, a shell bank. That too seems to be quite an appropriate precaution.

Bill C-25 requires foreign subsidiaries of Canadian banks to comply with the same rules as Canadian banks. So we are going to try and extend our actions to the limit of our powers.

Finally an official of the revenue department will now have the power to transfer any information transmitted by another official under the Charities Registration (Security Information) Act to the Financial Transactions and Reports Analysis Centre of Canada. This power is designed to more readily combat the financing of terrorist organizations through so-called charitable organizations or through electronic funds transfers.

To continue this scenario, we must also talk about money laundering. Money laundering occurs when the revenue arising from criminal activity is converted into goods whose origin is difficult to trace, and has, in fact, been deliberately hidden. Thus proceeds of crime are disguised in an attempt to make them look legitimate.

Generally these are goods or assets arising from the illegal drug trade or other criminal activities, such as cigarette smuggling, burglaries and so on.

Since money laundering and the criminal activities it attempts to camouflage are clandestine in nature, understandably it is fairly difficult to get an accurate idea of the situation. The experts estimate, however, that between US$300 billion and US$500 billion worth of criminal funds enter the international financial markets every year.

The federal government estimates that between $5 and $17 billion is laundered in Canada every year. This is a significant amount of money. Although it is difficult to know the exact amount, given the source of the money, this gives us an idea of the seriousness of the problem.

The repercussions of organized crime go beyond mere economic consequences and the violence it causes. The social costs involved are also very high.

Obviously, regarding this area of the problem, we will try to resolve the issue of funding terrorist organizations. Terrorist groups are resorting more and more to the use of charities to ensure funding. Under the guise of charitable organizations, terrorist groups successfully accumulate the funds they need to plan and execute terrorist acts.

Furthermore, since the implementation of measures aimed at fighting large, structured terrorist organizations, such as al-Qaeda, we are now faced with several independent, separate cells. While larger organizations need enormous amounts of money to finance their operations, weapons purchases and international movements, the new wave of terrorism does not need as much money to achieve its ends. Thus, there is a greater need to develop means to fight against this type of funding.

The Financial Action Task Force on Money Laundering—or FATF—was created in 1989 at the G-7 summit in Paris. Its primary objective is to fight money laundering and the funding of terrorist activities. The task force now exists and has 33 members.

I would now like to talk in greater detail about the provisions that amend Bill C-22.

The first thing that Bill C-25 amends in Bill C-22 is the mandatory reporting of suspicious transactions in clauses 5 to 11. Under Bill C-22, the reporting of suspicious transactions, which is currently voluntary, would become mandatory. The obligation to report would extend to non-banking financial institutions and certain other businesses. Therefore, the reporting requirements would apply to regulated financial institutions, casinos, foreign exchange traders, stock brokers, insurance companies and persons acting as financial intermediaries, such as lawyers and accountants.

Bill C-25 will add to the list all organizations that make electronic funds transfers, issue or redeem money orders or traveller's cheques or deal in financial instruments. Departments and agents of the government that sell prescribed precious metals will also be subject to the legislation. These persons and institutions would be required to report certain prescribed categories of financial transactions as soon as they have reasonable grounds to suspect that the transactions are related to a money laundering offence.

Bill C-25 includes a measure pertaining to what are called “politically vulnerable” individuals. An institution will not be able to do business with this category of individuals without first obtaining the approval of senior management. Who are these politically vulnerable individuals, as defined in the bill? They include heads of state or government, members of the executive council of a government or members of a legislature, deputy ministers or people of equivalent rank, ambassadors or attachés or counsellors of an ambassador, presidents of state-owned companies or state-owned banks, heads of government agencies, judges, leaders or presidents of political parties represented in a legislature and holders of any prescribed office or position. All these people are considered politically vulnerable. Before an organization does business with them, its senior management will be informed and will have to act accordingly.

Bill C-25 also sets out more stringent rules and responsibilities for banking institutions. For any interbank transaction, the Canadian bank shall ensure, under sanction of law, that the corresponding foreign counterpart is not a shell bank, which makes sense. In addition, all foreign subsidiaries of a Canadian bank must follow rules that apply to Canadian banks located in Canada.

According to the provisions of the bill, not reporting this type of transaction will constitute an offence subject to a fine of not more than $2 million or to imprisonment for a term of not more than five years on conviction on indictment and a fine of not more than $500,000 or imprisonment for a term of not more than six months for a first offence on summary conviction. In the case of a second offence, there is a fine of not more than $1 million or imprisonment for a term of not more than one year on summary conviction.

