Bill C-25 (Historical)

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

This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record-keeping and reporting measures applicable to financial institutions and intermediaries. It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.
It allows the Financial Transactions and Reports Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies, and to make disclosures to additional agencies.
It permits the Centre to exchange compliance-related information with its foreign counterparts and permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.
It creates an administrative monetary penalty regime.
It amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the Centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am quite happy to join the debate on such an important subject as 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.

This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record keeping and reporting measures applicable to financial institutions and intermediaries.

It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.

It allows the Financial Transactions and Report Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies and to make disclosures to additional agencies.

The bill permits the centre to exchange compliance related information with its foreign counterparts. It also permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.

The bill creates an administrative monetary penalty regime, something which certainly seems to be needed.

It also amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.

Everyone in the House will likely agree that one of the best ways to fight organized crime and terrorism is to starve those involved of the funds that they need to operate. Stemming the flow of illegal money is of great importance, and it is equally important that we protect the privacy and the charter rights of individual Canadians.

Bill C-25 is a step in the right direction and contains much of what the previous Liberal government was in the process of developing. We will certainly support it in principle at this stage of debate.

The proposed amendments in the bill will make Canada's anti-money laundering and anti-terrorist financing regime more consistent with new financial action task force standards. They also follow some of the recommendations made in the 2004 Auditor General's report and in the 2004 Treasury Board evaluation of the regime. I will now turn to some of the key features in this bill.

There are enhanced client identification and record keeping measures for financial institutions and intermediaries. The proposed amendments include requirements for reporting entities to undertake enhanced monitoring of high risk situations, correspondent banking relationships and transactions by politically exposed persons. Banks, insurance companies, securities dealers and money service businesses would be required to take measures to identify and to monitor the transactions of foreign nationals and their immediate families who hold prominent public positions.

There is the reporting of attempted suspicious transactions. All reporting entities currently reporting suspicious transactions would be required to report suspicious attempted transactions to FINTRAC. This is the practice in other G-8 countries and is consistent with financial action task force recommendations.

Another feature in the bill is the registration regime for money service businesses and foreign exchange dealers. The proposed amendments would create a federal registration system for individuals and entities engaged in money service businesses or foreign exchange. FINTRAC would act as the registrar and would maintain a public list of registered money service businesses and foreign exchange dealers. These businesses are already covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act; however, given that this is an unregulated sector, the registry will assist FINTRAC in ensuring compliance with the act.

The bill refers to enhancing the information contained in FINTRAC disclosures. As recommended in the 2004 Auditor General's report and at the behest of law enforcement, the proposed amendments enhance the information FINTRAC can disclose to law enforcement and security agencies on suspicions of money laundering or terrorist financing. This will increase the value of FINTRAC disclosures, ultimately leading to more investigations and eventual prosecutions.

The bill creates an administrative and monetary penalties regime. Currently the act only allows for serious criminal penalties if the act is contravened. FINTRAC requires the ability to levy fines to deal with lesser contraventions in order to take a more balanced and gradual approach to compliance. The amendments create an administrative and monetary penalty system whereby fines can be applied for non-compliance. This was a recommendation in the 2004 Auditor General's report.

The bill reintroduces requirements for legal counsel. The government is working with the legal profession, including notaries in Quebec, to finalize requirements for client identification, record keeping and internal compliance procedures for legal counsel when they act as financial intermediaries. The bill removes the obligation for legal counsel to file suspicious transaction reports or other prescribed transaction reports.

The bill expands information sharing between federal departments and agencies. The amendments in the bill would expand FINTRAC's ability to share information with the Canada Border Services Agency, the Canada Revenue Agency and the Communications Security Establishment. In addition, FINTRAC would be able to receive terrorist property reports under the United Nations act regulations.

Internationally, the enforcement of the anti-money laundering and anti-terrorist financing requirements would be strengthened by information sharing provisions on compliance related information between FINTRAC and its foreign counterparts on obligations applicable to the financial sector and between the Canada Border Services Agency and its foreign counterparts on the enforcement of the cross-border currency reporting regime.

