Outside or inside Canada?
Evidence of meeting #48 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was lawyers.
A recording is available from Parliament.
Evidence of meeting #48 for Finance in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was lawyers.
A recording is available from Parliament.
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
Outside or inside Canada?
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Well, within the foreign subsidiary of the Canadian financial institution, so I would assume outside Canada, coming into Canada. Is that what you're referring to here?
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
That's correct. Our subsidiaries in foreign lands will simply report suspicious transactions to the equivalent of FINTRAC in those countries.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
What's the difference--you'll have to give me a little history here--between a member being part of the task force and a member not being part of the task force?
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
The difference is in numbers, sir. To the best of my knowledge, there are only 31 countries and two organizations, including the European Union, that are members of the Financial Action Task Force, as opposed to over 100 countries that have adopted the FATF standards.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
I see. Okay, I'm starting to understand here. In other words, if you're registered with the task force and you're complying internationally, those foreign subsidiaries should fall under the same relationship as the Canadian banks themselves?
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
Yes.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Okay.
Then just quickly, could you expand a bit on the part about the authorized foreign insurance companies being exempt from the extraterritorial effect of Canada's anti-money-laundering and anti-terrorist-financing legislation.
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
That's the other side of the coin. Those are foreign insurers authorized by OSFI to carry on business in Canada. Why would Canadian law apply to operations of a parent company abroad? A branch is an extension of the parent company in Canada.
Most of our foreign-owned insurers come from either the States or Europe. The United States has anti-terrorist legislation, and so do most of the countries in Europe, so they're already subject to the client identification requirements, record keeping, and reporting requirements.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
So the parent company should not be subject to the requirements unless they're doing business in Canada?
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
That's correct. Foreign banks are exempted. We're simply asking for equal treatment for foreign insurers.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
So in other words, the way the bill reads now, it would actually include parent companies. The application of Bill C-25 would in fact mean they would have to comply.
11:50 a.m.
General Counsel, Canadian Life and Health Insurance Association Inc.
Yes.
11:50 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
All right, thank you.
Ms. Tromp, I have a couple of questions.
One of the commitments we made in our budget with respect to donations is the ability for companies or individuals to donate securities to a charity. I wondered about the impact of what you're suggesting, the overlap of where donations may or may not be subject to a review. I don't know whether you've thought about that, and I don't mean to put you on the spot, but I'm just a bit concerned around that area.
If someone were to make a substantial donation to a university, let's say, or a not-for-profit organization, where do your concerns lie within that sort of donor capacity?
11:50 a.m.
Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
I'll try to answer that question based on what I'm understanding it to be.
I suppose, very generally speaking, to the extent that the changes have led to an increase in giving, we monitor charities through their annual returns and through a risk-based approach to audit, and of course we look at applications for registration. In our course of monitoring charities, where there is something that doesn't look right, whatever that is--
11:55 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
You're getting at my point on what I think is going to happen, especially from what we've seen early on in this fiscal year. There has been significant uptake and increase in the contributions made. So in some charities you're going to see huge increases in donations that have been made to those, based on what was in the budget.
11:55 a.m.
Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency
We will have to take that into account, obviously, in the process of reviewing. That wouldn't be a sole indicator of whether there was something to be pursued. It may or may not be something we need to look at.
11:55 a.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Okay, thanks.
Mr. Fox, I have a quick question, as I'm sure I don't have much time left time.
Dealing with the point you made with respect to bringing regulations back here to the committee, it leads me to ask: were you involved in the earlier consultations of how the bill would actually come forward? How would you suggest that you be involved there or that these regulations come back and you folks have a chance to be involved in that again?
November 2nd, 2006 / 11:55 a.m.
Regional Vice-President Canada, Western Union
Thank you.
We were involved both with FINTRAC and with the Department of Finance in discussion on our industry specifics. Given Mr. Bernier's point, which we noted as well, there were 54 mentions of the prescribed regulations, with no supporting documents to help us understand what they will be. We would really like to be involved in the process of reviewing the regulations and perhaps bringing them back to this committee so that we are all comfortable with them.
11:55 a.m.
Conservative
11:55 a.m.
NDP
Judy Wasylycia-Leis NDP Winnipeg North, MB
Thank you, Mr. Chairperson, and thanks to all of you.
I think I'll talk first to Mr. Timmins. It is my understanding from the Auditor General's report of 2003-04 that one of her concerns was whether or not we were getting value for money. We're talking about a $31 million budget annually, yet it didn't seem to be translating into actual information being used for investigation purposes or laying charges. I know that was a few years back, but I don't think there was much change in the information for 2004-05 and 2005-06.
Do you think the legislation will do anything to improve the reporting and the usage of the information so it goes somewhere and actually leads to investigations and charges?
11:55 a.m.
Assistant Auditor General, Office of the Auditor General of Canada
I think it would be difficult for me to comment without having done additional work. That would require follow-up audit work to see whether it will be effective. But as I've said in my opening statement, we do believe it goes in the direction of providing FINTRAC the ability to provide additional information, which should respond to the issue that we saw or were told at the time of our audit, that they weren't getting the kind of information that would allow them to pursue the investigations.
The issue was that getting the tombstone data was not useful. The fact that they will now get context to those disclosures will allow them to perhaps appreciate the significance or the rationale for why FINTRAC might feel there's something worth pursuing. The argument we heard from the law enforcement agencies was that, with limited resources, all they could really do was continue to do the investigations that they already had under way, and if information helped them do that, that was fine, but to start something fresh on the basis of basically raw data was not very useful.
So I think the issue is that we see that the intent is here to make it work, but it would be inappropriate for me to prejudge whether it will be effective enough or not.
11:55 a.m.
NDP
Judy Wasylycia-Leis NDP Winnipeg North, MB
What's the regular cycle for an audit of an organization like FINTRAC, or is there one?
11:55 a.m.
Assistant Auditor General, Office of the Auditor General of Canada
There isn't one. We would obviously take into account that a period of time would be necessary after the legislation was in place to have some effective period before we would consider, and of course interest expressed by committees of Parliament and so on might have some influence. But it would certainly go into our normal longer-range planning of when would be appropriate to look at it again.
11:55 a.m.
NDP
Judy Wasylycia-Leis NDP Winnipeg North, MB
There is one other issue that the Auditor General has raised in the past, which is the removal of lawyers from the reporting requirements. In the 2004 report, she suggested that this means Canada's money laundering system does not fully meet international standards. I know the Senate had a big debate on this, and they actually recommended that some consideration be given to reporting.
I could be reading between the lines, but the issue I'm trying to raise here is that although lawyers are considered to be outside the parameters of this legislation, there should be some way to have some reporting. In fact, the Senate report mentions other countries where there is something that happens--the United States, the United Kingdom, other European countries. I'm just wondering if there isn't a need for us to include something in this legislation to deal with that concern.
