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

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I want to build on the question my colleague, the hon. member Mississauga South, asked. He made reference to an exchange that took place yesterday between he and I about whether we should not expand in Bill C-25 the idea of reverse onus on the seizure of assets purchased from proceeds of crime. Would my colleague not agree that it makes sense in very narrow circumstances?

In the case where a person is a known member of an illegal organization or a criminal organization, for example, the Hell's Angels, and that person has assets such as a luxury mansion, two cars in the garage, the speed boat, all the trappings of luxury, but has had no visible means of income for the last 20 years, why should we not be able to seize those assets and put the onus on him to demonstrate that he did not purchase them with the proceeds of crime? The province of Manitoba introduced legislation like this which would be law had it not been blocked by two Liberal members of the legislature.

Why should we not use this opportunity to give police and law enforcement officers the tools they need to do their jobs? When we see glaring cases of wretched abuse by known criminals, why should the burden of proof be on us to prove beyond a doubt that they bought that luxury home or whatever with the proceeds of crime? Let us put the reverse onus on them and make them prove they did not, that they earned it honestly.

[Thierry St-Cyr, Bloc, 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.

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.

[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 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.

Canadian Heritage

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Mr. Speaker, I want to thank the member for Bonavista—Gander—Grand Falls—Windsor and the member for Saint-Lambert for the information they are providing us today.

I was a volunteer member on the Workers Arts and Heritage Centre in Hamilton. I was really struck when I heard government members talking today about the fact that money was available, but people were not sophisticated enough to access it. It strikes me that it would be the government's responsibility to help people who are not sophisticated and need access to their government and government programs.

I was extremely disappointed to hear a government member today comparing Bill C-25, Bill C-26 and Bill C-27. These are very serious pieces of legislation. The member was saying this should be minimized debate. It sounds to me as though the government started searching for programs it wanted to cut and unfortunately it chose this one.

[Jim Abbott, Conservative, Parliamentary Secretary to the Minister of Canadian Heritage]

Mr. Speaker, I was wondering if the member might want to comment on the fact that our colleague from the Standing Committee on Canadian Heritage, the member for Saint-Lambert, has brought forward his concurrence motion at this particular time.

I have the highest respect for the member for Saint-Lambert and for his dedication to this question. Considering the fact that the Minister of Canadian Heritage and I on her behalf have made it perfectly clear that we are working toward a new museums policy, I am wondering about the timing of this debate. Today we were supposed to be debating Bill C-25 from the Minister of Finance, a bill regarding the proceeds of crime and money laundering, an important issue, Bill C-26 from the Minister of Justice, an act to amend the Criminal Code (criminal interest rate), and Bill C-27 from the Minister of Justice, an act to amend the Criminal Code (dangerous offenders and recognizance to keep the peace).

We are trying to make Canada a safer place. I am wondering if the member for Peace River would agree with me on the timing of this debate. While I respect the member's intent of trying to keep the pressure on the government, nonetheless, we have to make sure that we are keeping Canada safe, not the issue that the member has brought forward with this motion.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act

[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--

[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.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Kamouraska for his sensitivity to the needs of these smaller institutions and the burden that the bill might place on them.

As I was speaking to the bill, I received an email from a general manager of a credit union on Vancouver Island. He has pointed out that his small credit union may have to deal with costs of up to $200,000 per year just to track, administer and file the necessary paperwork stemming from Bill C-25.

His second point, which I would like my colleague's view on it, is that in a small neighbourhood community institution, he resents that he may have to turn in activities of his friends and neighbours, which may not quite meet the standards or may seem suspect to some from thousands of miles away. He is not comfortable having to report private information to the government in his function as the general manager of a credit union.

My colleague mentioned the Privacy Commissioner. Is he concerned as well that neighbours may be called upon to blow the whistle on other neighbours?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

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.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, I do believe that criminals who are found to be involved in terrorist activity or in some type of activity that would define them as being in contravention of the law. We do need to investigate what we do with the property that they own.

Like many Canadians, as I am sure we would both agree, criminals should not be able to retain the proceeds of crime. I do not know if Bill C-25 is the right place to put in that measure but I would be supportive of a measure that would require criminals who could not prove that they got the assets in any other way to give up those things.

I believe this government is championing the reverse onus. We have seen it in the dangerous offenders legislation. We are thankful for the member's support on that legislation which would require criminals to prove they will not continue to involve themselves in this type of activity.