This bill proposes to make some necessary changes to the previous government's Bill C-36, the Anti-terrorism Act of 2001. Changes such as these will likely be required every few years as money launderers become more sophisticated and police need new powers to fight them. This is precisely what makes money laundering so difficult to combat. No matter how many safeguards and checks we as legislators put in place, the criminal element will always look for new ways to avoid or to counter them.

Canada's financial intelligence agency reported $5 billion worth of suspected money laundering and financing of terrorist activities last year alone. That total is more than double the one a year earlier. Of that, $256 million is tied to suspected terrorist financing. Of the 143 reports FINTRAC made to law enforcement agencies, there have been no convictions. The Auditor General in 2004 suggested that allowing more information to flow to law enforcement authorities would help in investigating these suspicious activities. This bill provides these powers.

This bill is largely derived from recommendations made by the Department of Finance under the previous Liberal government's tenure. Money laundering and terrorist financing have economic and social costs against which we must remain vigilant. In order to achieve this, we must continually re-evaluate how we monitor and disclose suspicious transactions as the nature of these activities changes and continually becomes much more sophisticated. The government must move to stem the tide of money laundering and terrorist financing and at the same time protect the privacy rights of law-abiding Canadians.

Given that both the Auditor General and the RCMP have expressed concern that exemptions for the legal profession leave serious gaps in this legislation, I am concerned with the government's decision to remove the obligation for legal counsel to file reports of suspicious transaction with FINTRAC.

Our colleagues in the other house recently tabled a report entitled “Stemming the Flow of Illicit Money” which made several recommendations, some of which are in the bill and some of which are not. I would also like to see the Senate Standing Committee on Banking, Trade and Commerce recommendations for Parliament to have greater powers to also scrutinize FINTRAC.

One of the main concerns I have is that we are not bringing some of the businesses that currently do not fall under FINTRAC's guidelines into the bill. As the banking, trade and commerce committee reported, the RCMP believe that as stricter regulations are imposed on businesses in the financial services industry, criminals are seeking alternative methods of laundering the money accumulated from criminal activity.

Various characteristics of the precious metals, stones and jewellery industry make it highly vulnerable to criminal activity. The RCMP has identified these businesses as a likely place for criminals to launder money, yet this bill does not require them to report suspicious transactions as financial institutions must. I strongly recommend that all of us in all parties work together to make sure that we amend this law so that it reflects clearly what is needed.

Another weakness that has been identified by both the Auditor General and the RCMP is that lawyers are not required to disclose suspicious transactions to FINTRAC. This is, of course, another delicate balancing act. On the one hand, we need to give law enforcement the ability to track down those who launder money, using a lawyer as a financial intermediary. On the other hand, we have the issue of protecting solicitor-client privilege. This bill strikes a compromise between the two and I look forward to studying whether this compromise is appropriate under the circumstances.

Another major concern with the bill is that it does not adequately ensure that the privacy of Canadians is protected. The bill will allow FINTRAC to share greater amounts of information with law enforcement agencies. This is necessary in order for those agencies to fully investigate suspicious transactions and to eventually prosecute where appropriate.

Another part of the bill that does not work as effectively as we would like to see is to provide increased protection for the privacy of Canadians, such as by creating an independent review commission with the powers and authority to conduct random reviews of an agency's files and an agency's operations. The Auditor General has also recommended that some such commission be created. In her 2003 report, she wrote:

The government should assess the level of review and reporting requirements to Parliament for security and intelligence agencies to ensure that agencies exercising intrusive powers are subject to levels of external review and disclosure proportionate to the level of intrusion.

It is extremely important that be put in place as this legislation goes forward for the review. Essentially, if we are going to give FINTRAC the ability to share more of Canadians' personal information with bodies like the RCMP and the Canada Border Services Agency, then should we not also move to ensure there is sufficient oversight of FINTRAC to ensure that the information that it is disseminating is appropriate?

As I said before, this is by and large a good bill. It has certain omissions and weak points and I feel that we should all work to amend it at the committee stage, but overall it will provide the police and prosecutors with some of the tools they require to combat money laundering and terrorist financing.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, I thank my colleague from York West for her excellent presentation.

I would like to ask her the following question. Given that, under this law, officials will be able to disclose information to other authorities, does the member not see that there should be a committee of judges or another type of filter so that information that could possibly ruin an individual's life is not disclosed to persons who do not necessarily understand their responsibilities or to certain people who could use the information to undermine another group?

