Finance Committee on Oct. 31st, 2006

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

I think the balancing act, so to speak, is to put the emphasis on suspicious transactions, and those are fairly clearly outlined. Even then, FINTRAC holds that information very closely guarded, and only discloses key identifiers and publicly available information. If a law enforcement agency wants additional information, they must go to court and actually get a court order requiring FINTRAC to provide additional information. So there is the filter of a court process to ensure that anyone's privacy is breached only when there is good and sufficient grounds to do so.

Once a person has been convicted, of course, that's a different issue, and I don't think you're really asking about that.

[Rick Dykstra, Conservative, St. Catharines, ON]

As for the four enhancements that we've done to Bill C-25, how does this put us with respect to our colleagues around the table at the UN? Have we significantly advanced? Is there some satisfaction that we're on the cutting edge, or at least that we're keeping pace with what we should be doing internationally?

[Diane Lafleur]

We will be assessed against the FATF's standards in 2007, and we are hopeful that we will be among the leaders in crime prevention.

[The Chair, Conservative, Brian Pallister]

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chairman, and thank you to the parliamentary secretary. I guess this is your first official meeting.

I have a quick question on the Auditor General's report dated November 2004, chapter 2, “Implementation of the National Initiative to Combat Money Laundering”. The first issue was regarding legislative limits. Mr. Dykstra asked the question, but I think it was a question that was more politely worded. There was a problem with what FINTRAC may disclose, and I'm not sure the bill addresses it.

The report says:

FINTRAC may disclose on suspicious transactions to so-called "tombstone" data: account numbers; names of the account holders; and places, dates, and values of transactions that have occurred. When a disclosure is related to an ongoing investigation, these data can be useful in corroborating findings or providing new leads.

But then it goes on to say:

In short, as the system now works, FINTRAC's disclosures can contribute to an existing investigation but generally generate new ones.

I'm not sure how the legislation would correct that.

[Diane Lafleur]

The legislation would allow FINTRAC to disclose additional information to law enforcement agencies. This would make their disclosures more useful to law enforcement. For example, if a financial institution were to submit a suspicious transaction report, FINTRAC can disclose the grounds for suspicions.

Previously, FINTRAC wasn't allowed to pass on that information to law enforcement. But under this legislation, it would be able to share the rationale or explanation of what was suspicious that came from the financial institution.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But the changes would implement only the actual suspicions. You're only transferring account numbers. Are you still going to be allowed to transfer names of account holders and all the backup with that?

[Diane Lafleur]

Yes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Does this apply only to information from the financial institutions?

[Diane Lafleur]

Financial institutions and other reporting entities.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

I don't want to get too technical, but where is this in the bill? I can wait for the answer.

[Lynn Hemmings, Chief, Financial Crime - Domestic, Financial Sector Division, Financial Sector Policy Branch, Department of Finance]

We can find it for you.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What happens when FINTRAC wants to cooperate with the other agencies, whether it be with the RCMP or CSIS? Is there an overlap or duplication of work? That's what I understand was happening before, when we had the Auditor General in during the last parliamentary session.

[Diane Lafleur]

FINTRAC is not an investigative body, so there is no overlap with law enforcement. It receives transaction reports, voluntary information reports, from law enforcement and sometimes from its international partners. It conducts analyses of the financial information. Where it has reasonable grounds to suspect that there's been either money laundering or terrorist financing, it turns this information over to the appropriate law enforcement agency. That's where the law enforcement agency takes over the investigation.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But the law enforcement agency will never turn around to FINTRAC and ask for an analysis. They will do it themselves, when FINTRAC may already have done the analysis.

[Diane Lafleur]

What can happen—and maybe this is where the confusion is coming from—is this: if the RCMP already has an investigation under way, it may voluntarily disclose information to FINTRAC.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But they won't give FINTRAC specifics. They'll just say they have an investigation under way. So FINTRAC, without knowing it, may already be doing their work on that case.

[Diane Lafleur]

The voluntary information reports are actually quite specific.

[Lynn Hemmings]

Yes, they are.

[Diane Lafleur]

They are specific in the information that they are provided. For example, they might refer to a specific individual. They might ask, do you have information in your data bank about somebody? Of course, FINTRAC, before it discloses the information, still has to apply the same test of reasonable grounds to suspect .

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

The other problem I have is that I think this bill comes from putting two acts together, one to combat money laundering and one to combat terrorist financing, if I'm not mistaken. I think my colleague John McKay alluded to this.

Are we using the same tools for two different items, two different aspects? Terrorist financing would work in one fashion, whereas even if the money is funnelled through a charity, or they're raising money through a charity, I don't think a money launderer would want to use a charity, because they're trying to launder money.

[The Chair, Conservative, Brian Pallister]

Mr. St-Cyr, you have five minutes.

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

Thank you, Mr. Chair. Before the end of the round of questions, and before we leave the room, I would like to raise a procedural question.

Thank you for being here. I have two specific concerns regarding this bill. Like several of my colleagues, I would first like to speak about the protection of privacy. I believe this was something that was raised by all parties. Mr. Dykstra, among others, asked whether we should protect the privacy of criminals and to what extent we should do so.

In my opinion, that is not the problem. Rather, the problem is that we do not know whether the people are criminals or not. That is why we protect people's privacy. You cannot label someone a criminal and share information about that person without taking a number of precautions.

You said that the act provides measures and penalties in the case of unauthorized disclosure of information. What mechanisms for protecting privacy do you plan on implementing in the various organizations?

As Ms. Ablonczy said earlier, it is not enough for a piece of legislation to prohibit the unauthorized disclosure of information. There also needs to be a system to ensure that people who handle such information will not disclose it and that, if they do, we will be able to find out and take appropriate action.

[Diane Lafleur]

The provisions in the bill are very clear: if FINTRAC employees who handle information without authorization are subject to very serious criminal penalties. In addition, if they are obliged to appear before the courts, they are not subject to...

They are immune from subpoenas.

In other words, they cannot be forced to disclose protected information, even before the courts.

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

Very well, but that is in terms of legislation.

In my previous career, as an engineer, I managed databases. If we did not want people to disclose or consult information they did not need as part of their duties, we would implement mechanisms to that end and monitor the people consulting the registry. This is what is currently being done with the registry at the Société de l'assurance automobile du Québec; access is being controlled so that unauthorized people who consult files or disclose information can eventually be identified.

It is not enough to have legislative provisions. I want to know the concrete mechanisms you plan to implement to control monitoring, if you will.