Finance Committee on Nov. 2nd, 2006

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

Thank you very much, sir.

[The Chair, Conservative, Brian Pallister]

As we continue, we'll perhaps conclude with Mr. Dykstra.

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

I'll do my best to be brief and concise, Mr. Chair.

Mr. Boyce, I caught a comment that you made just at the end, in terms of “risk-based”, and you associated that with customers. It was right at the end. I don't know whether you were using written words to speak from, or whether they were off the top of your head. If they were off the top of your head, I apologize, but the comment did catch my attention. I just wondered if you could clarify that.

[Lawrence Boyce]

Some types of customers may be at a higher risk. They can be judged, and there can be guidelines and what not as to what type of customers.... A lot will have to do, for example, with the type of business they're in, the size of the transactions they're doing, or country of origin. All these factors can be judged in terms of whether or not this is a customer who presents a high risk of being involved in money laundering transactions.

For example, I presume that if you found a customer whose business was exporting ether to Colombia, you might think they might be a bit of a high-risk customer. You can therefore tailor monitoring. You can get additional customer due diligence on that kind of customer. On the other hand, if your next-door neighbour whom you've known for thirty years comes to open an account with you, then you might consider them to be somewhat of a lower-risk customer and want to put lower kinds of customer due diligence obligations in that case.

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

It's interesting, and this seems to parlay into my next question. Senator Grafstein made a comment with respect to putting guidelines into the legislation. I suppose the other lawyers sitting at the table may in fact have a different perspective on that. At least from my perspective, the difficulty I see with putting guidelines into legislation is this.

Whenever you have a court challenge, where it questions the integrity of a piece of legislation and you end up in court, it's much easier from a guideline perspective if the guidelines are within the regulation so as to be able to change the regulation within the context of the ministry. If you enshrine guidelines into legislation, you in fact end up challenging legislation. Therefore, if it's found to be or deemed to be unconstitutional or incorrect, it ends up back in the House of Commons and you have to go through the whole process of revisiting the piece of legislation.

The concern I have, Senator, is that if we are to go down the road you're suggesting, we'd end up passing this bill, it would end up being challenged, and we'd end up back in the House of Commons and in the Senate versus being able to work within the confines of the ministry to change the piece of regulation that may have been deemed to be incorrect within a court of law.

Could either one of you comment?

[Jerahmiel Grafstein]

Obviously, from my perspective, I don't want to needlessly put people to court challenges if the legislation falls below a constitutional or other standard. I fully accept what you've argued. Some regulations are easier to change than others.

But the purpose of the law is to establish clear-cut values and principles within the law. I would think that if you can't establish the guidelines, you could have words to indicate that this is the standard you want the regulations to at least meet. It's a more complicated piece of drafting, but I've seen it.

You have to go back to Driedger and the great lawyers who have advised Parliament about drafting. Simplicity is important, but the principles embedded into the legislation are also important. Again, it's the tool you choose to accept.

But I think this is such a horrendous problem, and it's growing, that we need to send a clear-cut message to all Canadians and everybody who is in Canada that this is falling below our standards. I think you can probably accomplish both with clear-cut principles in the legislation, as well as variable regulations to deal with the problems.

[The Chair, Conservative, Brian Pallister]

We'll conclude with Mr. Pacetti.

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

Thank you, Mr. Chairman. I have two quick questions.

One is for Mr. Burbidge. In your brief, you spoke about the government having consulted with a lot of the stakeholders, organizations, or groups, but the problem is that nobody's really sure what's going to be in those regulations. Do you have any information on what's going to be in the regulations? Consulting is one aspect, but what about the actual regulations?

[Nicolas Burbidge]

I understand the point you're making. But in the consultations that Finance has been conducting--and we've been participating as a government body in those discussions--my sense is there's a fairly clear sense of the direction the regulations are pointing to. Furthermore, the standards to which the government is working are the standards that everybody's been referring to, which are the standards of the FATF.

In terms of the goal of those regulations, I would say the overall objective of those consultations and the goal of the government is fairly well understood at this point. Although as I confirmed, of course, we are still waiting for some actual drafts, I think it's the end process. The private sector has been engaged in this process for many weeks and months.

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

Thank you.

On that note, Mr. Grafstein, if the government listens to all the consultations and all the stakeholder organizations, are they going to be able to appease you or make you happy? The question is on the pillar aspect, where you were talking about having each pillar, each organization, and each sector addressed separately. If we're talking about the automobile dealers, precious metal dealers, foreign exchange dealers, money services, and pay lenders, in your opinion, will the government be able to achieve this?

[Jerahmiel Grafstein]

Well, I think it's up to the government. I don't want to prejudge the government. This is complicated.

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

It won't be the first time.

[Jerahmiel Grafstein]

Yes, but I'm a sensitive person. I respect the division of powers between the two Houses. I think the government has to opine and the Commons can then enter its decision. When you are all finished, we will give it sober second thought, and we'll try to do it as quickly and as efficiently as possible.

But this is a complicated piece of legislation, and quite frankly, I'm delighted that we're getting at it. The sooner we get at it the better, but I would take the time. My experience in Ottawa is very simple: when you rush to judgment, you're always wrong--always wrong--and you pick up the pieces later.

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

Thank you, Mr. Grafstein.

Thank you, Mr. Chairman.

[The Chair, Conservative, Brian Pallister]

Thank you, Senator, and I hope that you deliberated on that before you pronounced that judgment.

[Jerahmiel Grafstein]

No, I didn't, but I'll try to next time.

[The Chair, Conservative, Brian Pallister]

Okay, thank you, sir.

Thank you to all the members of our panel this afternoon. We very much appreciate your time and your being here. It means a great deal to the people of Canada. Thank you again.

Committee members, we will reconvene Tuesday morning at 10 o'clock, and of course we look forward to that.

We are adjourned.