It is possible to imagine that such practices could be used in the Canada of the future. According to the member, what type of filter would suffice in this case?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, clearly that is one of the reasons why we recommend it go to committee and that we all work together as parliamentarians to ensure the privacy of Canadians is respected. There is lots of opportunity for work at the committee level to ensure that is exactly what results by the time it comes back here.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, I did not hear in the hon. member's speech mention of credit unions, the implications for small institutions and the impact it would have on their budgets.

What does the hon. member think about that and could she maybe comment on the negative situations these credit unions and small institutions could find themselves in?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, part of the reason we are sending the bill to committee is to ensure we look at a lot of avenues, including how do we ensure credit unions and those kinds of organizations are able to deal with the kinds of changes being recommended in the bill.

Credit unions are have been very successful in the country. I bet if we took a poll of the 306 members here, many of us, at some point or another in our lives, have participated and have been members of various credit union.

As we move forward on the legislation, it is important to ensure that this protection is there and that what we bring in is not so cumbersome it becomes impossible for smaller banks and credit unions to work with and work through. However, we also have to remember how important it is for us to ensure that we do our jobs as parliamentarians, which is to ensure the safety of Canadians and many other people when it comes to financing terrorist activities through a variety of ways.

I am quite sure people would be aware of our trusting attitude toward credit unions and because of that, they would not be watched quite as carefully. We need to ensure we bring things in place that allow us to achieve our goal in terms of money laundering, but that do not become impossible for our various institutions to deal with.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, when my hon. colleague was in government, I know she did a lot of work in this area and provided a lot of constructive solutions to deal with an issue that the RCMP quite correctly said was a major plague within our country and an impediment to its ability to provide justice to Canadians.

I am very interested to know the conundrum that occurs when we try to pursue this, and that is the issue of privacy rights. We need to have a balance, and the member, quite correctly, brought this up in her speech and delved into it. However, I would be interested in knowing her further views on ensuring there is an adequate balance between the rights of privacy for the individual and the rights of our collective to pursue those individuals who are abusing this right in the interest of criminal activity.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, it is always interesting and difficult to have that balance. I have often had people come in and complain because they were trying to send money back to whatever country and they were being asked a lot of questions, and so on and so forth.

It is important that we find the balance. Hence this is the reason the work of the committee on the legislation will be so important. We need to ensure that money is not being sent abroad for terrorist activities. At the same time, we also have to ensure that we do not intrude too far into rights and privacy rights of Canadians.

I believe we all value and share the charter and its protection and that we want to be respectful of people's privacy. It is quite a difficult challenge, with whom is it safe to share information and with whom is it not safe to share information. As Canadians, who do we want the government to share our public information with, and with what agencies?

It is really important that we work carefully on these issues, that we spend a lot of time with this at committee to ensure we do it right and that Canadians understand why it certain parts and amendments will have to go through.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, earlier when I spoke, one of the questions I was asked, and I would be interested in the member's point of view on this, was on the utilization of the proceeds of crime.

As federal legislators, we make amendments to the Criminal Code, but it is up to provincial and regional policing authorities, as well as federal policing authorities, to carry it out. If they do not have the resources to deal with these things, the suggestion was that a greater degree of the proceeds of crime could be made available to those police forces that detected and exposed this kind of thing.

My concern was that there may be some inequities across the country, but I think the principle is probably valid, in terms of ensuring as much as possible those proceeds are available for the policing authorities at all levels of government across the country.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, as a former member of the Toronto Police Services Board, we often dealt with this issue. When we are dealing with large urban centres, especially, a lot of policing time goes into apprehending criminals and various items like houseboats, trailers, homes and so on. A lot of money is spent by our local police forces both in the investigative time and numerous other things they have to do to lay charges against individuals.

I have always felt that money from the sale of those individual items should go right into the local police services. It is a much more effective way of acknowledging they put out all this money. Currently they have to wait several years for any money spent as part of an investigation to come back to them.

Granted there would be an imbalance from our large urban centres to some of the smaller centres but, clearly, proceeds of crime, things that can be liquidated, should go back into the local police services so they can have more money to do additional investigations and ensure the safety of our community.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak on 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.

