Finance Committee on Oct. 31st, 2006

[Diane Lafleur]

All I can tell you is that a FATF representative is to appear before you Thursday morning. I will tell him that this is of interest to you and that he should be prepared to answer your questions on the current procedures and mechanisms, in order to alleviate your concerns.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Very well.

Mr.Paquette spoke earlier talked about tax havens. He wanted to know how this bill would eventually affect our ability to spot suspicious transactions conducted in tax havens.

I would like to hear from the people whose work is to uncover this type of crime. If we look at the problem from another angle, the fact that we tolerate tax havens and...

[The Chair, Conservative, Brian Pallister]

Monsieur Del Mastro, five minutes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you, Mr. Chair.

Madam Ablonczy, one of your comments was that terrorism costs money. We know that. To carry out their goals, they need funding. We announced $64 million so that the government can combat terrorism--financing and money laundering in general.

You talked about how it would bolster existing capacities. Could you expand on that a little? What type of capacities are we talking about? Is this for additional officers? Is it for new equipment? Why type of capacities have we invested in?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

As I mentioned, there are a number of ways this money will be of assistance in the fight against money laundering and terrorist financing. One way of course would be to add to the number of officers who are active in this field, doing investigations and gathering information. It will also assist the Border Services Agency that is on the look out for large sums of money being brought into the country illegally. It will help FINTRAC upgrade some of its equipment and processes to put more resources into the regime they're responsible for. All of these parts of the regime will be enhanced by the additional funding.

[Dean Del Mastro, Conservative, Peterborough, ON]

Great. It sounds like money well spent.

Ms. Lafleur, you were asked earlier about where this bill would rank. You said that you hoped it would rank somewhere near the top. In your personal opinion, how does this bill stack up against other G7 nations in terms of preventing terrorist financing and money laundering?

[Diane Lafleur]

I don't want to prejudge the outcome of the Financial Action Task Force evaluation, so that's a tough question for me. There are challenges that are unique for Canada among its FATF partners. We have much stricter privacy laws in Canada, for example. And the charter sometimes imposes some challenges on us. That said, this legislation goes a long way in meeting the revised international standards. We have seen a number of countries be assessed to date. The outcome of those evaluations gives us reason to believe that we will in fact do quite well in our own evaluation.

[Dean Del Mastro, Conservative, Peterborough, ON]

We had a number of questions with respect to attorney-client privilege this morning. I don't know that it's necessarily been called exactly that, but that's what the conversation is really about. You mentioned potential challenges with respect to the charter. On what potential grounds could we see legal challenges to this bill? Do you foresee any that would bring challenges from lawyers with respect to attorney-client privilege?

[Diane Lafleur]

Given that the legislation is going to carve out the legal profession from suspicious transaction and other prescribed transaction reporting, and given that this was essentially the crux of the legal challenge, we are certainly comfortable that the measures for the legal profession in respect of client ID and record keeping are sound. At least that's the legal advice we have been getting.

[Dean Del Mastro, Conservative, Peterborough, ON]

Did the additional funding contributed towards FINTRAC help us crack down at all on the potential illegal use of tax havens?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

If there is a belief that tax evasion is an element, the information is shared with the Canada Revenue Agency . The CRA would then take whatever steps they think are appropriate. That would include the kind of activity you're talking about.

[Dean Del Mastro, Conservative, Peterborough, ON]

Great.

I have nothing further, Mr. Chair.

[The Chair, Conservative, Brian Pallister]

Thank you very much.

We'll continue with Mr. McCallum. You have five minutes.

[John McCallum, Liberal, Markham—Unionville, ON]

Thank you, Mr. Chair.

I think we all agree that we're trying to achieve a balance between security needs and privacy concerns here. Just as a footnote to Mr. Dykstra, I think privacy concerns relate to the freedoms of all Canadians, not just the rights of criminals. All Canadians are assumed not to be criminals unless proven otherwise.

I also think it's the case that this bill strengthens the security side of the equation in various ways. My general question would be whether there are corresponding strengthenings of the privacy side. If there are not, maybe a bill that was previously balanced is now unbalanced. Compared with the previous bill, are privacy concerns stronger in this bill?

[Diane Lafleur]

We have maintained that we believe there are already very strong privacy concerns in the legislation.

[John McCallum, Liberal, Markham—Unionville, ON]

So you've strengthened the security side of it, but there's no change to the privacy side. Is that right?

[Diane Lafleur]

We have not made any changes in respect to the privacy side.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

It's important to point out that the changes in the bill are a result of new recommendations from the FATF, the international body that Canada helped found. The main purpose of the bill is to bring those recommendations into effect in Canada, while still maintaining a strong privacy protection element.

[John McCallum, Liberal, Markham—Unionville, ON]

But you're still saying it's status quo on privacy and more action on security. That's not necessarily wrong, but it does change the balance from what was in the previous bill.

So on Senate recommendation 14, I think you said the new bill was consistent with this. The Senate recommendation is that there be “an annual report to Parliament...undertaken by the Security and Intelligence Review Committee”. Is this in the bill?

[Diane Lafleur]

No, it's not.

[John McCallum, Liberal, Markham—Unionville, ON]

I thought you said the Senate recommendations were...well, so that one is not.

[Diane Lafleur]

It's not.

[John McCallum, Liberal, Markham—Unionville, ON]

Why not?

[Diane Lafleur]

FINTRAC is already subject to extensive oversight and reporting requirements. It tables an annual report in Parliament, as you know. It submits a departmental performance report annually, a report on planning and priorities. It's subject to the privacy legislation. It has to report on its compliance with the Privacy Act and the Access to Information Act. It's subject as well to Treasury Board-mandated evaluations that have been taking place every five years.

[John McCallum, Liberal, Markham—Unionville, ON]

Then why does the Senate make this recommendation?