The Conservative government has been very active on the file of getting tougher on crime, putting the onus on the criminal and protecting the citizens of our country. The measures the member talks about would protect the citizens from any future types of those activities. I also agree with him that we need to ensure that crime does not pay any more.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I would like my colleague to go a little further in his views on Bill C-25 than just the speech that he was given to read, which I think represents his party's views.

I would appreciate his own personal views on this idea. In the last Parliament and, in fact, in the Parliament prior to that, a private member's bill was floating around dealing with the seizing of assets that were the proceeds of crime. I believe it was under the name of my colleague from the Bloc the last time, Richard Marceau, and prior to that it was a Canadian Alliance member, Paul Forseth.

Those were good ideas in that they would have allowed the government to not only seize bank accounts full of ill-gotten gains, but seize the actual proceeds of crime that may have bought all the toys, the trappings of crime that we see a lot of the high profile criminals use.

Would the member agree that Bill C-25 should be extended to allow this concept, that where it can be clearly demonstrated that the person is a member of a criminal organization, such as the Hell's Angels, Hezbollah, whatever is on that list of criminal organizations, and the person has been convicted of an offence, why should we not be able to seize their assets and put the reverse onus on them that they should need to prove that they did not get it through the purchase of ill-gotten gains, that they had a legitimate means of income? Would that not be a good idea?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-25 at second reading.

The bill proposes to update legislation that will help fight those who would use our financial system to launder money and then divert that money to fund terrorist activities.

We have, unfortunately, seen so many horrible examples of how far terrorists can reach and how close to home they can get. We saw what happened in New York City, London, Madrid, Dubai and Toronto.

We were all shocked this past June when our RCMP, CSIS, the OPP and other Canadian police forces combined their forces to arrest a number of alleged members of a terrorist cell here in the greater Toronto area. The accused are alleged to have been planning a series of major terrorist assaults on targets in southern Ontario, targets that are alleged to have included the House in which we now sit.

Activities like this threaten our safety, our security and very much our own way of life. Canada is a country on the move. We are a country with a G-7 leading economy and under this government a steadfast commitment to meeting our international obligations. We take our global responsibilities very seriously. We know that terrorists need money and that is why we are introducing this bill to make it harder for them to get it.

Canada's financial sector is internationally recognized as stable, safe and sound. Our Minister of Finance knows that it is his responsibility to ensure that it continues to stay that way. That is why we have introduced this bill. The amendments it contains would strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to ensure that Canada continues to be a global player in combating organized crime and terrorist financing.

This year Canada assumed the presidency of the financial action task force, the intergovernmental body that develops and promotes national and international standards to combat money laundering and terrorist financing.

Holding the FATF presidency is another example of Canada's commitment to national and international security. The financial action task force plays a critical role in stopping terrorist financing activity and money laundering by promoting policies designed to starve these organizations from the funds they use to fuel them.

Terrorist and criminal organizations are becoming increasingly sophisticated in their attempt to move, conceal and launder funds through financial systems and other means. Despite the safeguards in place, terrorist organized crime and other criminal elements continue to find ways to take advantage of our financial system. That is why we are debating Bill C-25 today. The proposed amendments in the bill would improve the government's ability to act quickly and decisively against potential abuses of the Canadian financial sector.

I can assure the House that Canada's new government is being relentless in its efforts to combat money laundering and terrorism financing. One of the tools that we are using is FINTRAC, a system that is widely considered to have leading edge, analytical and technological capacity. This agency receives, analyzes, assesses and discloses financial intelligence on suspected money laundering, terrorist financing and threats to the security of Canada.

Since FINTRAC began making disclosures in early 2002, it has provided law enforcement and intelligent agencies, key financial intelligence on money laundering, the financing of terrorist activities, and the threats to Canada's security by analyzing financial transactions, reports and other sources of information.

FINTRAC recently released its annual report and revealed that it has tipped off law enforcement in Canada and the Canadian Security Intelligence Service to more than $5 billion in suspicious deals last year. It is more than double the figure of the year before. FINTRAC has only been in existence for two years, but it is obvious that its work is paying off.

FINTRAC is a member of the Egmont Group of Financial Intelligence Units whose purpose is to enhance cooperation and information exchange in support of the anti-money laundering and terrorist financing regimes in member countries.

The establishment of the Egmont secretariat in Toronto is yet another example of Canada's commitment to national and international security, collaborative solutions to global threats, and the need for the international cooperation and institutions.

Since taking office, Canada's new government has made safety and security of our citizens, and of global citizens, our priority.

