Finance Committee on Nov. 7th, 2006

[Diane Lafleur]

FINTRAC analyses all reported transactions; there is no $1 million threshold and some such thing. I repeat, FINTRAC analyses all reported transactions, and there is no threshold in place.

Perhaps CRA officials can respond directly to your question.

[Denis Meunier, Director General, Enforcement and Disclosures Directorate, Compliance Programs Branch, Canada Revenue Agency]

Thank you.

As you so clearly stated, Madam, ...

[The Chair, Conservative, Brian Pallister]

Would you identify yourself, please, for the record.

[Denis Meunier]

I'm sorry, Mr. Chair. I'm Denis Meunier. I'm the director general of enforcement and disclosures at the Canada Revenue Agency.

[The Chair, Conservative, Brian Pallister]

Welcome.

[Denis Meunier]

Thank you.

As Ms. Lafleur so clearly stated, in the case of transactions reported to FINTRAC, no threshold applies. Therefore, a FINTRAC official to whom a transaction is disclosed may find himself dealing with either small or large transactions. The information disclosed can vary widely. For example, CRA may receive information about a large number of individuals and several transactions. The threshold is no different for us than it is for a law enforcement agency to whom a disclosure has been made. All disclosures made to CRA are also made to law enforcement agencies because FINTRAC's main concern is money laundering or terrorist financing. CRA does not conduct criminal investigations into money laundering, but rather investigates cases of tax evasion.

There is no mention of a threshold in the amendment, or of money laundering, a key consideration in the drafting of this bill. As you also mentioned, Ms. Lafleur, CRA can also present what is known as a voluntary information report in cases where a criminal investigation has been launched into a particular matter. CRA can pass along this information to FINTRAC. If FINTRAC discovers information in its database about the target of the investigation, it has a duty to share that information—information about money laundering and tax evasion—not only with law enforcement officials, but with CRA as well.

I hope I've shed some light on this issue, Mr. Chairman.

[Pierre Paquette, Bloc, Joliette, QC]

In your opinion, does this amendment add anything here? If so, and if I understand correctly, we would need to change it to clearly include money laundering.

[Denis Meunier]

Indeed, but it's very clear that given the way in which the amendment is worded, it changes the whole spirit of the clause. CRA would have an advantage over law enforcement agencies, which would be somewhat inequitable. The aim of the amendment, namely to facilitate the exchange of information between the parties, is indeed sound. However,under the circumstances, CRA would have an advantage and that would, in my view, go against the very essence of the legislation.

[The Chair, Conservative, Brian Pallister]

Ms. Ablonczy.

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

I think what Thierry and others are saying is that this amendment would actually expand the ambit of FINTRAC beyond what it was meant to have. So I think we wouldn't want to do that without some pretty careful discussion and consultation. They are not a tax evasion body; they're a money laundering body, and I think we should leave it that way.

[The Chair, Conservative, Brian Pallister]

Are you ready for the vote?

(Amendment negatived on division)

(Clause 26 agreed to)

(Clauses 27 to 37 inclusive agreed to)

(On clause 38)

[The Chair, Conservative, Brian Pallister]

Now, Mr. McCallum has presented an amendment.

Mr. McCallum, I am going to rule your amendment out of order because it contradicts the Crown recommendations, which say specifically...and I could read them, but suffice it to say, in the manner and for the purposes set out in the measure....

Now, does everyone have Mr. McCallum's amendment? I want to explain my ruling, Mr. McCallum, to you and to committee members.

Mr. McCallum's amendment asked that clause 38 be amended by adding after line 3 on page 30:

The Security Intelligence Review Committee established by subsection...shall undertake a review

That review would clearly cost money, it would not be done for free, and because of that, Mr. McCallum, you're offending the royal recommendation in the preamble to the bill we received. On that basis, I will rule your amendment out of order.

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

Can I respond?

[The Chair, Conservative, Brian Pallister]

Yes, you may, of course.

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

My understanding is that this would be within the mandate of the Security Intelligence Review Committee and would not necessarily cost additional resources, so I don't agree with that point.

[The Chair, Conservative, Brian Pallister]

Thank you, Mr. McCallum. Do you wish to challenge the chair?

