Evidence of meeting #56 for Access to Information, Privacy and Ethics in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was fintrac.
A recording is available from Parliament.
Conservative
Matt Jeneroux Conservative Edmonton Riverbend, AB
I believe the line of questioning was about once you find who this is. That doesn't mean it's in FINTRAC. It could be somebody outside of FINTRAC. Your point is taken on whether or not it was someone in FINTRAC.
However, I'm trying to understand the process here. Once this is done, and you find out it's someone either within or outside FINTRAC, then what happens? Is there any reporting mechanism anywhere else? Does it stay within FINTRAC? What are the next steps?
Director, Financial Transactions and Reports Analysis Centre of Canada
This may stay within FINTRAC, because we have an internal process. People have obligations under our legislation and our code of conduct. Depending upon what we find, and the conditions under which the information was leaked, if it was leaked, then we'll decide what the next steps are. But there is a process within the organization and within the legislation that provides significant tools in terms of penalizing people, in terms of charging people. There are tools that we can use.
Director, Financial Transactions and Reports Analysis Centre of Canada
This has never happened before as far as I know.
Director, Financial Transactions and Reports Analysis Centre of Canada
Since I've joined FINTRAC, it's never happened.
Conservative
Director, Financial Transactions and Reports Analysis Centre of Canada
For almost five years.
Conservative
The Chair Conservative Blaine Calkins
I remind colleagues that we should keep the questions in line with the spirit of this committee's purview, which is access to information, privacy, and related questions. As parliamentarians we can second guess all we want the effectiveness of the legislation, but that purview would actually fall under a different committee that would have a different mandate.
Could colleagues keep that in mind with their questions, please.
Mr. Blaikie, did you have anything else you would like to go for?
Mr. Bratina, please.
Liberal
Bob Bratina Liberal Hamilton East—Stoney Creek, ON
Just briefly, this is a huge old company, a multinational. I looked it up. It has $700 million in assets, 34,000 employees. They must know what they're doing. What didn't they do in terms of not complying with their obligations? Were there oversights? When this was investigated, what was the explanation, if you can share that, for how these obligations were not met? Was it at the managerial level, that somebody had a document that said $20,000 went to Lebanon, but didn't report it?
Really, what happened?
Director, Financial Transactions and Reports Analysis Centre of Canada
Barry may provide more detail, but there were basically four things. The first is that given the size of the organization and the maturity of Manulife, we had expected that their compliance framework would be more robust than it was, in terms of policies, training, procedures, reviews of their risk profile more often by senior officials. That was one component.
The second component was that they did not report a suspicious transaction to us on a very specific individual who was well known. Given the fact that they knew the individual was well known, and the fact that they had reported that already to law enforcement agencies both in Canada and in the U.S., that suspicious transaction report from an intelligence standpoint could have been useful to us. They did not report that. They did not report, I don't know how many, but a certain number of large cash transactions of $10,000 and more, and they did not report a certain number of electronic funds transfers in and out of Canada of more than $10,000.
Those were the four main components, main violations, if you wish.
Liberal
Bob Bratina Liberal Hamilton East—Stoney Creek, ON
What would the Manulife people say as to how that happened and how it won't happen again? What would their approach be?
Director, Financial Transactions and Reports Analysis Centre of Canada
Well, they had already put in place, between the time we conducted the examinations and the time we penalized them—because we have to analyze the results of the examination—a number of mitigation measures to make sure it would not happen again.
Will it happen again? The next examination will reveal that, or not.
Liberal
Bob Bratina Liberal Hamilton East—Stoney Creek, ON
Were you satisfied, when you saw the explanation of those measures, that this looked like they were seriously addressing the non-compliance?
Director, Financial Transactions and Reports Analysis Centre of Canada
Yes.
The fact that they did not...warranted the million dollars that they had to pay as a penalty.
Liberal
Bob Bratina Liberal Hamilton East—Stoney Creek, ON
Finally, you're saying that this cascaded through the industry, that everyone has taken notice and pulled up their socks, so to speak.
Director, Financial Transactions and Reports Analysis Centre of Canada
Yes.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
I want clarity on how you arrived at the settlement to not disclose the name of the bank publicly. It was originally Manulife that sought a sealing order of some sort from the Federal Court, on an interim basis, before the full case was resolved. They won that, which gave them leverage to negotiate a settlement with you, and ultimately the settlement that you arrived at was to not disclose the name.
That's generally the sense I have from—
General Counsel, Financial Transactions and Reports Analysis Centre of Canada
Yes.
They achieved a decision from the court that the process of appeal would be confidential, which meant that until that process ended, there was no possibility of naming—
General Counsel, Financial Transactions and Reports Analysis Centre of Canada
It was then a decision of whether we would fight that appeal.
Liberal
Nathaniel Erskine-Smith Liberal Beaches—East York, ON
Or, would you carry it out in a private way in court and win, and then disclose it after the fact? That would have been an option as well.
General Counsel, Financial Transactions and Reports Analysis Centre of Canada
Yes, knowing that.... I will use one example of a case that is public, so I can speak to it, the British Columbia Lottery Corporation, which is in litigation with Interac over a penalty. That case started in 2010, and it is still before the Federal Court. In that case, that entity was named, because there was a leak from the other end of the fact of the penalty.
It just goes to show the nature of the litigation process.