Finance Committee on Nov. 2nd, 2006

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

So in the end, you feel that your reputation is worth more than the money you invest in fighting these problems.

I have a more specific question to ask of Mr. Bernier. Earlier, you spoke of foreign branches that have to gather information and provide it to FINTRAC…

[The Chair, Conservative, Brian Pallister]

Mr. Del Mastro.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

Mr. Timmins, in 2004 the Auditor General tabled a report called “Implementation of the National Initiative to Combat Money Laundering”. You've indicated that, superficially at least, it seems that Bill C-25 is taking steps toward what the report was recommending. This wouldn't be before Parliament if we didn't think there was a problem, that there weren't potential loopholes that could be exploited. Is that correct?

[Douglas Timmins]

Yes, Mr. Chair, although I believe there was a required legislative review done of the bill anyway, and we did the audit in advance of that. Certainly, it's my view that you're trying to deal with the issues and that's the reason the bill is here.

[Dean Del Mastro, Conservative, Peterborough, ON]

Could you comment a little bit on the title of the report of the Senate Standing Committee on Banking, Trade and Commerce? They titled their report “Stemming the Flow of Illicit Money: A Priority for Canada”. Could you comment on that at all?

[Douglas Timmins]

No, Mr. Chair. I don't know how to respond to that.

[Dean Del Mastro, Conservative, Peterborough, ON]

Do you think it's an appropriate title, Mr. Law? Do you think Bill C-25 is addressing what may potentially be a big problem in Canada?

[Warren Law]

Bill C-25 is certainly useful in making sure that Canada is up to snuff in terms of fighting the good fight. Bill C-25 is very useful with respect to making sure our FATF requirements are met and with respect to what other countries are doing. For example, the fact that we're now addressing attempted suspicious transactions is something that's been done in the G7 countries. I think we need Bill C-25 to continue to fight money laundering and terrorist financing activities.

[Dean Del Mastro, Conservative, Peterborough, ON]

I appreciate that.

Ms. Tromp, would the additional information that you may well receive from FINTRAC help you track...? We've heard a number of presentations here this morning. One thing that wasn't addressed is the potential for tax evasion through the use of tax havens in the Caribbean and so forth. Would this type of information help you track these things and keep a better handle on protecting the integrity of the Canadian tax system?

[Denis Meunier]

Perhaps I may answer that.

The information that is proposed in the legislation to expand the context, and particularly a number of elements that are included there, such as the reasons for suspicion, the indicators, additional information with respect to who is involved in regard to the financial transactions, and the ownership of some of the companies, will certainly facilitate tax evasion investigations, criminal investigations. Of course, when we are looking at the use of moneys offshore as well, that information will point us in the right direction. Therefore, the answer is yes.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Brian Pallister]

Thank you very much, sir.

We'll move to three-minute rounds to accommodate everyone. We'll continue with Mr. Pacetti.

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

Thank you, Mr. Chairman.

I will continue along the same line of questioning as Mr. Del Mastro had. I think the question was directed to you, Mr. Meunier, and was basically regarding tax evasion and the way the CRA can work with FINTRAC. I'm not sure if CRA can actually ask FINTRAC for specific transactions. I'll give you an example of somebody earning maybe $20,000 to $25,000 a year but is collecting illegal moneys. FINTRAC wouldn't catch that; it's too small an amount. Would CRA have the ability to ask FINTRAC to take a look and analyze what's going on there?

[Denis Meunier]

The way FINTRAC is set up, it's not a query system. For instance, when we pursue a criminal investigation we do have the opportunity to provide to FINTRAC a voluntary information report that would give some outline with respect to criminal investigation. Our legislation, the Income Tax Act, as well as the Excise Act, allows us to do this in very limited circumstances. So we would voluntarily provide that information.

If FINTRAC, through the course of its analysis, can provide some of that information back to us to further our investigation, obviously that would be welcome. Of course, in those cases--

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

You're not answering my question.

The question is that we don't necessarily want the law enforcement agencies involved, because they already have enough work, from what we understand. The idea is to try to make sure people who owe taxes are paying taxes. The CRA is the only agency that's going to do that, let's be realistic.

The CRA can also conduct its investigation more easily than some of the other law enforcement agencies because, with tax, you're guilty and then you have to prove yourself innocent, whereas in law you're innocent and the law has to prove you guilty. Wouldn't it be easier if CRA could ask FINTRAC to provide information on these people and just cut it there instead of perhaps, maybe, could be, what do you think? Wouldn't it work better that way?

[Denis Meunier]

A couple of hundred criminal investigations are conducted every year, and obviously we concentrate on the ones that are most egregious to the tax system. There is a difference between audits conducted in a civil environment and criminal investigations.

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

I'm sorry to interrupt, but the time is limited.

Let's take an example where you are conducting an audit and you think there's something more there. Can't you go to FINTRAC and ask them to get you some information on this?

[Denis Meunier]

No.

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

You can't, but would you like that to happen?

[Denis Meunier]

You suggest in the case of audit, and that's not the purpose of the legislation, to query FINTRAC for civil purposes. In this case, it's specifically in the context of FINTRAC providing us with information, particularly with respect to tax evasion, and in most cases it's something egregious. There are a lot of transactions out there.

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

I understand that.

Thank you.

[The Chair, Conservative, Brian Pallister]

We'll continue with Mr. Wallace now.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

Thank you, panellists, for coming this morning.

My questions aren't that difficult, and my cheering for my friend across the way was because he was asking one of my questions.

First of all, I want to thank Mr. Meunier for the report. As somebody on the committee, I think that when you have actual changes--and I know some are coming--providing them in writing would be much more efficient. We could debate that in future and have an understanding of what that involves.

I have a question for Mr. Fox. The question I've been dealing with regarding FINTRAC thus far has been about the new regulations, fines, and so on. At present it's only criminal offences, but now they're going to add some administrative offences. You've indicated support for the bill. Could you comment on the registration system, how you think it should work? What's your organization's position on that?

[Brian Fox]

We are onside to have registration for money services businesses like ours. I think it was Mr. Law, or maybe Mr. Timmins, who commented on the number of organizations being very hard to track, and that's true.

We are completely in favour of a registration system. In our earlier discussions with the Department of Finance, we leaned toward a registration system that allows the Government of Canada to keep track of these organizations, always looking to make sure we are not encumbering people. There's always the potential of driving some of this activity underground. This is the balance we're looking to see. There are many other jurisdictions we can look to around the globe to see examples of something that's appropriate.

Does that help you?

[Mike Wallace, Conservative, Burlington, ON]

Your concern is that through a registration system, a one-person operation that may be breaking the law now won't register anyway. You're concerned there's no action able to be taken against that person if they're not registered.