At the outset, I will illustrate for a moment why this is so important. Let us look at a place half a world away where our troops our dying. When President Karzai was here, he said “if the poppy crop is not eradicated, then the poppy crop will destroy Afghanistan”. I believe all members remember that. If we do not eradicate the poppy crop in Afghanistan, it will eradicate Afghanistan.

Why is this important and how does this connect to the bill. The poppy crop is a substrate upon which narcotics are made, in particular heroin. That heroin is processed and sold. It goes on to cause untold hardship, pain, suffering and sometimes death within our country and with many other countries in the world. That heroin also enables organized crime gangs to make enormous amounts of mount.

We could put an advertisement on television, “Use heroin and support the terrorists”. If people use heroin, they are providing the money that enables our troops to be killed in Afghanistan.

Drugs are one of a number of products that are used by organized crime and terrorist organizations. They provide the funds that enable them to buy weapons and infrastructure to carry out terrorist activities against us and our allies, which cause untold instability in various parts of the world.

In fact, if we do not get a hold on the poppy crop in Afghanistan, the mission there will never be successful. That is why it is critically important, and we have heard this recently, that the west not change its approach to drugs. However, if we go in and wipe out vast poppy crops, it leaves farmers with absolutely nothing. That is why some of those people are joining what we call the neo-Taliban. This is not the same group of Taliban that was there in 2001-02. It is a new group. Part of that group is made up of farmers who have had their livelihood removed. As a result, they have joined the Taliban and taken up arms against us.

The failure to deal with the poppy crop not only is a failure to deal with the economic wherewithal to engage in actions against our troops and against our allies, but it also is a poison and does not enable Afghanistan to get on its feet. My personal view is that we need to call a regional meeting to deal with the poppy crop. I personally hope the crop is bought, destroyed and other alternative crops are given to those farmers.

Unless we can provide those farmers with an alternative form of living, when we go in there and wipe out their livelihood, then we have left them with nothing for themselves, their families and their communities. If we do not, they go from being a subsistence farmer to abject poverty. With the Taliban holding out its arms and also some money for these farmers, they take up arms against us.

This is the on the ground reality of why the bill is important and why it is important for us to deal with the poppy crop and the drug trade.

Let us look at South America and Colombia where cocoa is produced. Colombia is the primary cocaine producer in the world. The United States spends $800 million a year in its so-called war against drugs. It is a war that will never be won.

Organized crime gangs and terrorist groups are the ones that feed off the products of cocaine, the FARC, the ELN, the paramilitary. Those groups are not ideological groups. They are organized crime groups, organized militias, that make money from the drug trade. Interestingly enough, those groups in South American are also attached to al-Qaeda. They are all connected again to what we are talking about here, which is trade in money laundering, the trade in various products.

Another point I want to talk about is gems. If we look at west Africa and countries such as Sierra Leone and Liberia, where people live in abject poverty, diamonds can be found on the ground.

One will find in these areas organized crime gangs working with various local warlords, so to speak, in order to take those diamonds, pay a small amount of money and earn huge profits from them. The reason why diamonds are used is that they are very easy to move around. They are very difficult to track. It is very easy to sell them for very high amounts of money, with huge profit margins.

That is what these organized crime gangs rely on. They rely on huge profit margins on products that can be bought and sold very easily to make the large amounts of money that are used in their nefarious activities.

According to the police, the most effective way to deal with these issues and with organized crime gangs, which I would put at the forefront for us domestically, is to cut the money supply out from underneath them. That is what this bill does.

My colleague articulated a number of our party's concerns with the bill. It is not that we oppose the bill. We would like to strengthen it.

What the United States did was very bright. The Americans adopted something called the RICO amendments, the racketeer influenced and corrupt organizations charges. What they recognized is that the best and easiest way to undermine organized crime gangs is to go after the money. If we go after the money, we weaken them.

When the Liberals were in government we actually put together RICO-like amendments for our country. We have proceeds of crime legislation. I think it needs to be strengthened and I would encourage the government to look at it to ensure that we have the ability to take away those resources.

I will give members one example. There is one thing that can be done. If people have made vast sums of money and have been charged and convicted of organized criminal activity, then the onus should be upon their shoulders to prove that their large wealth was actually generated from honest, law-abiding means. If we actually make the change that the police have requested, then we will be able to go a long way in removing the resources that tend to continue to circulate through organized criminal activities.