Bill C-25 extends these provisions to all new entities governed by this regulation.

The second major set of amendments made by this bill, clauses 12 to 39, covers the declaration of significant transborder movements of currency. Individuals who import or export large amounts of currency or monetary instruments, such as travellers cheques, must report these to a customs officer. Failure to do so may lead to seizure of the currency or instruments transported unless the individuals decide not to proceed further with importing or exporting them. A mechanism is put in place for that purpose, and we will add, in clauses 15 and 16 for example, provisions authorizing customs officers to search a person or the vehicle of a person if they suspect on reasonable grounds that the person has secreted on or about their person currency or monetary instruments not reported pursuant to the law.

Another provision will make it possible for Canada to enter into an agreement with the customs agencies of foreign states which have similar reporting requirements for transborder movements of currency and monetary instruments.

The third important element is the creation of the Financial Transactions and Reports Analysis Centre of Canada covered under clauses 40 to 72. This bill will create this new government agency, which will be independent and will be responsible for gathering and analyzing the reports it receives under the legislation. The Financial Transactions and Reports Analysis Centre of Canada will be a central repository for information about money laundering activities across Canada.

The proposed legislation authorizes the centre to provide key identifying information of suspicious transactions to the appropriate police force if it has reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence.

It is important to note that the role of the centre will essentially be to gather information, process it and determine the potential problems and suspicious cases that will be passed on to the police forces. They will be in charge of determining whether to take action or not. I had a chance to meet, at the Standing Committee on Finance, someone from an existing organization in Canada that does similar work. I imagine the centre and the agency will join forces to try to identify suspicious patterns in a series of financial transactions.

The centre will also raise awareness among and provide information to the public on this type of problem. It will also be authorized to subpoena witnesses and to make an order for the production of documents.

I would like to close with the offences covered in the legislation in clauses 74 to 82. The sanctions for breaching these requirements are described in these clauses.

Bill C-22 implemented tough criminal penalties for serious offences. Bill C-25 will implement administrative penalties for less serious offences in order to ensure that the rules are respected by all players in the financial system.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Government Orders

1:40 p.m.

NDP

Dawn Black New Westminster—Coquitlam, BC

Mr. Speaker, I listened carefully to the comments of the member opposite. We support the bill and we want to see it come to committee, but we do have some concerns. I have some questions and would like to hear the member opposite's opinion on them.

This will be a tool for our law enforcement agencies to deal with money laundering and terrorist financing, but there are still some concerns around the whole issue of foreign access to the information that we would like to see addressed. What does the member think of that?

We are also concerned that the bill would remove the obligation of the legal profession, of legal counsel, to file suspicious transaction reports. We see that as an important component of any effective money laundering legislation on organized crime. Could I also hear his opinion on that?

Canada's Privacy Commissioner has also expressed concerns that the act is intrusive in regard to some privacy rights, and has called for accountability structures to be put in place.

Finally, one of the issues that is missed in all of this and needs to be incorporated would be a process of civilian monitoring of the legislation and an agency.

Does the member opposite agree with those concerns and does he also feel there should be a civilian monitoring component to this legislation?

Proceeds of Crime (Money Laundering) and Terrorist Financing Act
Government Orders

1:40 p.m.

Bloc

Thierry St-Cyr Jeanne-Le Ber, QC

Mr. Speaker, I undoubtedly share some of the member's concerns, particularly where foreign access to information is concerned. The bill states that agreements or arrangements may be entered into with foreign institutions or agencies that have policies similar to ours.

We will indeed have to see what that means exactly. Will it allow a two-way exchange of information to better combat money laundering?

Among the points raised by the hon. member, the main one, the one of greatest concern to me personally and to the Bloc Québécois is unquestionably the protection of privacy. As I said at the beginning of my speech, this is a fundamental issue and a very important one.

Naturally, at this stage, we are debating the bill's principle. I think that this is how our colleagues from the NDP see it as well. The principle is good. At committee, we will have to take a more detailed look at what impact the bill could have on people's privacy and see whether it is well balanced in terms of the fine line between privacy, on the one hand, and national security or the fight against organized crime, on the other. If the proper balance has not been struck in the bill as it stands, my colleagues from the Bloc Québécois will work at making or supporting amendments designed to provide greater balance.