Mr. Speaker, I rise today to speak to 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.
As I speak today, I am thinking about the reality we have faced for the past several years, that is, the increase in terrorist activities and the tools we have tried to put in place to fight against terrorism. As we all know, the Bloc Québécois took up a major challenge in the past regarding the fight against organized crime.
I would remind the House of the battle waged here, led by the Bloc, to enact anti-gang legislation. Many individuals have continued that battle, including the leader of the Bloc Québécois and hon. member for Laurier—Sainte-Marie and the hon. member for Hochelaga—a young child in his riding was unfortunately a victim of organized crime warfare. My former colleague, Michel Bellehumeur—who is now a judge, but who was the justice critic at that time—successfully led one offensive after another, as did Richard Marceau, regarding the elimination of the $1,000 bill. The Bloc Québécois' credibility is well established here, as it is in many other areas.
We have led battles and we have helped to develop the best laws possible. Today, we are discussing legislation that the Bloc Québécois will support because it will enable Canada to comply with the recommendations of the financial action task force on money laundering. This is a group that was created by the G-7 to examine in depth the issue of the financing of organized crime world wide. The group can make recommendations to all countries on ways of countering criminal use of money. It has been said that money is the sinews of war, and it is the same in the fight against terrorism.
There is a real battle that can be fought on the ground in terms of propaganda, but there is also the whole issue of financing. Let us hope that we can do our share in a meaningful and concrete way.
However, at the same time—this will be a continuing concern for the Bloc—during the committee stage, we must ensure that in the application of the law we are not faced with the excesses we have already seen, such as in the case of the treatment of Maher Arar by the RCMP. We know that the RCMP slipped through the cracks in existing mechanisms to end up accusing Mr. Arar and that he suffered unacceptable treatment. In the final analysis, Mr. Arar suffered harm that will be very difficult to repair.
In the previous instance, it was the case of an individual. Today, we are dealing with the financing of terrorism. We must ensure that in the application of this law that there is no similar hole in the legislation.
I am referring, for example, to the fact that under the law an official of the Department of National Revenue would have the power to forward information that was sent by another official under the provisions of the charities registration act. That information could be forwarded to the Financial Transactions and Reports Analysis Centre of Canada.
This could be done in good faith and be completely legal. It could involve the forwarding of relevant information; however, we must ensure that there are safeguards to prevent excesses.
After they have debated the actual principle of this bill and its general appropriateness, the committee members should pay particular attention to the issue of protection of personal information. I would like the privacy commissioner to appear before the committee so that she could say how the act for which she is responsible applies to the reality of Bill C-25 and to the regulatory framework defining how to track the financing of terrorist groups so that such financing is clearly opposed and minimized, and how at the same time the rights of individuals will be respected.
We should recall that Bill C-22 was the forerunner of Bill C-25, which we have before us. It was tabled on behalf of the Minister of Finance in 1999 and intended to counter money laundering. That was Bill C-22. It was very similar to Bill C-80, presented in May 1999, but died on the order paper when the House was prorogued.
The general objective of the bill was to correct the shortcomings of Canadian legislation respecting money laundering, as they were identified in the 1997-98 report by the FATF, the financial action task force on money laundering, created by the G-7.
In addition, the FATF recommended in its report that any provisions respecting reports in Canada—which at present are voluntary—be made public and that a financial information unit be created with the responsibility of gathering, managing, analyzing and distributing reports of suspicious operations and other relevant information. So it was an international committee that made the recommendations and the 1999 bill was designed to put them into force.
That bill was passed. 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. A lot of money changes hands. We will see a little later that the quantities of money are very significant.
Furthermore, the bill provided for the creation of a new independent agency, namely the Financial Transactions and Reports Analysis Centre of Canada. This centre receives and administers the information reported. Bill C-22 was enacted on June 21, 2000, and replaced the Proceeds of Crime (Money Laundering) Act then in effect.
The Conservative government is proposing to amend Bill C-22 with Bill C-25, which we are debating today. This new bill is designed to increase financial institutions' duties to keep records and report suspicious transactions, with a view to eliminating funding for terrorist organizations. The idea is to achieve greater transparency in the circulation of money. Banks are institutions that are responsible for the quality of their work. In my opinion, in the fight against terrorism, they need much clearer and more specific guidelines and instructions. Let us hope that this bill will clarify the situation.
First of all, the bill extends the application of the act to all organizations that, in addition to dealing in securities, deal in other financial instruments. Targeting securities alone does not go far enough, in light of terrorists' investment methods. The act also applies to persons and entities engaged in the business of remitting or transmitting funds by any means or through an intermediary to electronic funds transfer companies or of issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments. In other words, the framers of the bill became aware of all the actions and the financial and monetary transactions that the bill needed to cover to try and control the circulation of money used to finance terrorist activities. The people who sell prescribed precious metals will be subject to Bill C-25.