Getting back to trafficking in gemstones, one of the things the Liberals put together, and which the government should look at, is the Kimberley process. Through the Kimberley process, it was the first time we were able to deal with blood diamonds. Not only diamonds are addressed, but other semi-precious gemstones that can be easily trafficked are as well. We have to do a better job of strengthening the Kimberley process so we are able to ensure that legal gemstones are traded, bought and sold but that we stop the illegal trade in so-called blood diamonds and other gemstones.

It is critically important that this is dealt with, because countries like Liberia, Sierra Leone and Angola will never be able to get on their feet unless those natural resources are actually used and bought and sold legally, with the moneys poured back into the countries that produce them. In that way, these countries can build up their primary infrastructure, health care and education for the benefit of the people. If that does not happen, the people of these countries will continue to live in abject poverty and will never be able get out of their current poverty cycle.

The other issue relates to oil and what is called bunkering. What is happening now in west Africa from Angola to Nigeria is that oil is extracted, but ships come alongside where the oil is produced and a certain percentage of the oil is put onto these ships and disappears. Oil is bought and sold illegally and those moneys can then be used to fund terrorist activities. It is a very lucrative area that is not explored, but unless we deal with this, it is going to be a major problem.

A lot of those moneys wind up in Swiss bank accounts and in other areas where the tax regimes are not as transparent as they are in countries such as ours. These regimes are very opaque even though they are those of western countries. I would encourage the government to work with other countries that currently have opaque tax regimes, to put together and establish agreement on a rules based mechanism and standard in which we could have more transparent tracking of these moneys as they wind themselves inexorably through our current international financial mechanisms.

Again I want to emphasize that a failure to do this will ensure that we will never ever get a handle on organized crime gangs, organized criminal activity, and terrorism, because these three areas rely on these transactions, on taking a product that is sometimes illegal, like narcotics and other illegal drugs, selling it for a vast profit and then laundering those moneys through legal means.

That is why Bill C-25 is so important. That is why my party is supporting it to go to committee so that we will be able to make amendments to strengthen those areas that we feel need to be strengthened.

It is important in dealing with this issue that we also listen very closely to the police. In my province of British Columbia, more than 60% of the illegal activity comes from organized criminal activity, and a large chunk of that comes from the trade in illegal drugs. I know that the government likes the approach of the so-called war against drugs, but I would submit that it is a so-called war that cannot, has not and will not be won. It simply cannot be won.

There are now only two countries in the world that officially support the so-called war on drugs approach: Canada and the United States. If we look south of the border and at the objective parameters on where this war has taken the Americans, what we see is very stark and very frightening. For example, the U.S. has a higher use of both hard and soft drugs. The Americans have higher incarceration rates, higher disease rates, higher death rates, higher sickness rates, higher HIV rates, and higher rates of hepatitis B and hepatitis C, both connected with intravenous drug use.

Why is that so? If the war on drugs was so successful, why has this approach, by any objective parameter, been an abysmal failure? Because it does not work.

So where does it work and how can it work? I think we have to take an approach that marries two groups together. The first is the provisions in this bill that could be strengthened to enable us to track, undermine and undercut the trafficking and money laundering associated with these substances. The other is a rational medical approach toward substance abuse. Where can we find that? We can find that in northern Europe. We can find that in Germany. Frankfurt has an outstanding model. The Swiss have some very good models, as do the Swedes and the Finns.

All of those countries have procedures and integrated approaches to substance abuse that are rooted not in a judicial approach but a medical approach. They involve the following components. They involve harm reduction and, yes, safe injection sites. They involve detox and psychiatric counselling. They involve training programs. They involve housing issues. They involve work.

If we take a look at all those components, we will be able to have an effect because, interestingly enough, many of the people who have substance abuse problems, particularly those we find on our streets, have what we call dual diagnoses. A lot of them also have psychiatric problems, so we cannot disconnect the people who have substance abuse problems from those who have psychiatric problems. They are connected.

To take a judicial approach against those people, I would submit, is not only factually incorrect and will be ineffective, but also it is inhumane. These people do not need to be thrown in jail. They need a medical approach that is going to help them and deal with some of the underlying problems they have, problems that can be dealt with.

