Finance Committee on May 15th, 2006

[Garth Turner, Conservative, Halton, ON]

We're trying to ascertain the dollars that will go to you folks to do what you do, so it's important for us to know what you do and the level of threat that exists, as revealed through financial transactions that may pose terrorist threats to Canada.

[Sandra Wing]

The 24 cases of suspected terrorist activity financing that we disclosed in 2004-05 would support that there is terrorist activity financing in Canada.

[Garth Turner, Conservative, Halton, ON]

Okay. You still haven't told us what areas or given us--

[Sandra Wing]

Do you mean what areas of Canada?

[Garth Turner, Conservative, Halton, ON]

You told us about a whole range of things that you monitor, from casinos to real estate transactions, so where in the economy are you seeing this?

[Sandra Wing]

Terrorists and those who raise funds in support of terrorism use a variety of means. They use the legitimate financial services sector and the unregulated financial services sector. If I went down the list, I guess I could try to tick them off. Of all the sectors we monitor or that report transactions to us, the vast majority are moving through the legitimate financial services sector--so the deposit-taking institutions.

We have not conducted that study. We have not looked at it from the point of view of what percentage of which financial sectors they're moving through.

[Garth Turner, Conservative, Halton, ON]

I was just interested in whether it was real estate, casinos, financial institution deposits by terrorist organizations, or--

[Sandra Wing]

The vast majority of it is through the deposit-taking institutions--so the banks, the credit unions, and the caisses populaires.

[The Chair, Conservative, Brian Pallister]

Your time has elapsed so we'll go over to Mr. Crête now.

It's your round, sir.

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

Thank you very much, Mr. Chairman.

In your documents, you stated that you disclosed 142 cases regarding approximately $2.1 billion to law enforcement and the intelligence organizations.

Do you know how much of this money has been recovered?

[Paul Dubrule]

No. This question should be put to the police departments. FINTRAC is responsible for forwarding financial information. That is therefore not part of our mandate.

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

After you have determined that some $2 billion in suspect money is in circulation, do you not think it would be relevant to find out whether or not the system allowed for the recovery of a certain percentage of this amount, so that you can assess the effectiveness of any operation and ascertain whether or not any changes need to made, either at your level or somewhere else?

[Paul Dubrule]

Under the act that governs us, dozens of legal proceedings have been launched and in many other cases, convictions have been obtained. However, we do not know whether there have been any seizures of goods in any particular case. That is not our role.

As Ms. Wing said earlier, we work in cooperation with the police departments to obtain information and statistics in order to establish how many files have been processed. This financial information helps us instigate proceedings and conduct seizures, if necessary.

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

Would you find it useful if, either through a regulation, an act or another statutory instrument, there was an obligation to forward this information to you in order to measure the effectiveness of your work?

[Paul Dubrule]

Yes. Our act forbids us from formally indicating that we have forwarded the information in a specific case. We find out from the media that Mr. So-and-So was convicted and we know that we disclosed the information, but it stops there.

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

What mechanism, be it legislative or regulatory, should we create to rectify the situation? You forward the names, investigations are launched, and, finally, a decision is rendered or an obligation is imposed, but you do not get this information.

What do we need to do to ensure that you obtain this information automatically?

[Paul Dubrule]

First of all, there is the legislative aspect, and secondly, the cooperation between ourselves and the police departments. This is a relatively new product, which has only been in existence for three years.

We try to cooperate in order to find out whether such information helps them do their jobs, on the one hand, and, on the other hand, what they do. Did a seizure take place? Was the individual convicted for money laundering or any other crime? We do not have access to this information because the police do not forward it to us.

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

Based on what you're saying, we do not necessarily have to change the regulations. The Minister of Justice or the Solicitor General, at either the federal or provincial level, could write to the police departments to encourage them to forward such information to FINTRAC.

[Paul Dubrule]

Indeed, it would be very useful, for instance, to find out the grounds resulting in a given individual's conviction and how much money was seized so we could simply determine exactly what occurred.

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

Mr. Chairman, if I still have some time remaining, I would like to give my colleague an opportunity to ask a question.

[The Chair, Conservative, Brian Pallister]

I am sorry, sir: there is some time remaining, but you cannot use it now.

For clarification, I recall the Auditor General's report of, I think, 2004 alluding to the challenges posed to your organization and others because of the lack of ability to access financial records from legal counsel. I'm curious as to where that discussion is now.

It strikes me that if lawyer-client privilege can be claimed, the first place I'm going, as a potential terrorist or as a participant in organized crime activity, is to a lawyer. I want to know where that discussion is, from your perspective. Would you like to elaborate to the committee on that?

[Paul Dubrule]

She wants the lawyer to answer the question? That's perfect.

[The Chair, Conservative, Brian Pallister]

Don't claim lawyer-client privilege.

[Paul Dubrule]

Yes, I'll claim privilege and not say anything.

In its white paper released last year, the Department of Finance indicated it was the position of the government, and remains the position of the government, that all financial intermediaries should be subject to reporting requirements under this legislation. At the same time, the government acknowledges that there are peculiarities in relation to solicitor-client privilege and to how lawyers could be subject to the legislation when they are acting as financial intermediaries.

As a result, there have been ongoing discussions with the Federation of Law Societies of Canada in an attempt to come to a meeting of the minds to show that lawyers can in some way be subject to some mechanisms similar to those set out in the legislation for other financial intermediaries, be they accountants or bankers, so that we can demonstrate to the FATF, among others, who have said that lawyers should be subject to this type of regime. The government is working with the Federation of Law Societies of Canada to come to a resolution of this issue.

[The Chair, Conservative, Brian Pallister]

Would you like to comment as to what degree you feel the lack of disclosure requirements is a problem for the efficacy of your organization and others?