In our first budget in May the Minister of Finance announced significant new funding to enhance the work being done by Canada's financial intelligence unit, the financial transactions and reports analysis centre in Canada, the Royal Canadian Mounted Police, the Canadian Border Security Agency and the Department of Justice.

Bill C-25 would build on these measures and make Canada's overall regime consistent with international standards. The proposed measures in this bill would make Canada's anti-money laundering and anti-terrorist financing regime more effective by making it consistent with the new FATF standards.

Canada has committed to implementing the 40 FATF recommendations on money laundering as well as nine special recommendations on terrorist financing. The hon. members will know that the interim report of the Standing Senate Committee on Banking, Trade and Commerce is calling for tougher measures to deal with money laundering and terrorist financing.

Bill C-25 responds to the Senate committee recommendations. The proposed measures in Bill C-25 would respond to recommendations made in the 2004 Auditor General's report and the 2004 Treasury Board evaluation of the regime.

One of the most important amendments proposed in Bill C-25 is a proposal to enhance client identification and record-keeping measures for financial institutions and intermediaries.

Under this legislation, these institutions would be required to undertake enhanced monitoring of high-risk situations. For example, businesses such as banks, insurance companies, securities dealers and money services would be required to identify and monitor the transactions of foreign nationals who hold prominent positions, along with their immediate families.

Amendments in Bill C-25 would require the reporting of attempted suspicious transactions to FINTRAC. The bill would create a registration regime for money services businesses.

As we know, these businesses are largely unregulated. With the passage of the amendments in this bill, FINTRAC would act as a registrar and would maintain a public list of registered money services businesses and foreign exchange dealers.

As recommended in the 2004 Auditor General's report, and at the request of law enforcement, this bill would enhance the information contained in FINTRAC disclosures to law enforcement and security agencies on suspicions of money laundering and terrorist financing. This would increase the value of FINTRAC disclosures, ultimately leading to more investigations and eventual prosecutions.

Bill C-25 proposes to strengthen penalties in order to allow FINTRAC to better enforce compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

While current legislation only allows for criminal penalties if the act is contravened, Bill C-25 proposes to create an administrative and monetary penalty system where fines could be applied for lesser contraventions of the legislation. Another component of the regime is the reintroduction of client identification and the record-keeping requirements for legal counsel.

The government is working with the legal profession, including notaries in Quebec, to finalize the details of these requirements and to ensure adequate compliance and enforcement. Information sharing is crucial in the coordinated fight against money laundering and terrorist financing.

Bill C-25 proposes to 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 will now be able to receive terrorist property reports under the United Nations Act regulations.

All of these steps and all of our efforts add up to a better and a safer world for all of us, a world where our financial systems are used as they were intended, to create better opportunities for our citizens and a greater prosperity for our nations.

Criminals do not stand still, so neither can we. As they adapt, we must adapt and as we adapt they do adapt. We must be vigilant and relentless in our pursuit of ideas, innovations and ways to cut them off to make it harder for them to finance their activities.

Through more funds, improved legislation and a relentless resolve to shoulder our global responsibilities, Canada is serving notice that we will put these criminals out of business at every chance we get. I urge all hon. members to accord this bill the quick passage that it deserves.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Mississauga South for sharing with us his views on Bill C-25 and am interested in the summation of his speech, wherein he made reference to the idea that we should explore the concept that it should not be just the cash or bank accounts that may have been developed by ill gotten gains that we should be looking at, but perhaps we should be looking at other assets as well.

I would like to share with him that I believe strongly that we, the government and the law enforcement agencies, should in fact be able to seize other ill-gotten gains if it is in the context of this bill, which says it can be done if the person has been convicted and is known to be a member of an illegal or criminal organization. In those circumstances, if they happen to have what is ostentatious wealth, I suppose, and if they cannot show any proof of where those assets came from, why should we not be able to seize them and put the reverse onus on that individual to prove to us that the assets were in fact purchased through work?

I do not believe that is an infringement on anybody's civil rights. It is simply asking the question. If a person is living in a million-dollar mansion, has had no visible means of income for the last 20 years and is known to be associated with the Hell's Angels, then that person should show us where he got the money to buy that mansion. If it was from some rich uncle who died and left the money to the person, then he should show us the will. It should not be that difficult. We would take the person's word for it. But why should we not be able to seize that mansion, sell it for a million dollars, put that money back into law enforcement and use the resources to bust more criminals?