I would encourage the government, which in my view has taken a very blunt and very ineffective approach against this problem, to open its eyes, deal with the statistics, look at the facts and adopt those solutions that will have an effect. All of us in all of our communities know that this is an issue that affects all of us, and none of us want to see people get into this death spiral with the use of illegal substances that can ruin lives. All of us have seen on the streets in our communities people whose lives have been destroyed, for many reasons, and it does not have to be so.

It is incumbent upon us to work with the provinces, the managers of health care, in order to be able to use and take that integrated approach. I personally would like to see that in my community, in Victoria on Vancouver Island. I would like us to be able to take on this integrated harm reduction strategy and work on the housing issues, the medical issues, the psychiatric issues, the counselling issues, the skills training issues and the work issues that are at the forefront of solutions to address this problem.

In my city of Victoria, this is a very big problem. The police are looking for help. The police recognize that this is the route to go. The police want help on this. Their hands are open, as are those of the community. I would encourage the government to listen to us and work with us to implement those solutions that will work.

In closing, for the sake of our troops in Afghanistan, for heaven's sake let us start to deal with the issue of the poppy crops in Afghanistan, in a rational approach. The poppy crop can be removed, but we have to replace it with alternative livelihoods. Afghanistan and the southern area used to be a very--

[The Deputy Speaker, Bill Blaikie]

Order, please. The hon. member does have five minutes remaining in his 20 minutes, so he might want to pick up where he left off when we go back to orders of the day.

We have now reached the time for statements by members. The hon. member for Peace River.

The House resumed 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.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to speak to Bill C-25, a bill to deal with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act.

The bill builds on the work that our government did in 2001 when we introduced the legislation, which was passed by the House and the other place, and when the government set up FINTRAC, the financial transactions agency that serves as the financial intelligence unit for various reports that come in from financial intermediaries to track the suspicious transactions that might be laundering activities.

This bill proposes certain amendments to the act and basically builds on a number of themes. The financial action task force, which is the body that sets the standards in the fight against money laundering, came out a number of years ago with 40 recommendations with respect to standards in the fight against money laundering. Given the advent of 9/11 and other events, it added to its 40 recommendations on money laundering a further nine special recommendations on terrorist financing.

What these amendments do in part is they bring the legislation up to date with that but they do a number of other things, and I will be happy to speak to those as well.

Before I do that, perhaps I could talk briefly about the size and the scope of money laundering. People at home might be watching this debate and wondering what money laundering is. Money laundering has many definitions but the one I prefer is the one that says that money laundering is the processing of criminal proceeds in order to disguise their illegal origin.

If someone were a drug dealer or if someone were involved in planning a terrorist activity, the person would be disinclined to take the money he or she had received and put it into a bank account under his or her own name. Criminals try to launder the money through legitimate businesses. They reinvent themselves into some legitimate purpose and deposit the money and try to launder it in that way.

We do not want to have that type of activity in this country, nor is it something we want happening worldwide. It is an international problem of significant scope. In fact, KPMG, the consulting firm, estimates that money laundering is somewhere in the region of $500 billion to $1 trillion annually. I would suggest that is probably on the low side. I think it is probably more than that.

Who are the money launderers? We have basically four major categories. The first one relates to major drug crimes and we are talking primarily about drug related activities. The second category would be terrorist financing, which would be financing done before a terrorist event or after a terrorist event where money would either be accumulated to enact a terrorist event or it would be money that would be used to pay off various terrorists who had committed these offences. The third category is money laundering related to corruption. This is a very serious problem worldwide. The fourth category is money laundering related to tax evasion.

There are many ways and reasons to launder money, which is why our government brought in the anti-money laundering legislation in 2001 and that is why we set up FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada. That organization began making disclosures in the year 2002.

It is quite appropriate for Parliament to review the act. In fact, a committee reviewed FINTRAC in 2005 to see what it was doing, what it was proposing to do, how successful it had been and what kind of changes it wanted to see. There was also a review recently in the other place on money laundering, and the Auditor General completed a report not too long ago.

It is quite timely that the government has introduced the amendments. Generally, I would support the way it is proceeding, but if the bill passes the House and goes to committee, there are a number of issues the committee should examine in some more detail.

