Declaration of Emergency Committee on May 3rd, 2022

[The Joint Chair, NDP, Matthew Green]

Good evening, friends. I'd like to call this meeting to order.

Welcome to meeting six of the Special Joint Committee on the Declaration of Emergency, created pursuant to the order of the House on March 2, 2022, and the Senate on March 3, 2022.

Today's meeting is taking place in a hybrid format pursuant to the order of the House dated November 25, 2021.

I'd like to remind all those present in the room to please follow the recommendations of the public health authorities as well as the directives of the Board of Internal Economy to maintain health and safety.

Should any technical challenges arise, please advise me, as we may need to suspend for a few minutes to ensure that all members are able to participate fully.

Witnesses should also be aware that translation is available through the global icon at the bottom of your screen.

We have with us today, from the Department of Finance, Isabelle Jacques, assistant deputy minister of the financial sector policy branch; Julien Brazeau, director general of financial crimes and security division of the financial sector policy branch; and Manuel Dussault, senior director for framework policy, financial institutions division of the financial sector policy branch.

Also, from the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, we have Barry MacKillop, deputy director, intelligence; and Donna Achimov, deputy director and chief compliance officer in the compliance sector.

Each department will have five minutes for opening remarks.

Let's begin with the Department of Finance.

The floor is yours for five minutes, please, for opening remarks.

[Isabelle Jacques, Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance]

Good evening, Mr. Chair, and thank you for inviting me to appear before you today.

As you mentioned, my name is Isabelle Jacques. I am the assistant deputy minister of the financial sector policy branch at Finance Canada.

I'm here today to explain the measures contained in the Emergency Economic Measures Order.

As you know, the order was adopted by the government pursuant to the Emergencies Act. It was in force upon its registration on February 15 until its revocation on February 23. The order was not retroactive.

The first category of measures in the Order required financial service providers to cease providing financial services to any individual or entity engaged, directly or indirectly, in activities prohibited by the Emergency Measures Regulations. The Order referred to such an individual or entity as a “designated person”.

The industry told the Department that their actions taken in response to the Order resulted in the freezing of approximately 280 financial products, such as savings and chequing accounts, credit cards and lines of credit, for a total of approximately $8,000,000, including $3,800,000 from a payment service provider.

We understand that financial service providers undertook these actions based in large part on information provided by the RCMP. The Order authorized law enforcement agencies, and other government institutions, to disclose information to financial service providers to apply the Order.

In addition, the order required financial service providers to determine on a continuing basis whether they were in possession of a designated person's property and to disclose to the RCMP or CSIS the existence of such property and any information they could have had about associated transactions.

The measures in the order were targeted exclusively at designated persons, and financial service providers were required to resume providing financial services when a designated person ceased engaging in activities prohibited by the regulations.

I also understand that financial service providers began unfreezing accounts, credit cards and lines of credit on February 21, after receiving additional and updated information from the RCMP. All accounts frozen in response to the order had been unfrozen by February 24.

The other broad category of measures in the Order was specifically aimed at crowdfunding platforms and payment service providers that were not subject to the obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

The Order extended certain anti-money laundering and anti-terrorist financing requirements, such as registration with the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, and the reporting of suspicious and large value transactions, to crowdfunding platforms and some payment service providers that were in possession of a designated person’s property.

The measure reduced the risks that these platforms and payment service providers could receive funds from illicit sources, and increase the quality and quantity of financial transaction information received by FINTRAC, which would in turn make more information available to support investigations by law enforcement.

Thank you.

We will be pleased to answer your questions.

[The Joint Chair, NDP, Matthew Green]

Thank you very much.

We'll now proceed with the opening statement from FINTRAC.

[Barry MacKillop, Deputy Director, Intelligence, Financial Transactions and Reports Analysis Centre of Canada]

Thank you, Mr. Chair.

I want to thank the committee for inviting FINTRAC to participate in your review of the declaration of emergency.

I would like to begin by explaining briefly the Centre’s role in protecting Canadians and Canada’s economy.

FINTRAC’s mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities.

FINTRAC was established as an administrative financial intelligence unit and not a law enforcement or investigative agency. We do not have the authority to monitor or track financial transactions in real time, freeze or seize funds, ask any entity to freeze or seize funds, or cancel or delay financial transactions. This did not change under the Emergencies Act.

As Canada’s anti-money laundering and anti-terrorism financing regulator, we are responsible for ensuring the compliance of more than 24,000 businesses that have requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Businesses subject to this act are required to fulfill a number of obligations, including reporting certain transactions to FINTRAC, such as international electronic funds transfers and suspicious transactions.

With the reporting that we receive, we are able to generate actionable financial intelligence for Canada’s police, law enforcement and national security agencies. Last year our financial intelligence contributed to over 376 major, resource-intensive investigations and many hundreds of other individual investigations at the municipal, provincial and federal levels across the country.