The new bill prohibits any entity from opening an account if the bank cannot establish the identity of the client. The bank must be certain that it knows the identity of the client. Furthermore, the bill ensures requires any institution that does business with a politically exposed foreign person, foreign judge, head of state or minister, to obtain the approval of its senior management before entering into a transaction. Thus, safeguards are established. Such requirements apply to all sectors. For example, in the case of electronic funds transfers, the bank or other business must include the name, address, account number and all client reference numbers, whether sending or receiving such transfers.
This is where we must consider the issue of authorization given to officials of the Canada Revenue Agency to disclose information to the Financial Transactions and Reports Analysis Centre of Canada. We will have to be very vigilant to ensure that we do not erode the right to protection of personal information and to establish an appropriate balance so that the legislation falls within the desired framework.
Of particular concern is the laundering of proceeds of crime, which is the conversion of the proceeds of criminal activities into goods making it difficult to trace the proceeds to their criminal origins. It consists of hiding proceeds of crime by making them seem legitimate. It is money laundering. A large portion of these goods and assets are derived from the illegal drug trade and others result from criminal activities such as burglary and cigarette smuggling. The criminal activities that they seek to hide are, by their very nature, clandestine activities. It is difficult to have a precise idea of the extent of money laundering operations.
Experts estimate that, overall, some US$300 billion to US$500 billion in criminally derived funds enter international capital markets annually; $300 to $500 billion is a lot of money.
In Canada, the federal government estimates that between $5 billion and $17 billion in criminal proceeds are laundered in this country each year. There was therefore a need to take action and find a way of shedding light on these transactions in order, at least, to reduce them as much as possible.
There is also the problem of the financing of terrorist organizations. We know that terrorists were going so far as to take advantage of charitable organizations and ultimately use them for purposes other than those they were intended for. We need to re-consider things in this regard as well to be sure that we can also follow the financial transactions.
The financial action task force on money laundering established in 1989 is an international organization which wants to ensure that the different countries around the world have legislation for dealing with this problem. However, we have seen a major increase in terrorist group activity over the last few years. I think that we need to move faster and provide more support. The FATF’s mandate was renewed in 2004 to run until 2012, and it will continue to monitor the situation.
Through the mandatory reporting of suspicious transactions, this bill will ensure that we do not suddenly find ourselves in a situation where a whole series of suspicious transactions have to be identified because they were not being followed. The mechanism being put in place will hopefully take care of this.
In regard to the reporting of major cross-border currency movements, the bill will ensure that certain precious metals are also regulated and included in the currency to be reported.
There are two provisions authorizing customs officers to search people or the vehicles of people when the officers have reasonable grounds for suspecting that the people are hiding on or near their persons currency or monetary instruments that were not reported in accordance with the act's regulations. Finally, a new provision makes it possible to conclude cooperation agreements between Canada and the customs agencies of foreign countries that have similar requirements to report cross-border movements of currency and monetary instruments.
The comparison I made with the Arar affair also applies here. We must ensure that we are not creating a ripple effect by inadequately protecting personal information. When we give information to a foreign agency, we must ensure that we do so in accordance with the law and that the other country uses it in accordance with the law. We must not damage people's reputations because of incorrectly conducted transactions. In this case, it might not end with the kind of torture Mr. Arar suffered through, but it could damage reputations. We must be vigilant in ensuring that, if necessary, this bill is amended in such a way as to guarantee the protection of personal information.
The third important element is the creation of the Financial Transactions and Reports Analysis Centre of Canada covered under clauses 40 to 72. This is the framework, the organization, the structure that will ensure the implementation of this legislation. We hope the centre can operate because it will be responsible for analyzing and evaluating the reports it receives, as well as other information. If necessary, it will provide information to law enforcement organizations. It will also be responsible for making recommendations to the Department of Justice, the RCMP or other organizations. Here, too, we must be vigilant to ensure that the management and analysis of personal information are done correctly.
Bill C-25 sets out guidelines concerning individuals and groups eligible for registration with the centre. Any person whose name appears on the list of terrorist groups, who was convicted of terrorist activity or of participating in, facilitating, instructing to carry out or inciting to commit terrorist activities, who was convicted of participating in organized crime activities, or who was convicted once on indictment or more than once for fraudulent transactions or for an offence under the Controlled Drugs and Substances Act, except for consumption, is eligible to register.
Clearly, what we are seeking is a comprehensive framework that will allow for proper intervention regarding cash flow linked to terrorists. Accordingly, the Bloc Québécois believes that this bill deserves our support.
It also includes serious offences so that criminals are well aware of the seriousness of their actions.
To conclude, I refer back to my comment on privacy. I would like to see this bill passed as quickly as possible, given the study that will be required in committee. Indeed, it must be carefully studied to prevent individual cases from slipping through security and, above all, to prevent honest, law-abiding citizens from being penalized by such legislation.
Significant amounts of money circulate in this area of activity and this legislation could, in due course, have implications for human life. Terrorist activities funded at the source by this type of monetary flow often lead to the deaths of innocent bystanders.
It is a fine idea to create tools to stop this money from circulating, but we must strike a balance with the protection of privacy.
The Bloc Québécois supports the principle of this bill. We will see if, through amendments, we can adapt it more to the reality of these people and make it more compliant with the Privacy Act.