We are very privileged that the presidency of the Financial Action Task Force, which is the standard setter in the fight against money laundering, has been assumed by a Canadian, a very distinguished public servant from the Department of Finance, a gentleman by the name of Frank Swedlove. This gives us a unique opportunity to be engaged in the fight against money laundering.

What is FINTRAC? The Financial Transactions and Reports Analysis Centre of Canada is an arm's length agency. It is required to collect all the reported suspicious transactions by financial intermediaries. In 2001 the government defined suspicious transaction as predominantly a cash or near cash type of definition. Any transaction over $10,000 is automatically deemed a suspicious transaction. Then many other types of transactions are covered by guidelines and some of the professional people look at these types of questions. A number of guidelines published by FINTRAC and the Department of Finance define transactions that might be suspicious even though they are below $10,000.

In fact, in its recent report, FINTRAC reported that it had disclosed more than $5 billion in suspicious deals to law enforcement and CSIS last year, which was twice what it had reported in previous years. We are seeing that the laundering of money is not diminishing. It is increasing and it is of particular concern now with the threat of terrorism before us.

I had the great honour, from 1999 to 2001, to serve as the parliamentary secretary to the then minister of finance, our colleague, the member for LaSalle—Émard. I was very proud that we were able to get the support of the House and the other place for the legislation and to establish FINTRAC.

I have also been quite involved with the Global Organization of Parliamentarians Against Corruption. This organization started in Parliament. People from around the world were invited and GOPAC was formed. GOPAC sees its mission as not only being the fight against corruption, but also the fight against money laundering. A large conference was held in Tanzania at which some 300 parliamentarians from 50 countries around the world attended.

I would like to indulge the House, if I may, with the resolutions that came out of the conference with respect to money laundering. I will not read them all. There are six of them. I will highlight some of the more critical ones.

First, it is to seek observer status within the Financial Action Task Force. The request has gone out to Mr. Swedlove to get observer status for the Global Organization of Parliamentarians Against Corruption.

Another resolution was to look at the benefits of an international convention against money laundering and also to encourage GOPAC members of the importance of the 40 + 9 recommendations published by the Financial Action Task Force.

Another resolution was that GOPAC begin a dialogue with the offshore and international banking communities to better understand what the communities were doing to fight money laundering in the financing of terrorism and also to develop protocols specifically on fighting the laundering and recovery of corrupt money and assets. That was done, particularly in the context of GOPAC, which is concerned mainly with the fight against corruption.

In bringing forward this legislation in 2000-01, it was quite a challenging balancing act, balancing the need for Canadians to deal with the blight of money laundering and the risks to which Canadians were exposed while at the same time balancing the privacy needs of Canadians.

There were questions around what kind of information FINTRAC should disclose to law enforcement and to CSIS and on what terms they should disclose it. There were many issues like that.

There was the question of how we define financial intermediaries. We had a lot of presentations by various interest groups, whether they were the lawyers, the accountants, the department stores or the churches. They said they wanted to be exempt because, after all, they were not laundering money.

The tack the government took was to say that it would not create any exceptions, because money launderers being what they are, the money launderers would go to the areas where there were gaps or where exceptions were made. The decision of the government was to set a very big net and basically capture everybody in the sense of reporting requirements, and then, over time, evaluate what could be released and what would not.

As part of this amendment to the bill before us today, there is something that is quite a concern. I am not sure that there are many answers other than what is proposed here, but I think it would be a good discussion within the committee.

So that Canadians understand what is being done here, the lawyers in Canada were included in the reporting requirements of FINTRAC. In other words, any suspicious transactions had to be reported by the legal community to FINTRAC. The law societies of Canada, or whatever organization represents them in this case, took this to court. The court agreed with them that it would create a problem with respect to solicitor-client privilege.

So what these amendments do is take the lawyers out of that reporting requirement. There are ways that the Department of Finance is working to incorporate lawyers, but it is an area of great concern, because once the launderers realize that there are gaps, that is where they will go. We know that, and I will pick this up again--

[The Deputy Speaker, Bill Blaikie]

Order, please. I have the feeling that members are disappointed that the House is about to adjourn, but the hon. member will have eight minutes left in his speech when we resume debate on the bill.

It being 6:30 p.m., this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6:30 p.m.)

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.