Mr. Chair, under the emergency economic measures order, certain businesses were required to take specific actions in relation to the financial activity of individuals who were engaged in the blockades. For example, crowdfunding platforms and payment service providers were required to register with FINTRAC when they were in possession or control of property that was owned, held or controlled by an individual or entity that was engaged in an activity that was prohibited in the emergency measures regulations. These same businesses were also required to report certain types of transactions when thresholds set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations were met.

Following the invocation of the Emergencies Act, FINTRAC was contacted by a number of crowdfunding platforms and payment service providers to discuss registration. In addition to engaging in these preregistration discussions, we also prepared guidance for businesses potentially affected by the Emergencies Act. We modified our own IT systems to allow for the registration of these new entities.

Given that it normally takes about 30 days to complete the registration process with FINTRAC, we did not have the opportunity to formally register any entities in relation to the Emergencies Act prior to its revocation.

In terms of our role as Canada’s financial intelligence unit, I am prohibited under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act from discussing any information that we receive or any specific financial intelligence that we disclose. I can say, however, that we were actively engaged throughout this period in fulfilling our mandate and supporting the money-laundering and terrorist activity financing investigations of Canada’s police, law enforcement and national security agencies.

I can also say that it was clear that businesses were very much aware of the Emergencies Act and the need to be extra diligent in relation to their anti-money laundering and anti-terrorist financing obligations.

Thank you, Mr. Chair. We are available for any questions you may have.

[The Joint Chair, NDP, Matthew Green]

Thank you very much to both for your presentations and opening remarks.

I would like to provide the preface that in these upcoming rounds, you may find from time to time that parliamentarians or senators may interject to redirect you to another question. It's not that they're being rude; it's just that they have a very limited amount of time.

Should you not be able to answer a question in its fullness, you can always follow up in writing. We'll do our best to avoid scenarios where people are talking over each other. As we found out in previous rounds, it really puts a lot of strain on the interpreters.

To the folks around the table, I think the last meeting was made better by the chair when we had an acknowledgement of a minute left. For the purpose of this meeting, I'll hold up a folder to indicate that you have a minute. That will let you know that it's time to wrap up your remarks. I'll also state that there will be discretion. If there is a fulsome answer being provided, I will, to the best of my ability, allow that question to end.

If that's okay, we will proceed now with the opening round of questions, beginning with Mr. Motz.

Mr. Motz, the floor is yours for five minutes.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Thank you, Chair.

Thank you, witnesses, for being here. I will fire off some rather rapid questions at you.

Mr. MacKillop, your direction to investigate under the Emergencies Act was given to you by whom?

[Barry MacKillop]

We have no investigative powers.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Okay, I used the wrong choice of words. Who gave you the direction to pursue matters under the Emergencies Act?

[Barry MacKillop]

The direction already existed in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, sir, and that was not changed by the Emergencies Act.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Was there any evidence of money laundering under the Emergencies Act that you found with the protest?

[Barry MacKillop]

There was no money laundering per se during the emergency measures that I could see, but sir, the reporting would have been reported specifically on money laundering or terrorist financing.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Did you find any evidence of terrorist financing activities with the protest under the Emergencies Act?

[Barry MacKillop]

Well, I can't speak to any specifics. I can't really disclose anything in terms of specifics on any activities that may or may not have taken place.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

I'm not asking for specifics. I'm asking whether you found any terrorist activities. You've testified at another committee before, and you said you did not.

Did you find any evidence of insurrection funding activities by the protesters during this particular Emergencies Act invocation?

[Barry MacKillop]

Nothing that was reported to us, no.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

All right.

Ms. Jacques, you explained that you were looking for illicit sources of financing. What is that illicit source of financing?

[Isabelle Jacques]

Well, no, we were not looking for illicit sources of financing. What we did was put measures in place that would help in case there were illicit sources of financing.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

Did your department consult with the Department of Justice on the charter risks involving by freezing individual bank accounts without a court order?

[Isabelle Jacques]

Yes, we did.

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

And?

[Isabelle Jacques]

As you know, I'm not at liberty to provide legal advice that was provided to us, but certainly, the emergency order became law, and as for—

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

So you can't. Did the DOJ express concerns with respect to section 8 of the charter that guarantees protection against unreasonable search and seizure?

[Isabelle Jacques]

I cannot provide details of advice provided to us as clients while—

[Glen Motz, Conservative, Medicine Hat—Cardston—Warner, AB]

I would question whether you were a client.

It would appear to me that you've been specifically instructed by the PMO, the Minister of Finance or the Minister of Justice to invoke solicitor-client privilege in response to these questions or invoke the principle of cabinet confidence.

Would that be an accurate statement?

[Isabelle Jacques]

No, that would not.

I used to be a lawyer with the Department of Justice, and I'm aware of the boundaries with respect to solicitor-client privilege.