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

Well, I think if it costs money, it would be a minimal amount, and in return we're getting an amendment. All this does is this. The Security Intelligence Review Committee already reviews CSIS. It would also be asked to review FINTRAC, and there would be an annual report to Parliament to increase parliamentary scrutiny.

[The Chair, Conservative, Brian Pallister]

Actually, you're speaking now, sir, to your motion. If you wish to challenge my ruling, you're well within your right to do so. I invite you to do so, but we're not here to discuss your motion, which I've already ruled out of order.

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

I am challenging it in the sense that I don't see—

[The Chair, Conservative, Brian Pallister]

There's no discussion on that.

Shall the chair's ruling stand?

(Chair's ruling overturned)

The chair's ruling is defeated.

Mr. Pacetti, you can come and take over now.

Mr. McCallum, you may now speak to your motion.

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

Thank you, Mr. Chair.

Perhaps I already explained it, but I'll briefly do it again.

Just prior to my amendment, the bill says there will be a review of FINTRAC every five years. What I'm saying in this amendment is that the Security Intelligence Review Committee shall have an annual review of the operations of FINTRAC. This brings it under the ambit of this civilian oversight committee, which currently does something similar for CSIS and then does an annual report to Parliament. So there would be an increase in the degree of parliamentary oversight of FINTRAC.

As we heard from witnesses such as Senator Grafstein, this is what the Senate committee recommended. I also think it was agreed that with FINTRAC, as we discussed earlier, there always has to be a balance between privacy concerns and security concerns. The bill increases the powers of FINTRAC on the security side. To balance security against privacy, I think it's a good move to increase also the civilian surveillance.

I think it's positive to have parliamentary scrutiny. It wouldn't have a major negative effect on the ability of FINTRAC to carry out its operations, but it would allow parliamentarians, through the civilian oversight committee, to have a better handle on what FINTRAC was doing, and I think it would reduce the chances of abuses to privacy rights. We've seen recently that these can happen. I think this is a positive addition to the bill.

[The Chair, Conservative, Brian Pallister]

Mr. Comartin.

Welcome, by the way.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Thank you, Mr. Chair.

I didn't vote to overturn your ruling, Mr. Chair, although I did want it to be overturned, because I wanted to speak to this.

But I want to speak against this amendment. Just to give some quick history, this is the wrong group to be sending this to. In the last Parliament we did an extensive review of oversight of all of our intelligence agencies, including FINTRAC. This was in an ad hoc committee of both the Senate and the House established under the PCO. There was a bill before the House just before the election was called that set out a mechanism and a committee—again a joint committee of both Houses—that would have provided oversight not just to a single agency but to all of our intelligence agencies. We have about 12 of those in the country, FINTRAC being one of them.

I think it's a mistake to look to SIRC. They have a very limited mandate. Quite frankly, when you see some of the files that have gone through and then been reviewed by them.... Take the Air India one, for instance. You then have other agencies, or in that case a court, pointing out all of the deficiencies there were in front of CSIS. They simply don't have a broad enough mandate to take on the responsibilities that legislation would have provided. The current minister has indicated that once Justice O'Connor comes down with his second report, which is scheduled for the end of this month or early in December, either that bill or a similar bill will be reintroduced.

That's where the responsibility should go. Passing it over to SIRC I think generally would be useless, but more importantly, it would be saying that maybe it is the agency we should be using, and I don't believe it is. The parliamentary oversight should be done by parliamentarians, including the work that needs to be done with respect to FINTRAC.

Mr. McCallum's point is well taken; all the points he made about the need for that oversight are well taken. This just isn't the body it should go to.

Thank you.

[The Chair, Conservative, Brian Pallister]

Thank you, sir.

Madam Ablonczy.

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

In addition to that, I think the committee will know that FINTRAC is not an investigative body. SIRC oversees investigative bodies such as the RCMP and CSIS, but FINTRAC is not an investigative body.

In addition to that, FINTRAC has to table reports in the House of Commons and the Senate each year. It also tables an annual report on its operations. It is subject to audits by the Auditor General and also by the Treasury Board.

I can also point out that since FINTRAC was set up in November 2001 there have not been any unauthorized disclosures of information from FINTRAC either inside or outside of Canada, which I think suggests that the present regime is working very well.