Finance Committee on Nov. 7th, 2006

[Diane Lafleur]

Paragraph (b), but not paragraph (a).

[The Chair, Conservative, Brian Pallister]

Remove (b), or add 6.1. Remove (b)?

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

It's easier.

[The Chair, Conservative, Brian Pallister]

Mr. McCallum is proposing an amendment to remove (b).

(Subamendment agreed to [See Minutes of Proceedings])

[The Chair, Conservative, Brian Pallister]

That's unanimous! Congratulations, committee.

(Amendment agreed to [See Minutes of Proceedings])

[The Chair, Conservative, Brian Pallister]

We're on amendment L-4 now, page 8.

Mr. Pacetti.

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

Basically what we're looking at here, if I recall, is the meaning of section 2 of the Bank Act on authorized foreign companies. We're adding again the Insurance Companies Act, which I believe is not there. It's not clear, again. It's for the authorized foreign companies that have to act within the meaning of section 2 and I think the Insurance Companies Act was not stated in the original bill. I think that's it, that's the extent of that amendment. It goes along the same lines as the previous amendment.

I'm not sure if the officials have a comment on that. Go ahead.

[Diane Lafleur]

Similar to the previous amendment, we would recommend adding back in proposed section 6.1 for the client ID requirements at the end of that section.

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

Okay, that's fine.

[The Chair, Conservative, Brian Pallister]

Can we have an amendment from someone other than Mr. Pacetti on that? Mr. Savage, thank you.

(Subamendment agreed to [See Minutes of Proceedings])

(Amendment agreed to [See Minutes of Proceedings])

(Clause 8 as amended agreed to)

(Clauses 9 and 10 agreed to)

On clause 11)

[The Chair, Conservative, Brian Pallister]

Clause 11 has an amendment on page 9, a government amendment, I believe.

Madam Ablonczy.

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

It's the same thing, Mr. Chairman, just a technical amendment to note the change of nomenclature.

(Amendment agreed to [See Minutes of Proceedings]

(Clause 11 as amended agreed to on division)

(Clauses 12 to 16 inclusive agreed to on division)

(On clause 17)

[The Chair, Conservative, Brian Pallister]

On clause 17, we have amendment G-4, which is on page 11.

Madam Ablonczy.

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

This just catches the difference between the Quebec Civil Code and common law.

[The Chair, Conservative, Brian Pallister]

Thank you.

(Amendment agreed to on division [See Minutes of Proceedings])

(Clause 17 as amended agreed to)

It is unanimous. Thank you.

(Clauses 18 to 25 inclusive agreed to)

(On clause 26)

On clause 26, we have amendment L-5, which is on page 13.

Mr. Pacetti.

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

Thank you, Mr. Chairman.

It looks like a long paragraph and a big amendment, but it's basically quite easy. The thrust of the bill is mainly for FINTRAC to be doing the analysis and then doing the reporting. Basically what I'm asking here is for Revenue Canada, every once in a while, to be allowed to request information from the centre, meaning FINTRAC. It's the same information that FINTRAC provides to CRA, but it's always based on the initiative of FINTRAC. In this clause, I want CRA to have the ability to ask FINTRAC under the same conditions, and if there's any doubt as to the information, they can also go to a court of law to ask for that permission. It's basically giving the same rules of play to CRA as it does to FINTRAC. It reads the same way as proposed paragraph 55(3)(b).

I'm not sure I'm stating it right, but basically it's on page 17, the top paragraph.

[The Chair, Conservative, Brian Pallister]

Madame Lafleur, do you have any further comments?

[Diane Lafleur]

Thank you, Mr. Chairman.

Just to clarify for members of the committee, the Canada Revenue Agency right now is permitted under the law to submit a voluntary information report to FINTRAC where it is already investigating a case of potential tax evasion. FINTRAC then would do its own research within its database as to whether it had any information that was relevant, and if it did and if FINTRAC had reason to believe there was a case of money laundering or terrorist financing, they would then be allowed to disclose the information to the Canada Revenue Agency. But that test of money laundering and terrorist financing is a crucial one from a privacy and charter perspective, and I note that it is absent here.

Also, I would add that under the current legislation the Canada Revenue Agency can obtain a court order in order to get additional information for FINTRAC that might be relevant for an investigation.

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

Mr. Chairman, I don't disagree with what the officials are saying, but this is just to make it easier. I think the voluntary disclosure takes a little bit more time. From what we heard from FINTRAC, there is more emphasis on larger transactions, whereas CRA may be looking at smaller transactions. It's sometimes easier for CRA to request the information.

I am in no way requesting in this amendment that CRA have an open rein and just go crazy on the access to information. It is just to give an extra avenue for CRA to ask for information from FINTRAC. We're tying the hands of the agencies, and I'm just trying to alleviate some of the work that both these agencies have to do so that information is more easily accessible by the two agencies.

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

To my way of thinking, this amendment creates a loophole in the privacy mechanism provided for in the original legislation. As I recall, witnesses who testified about FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, explained the black box principle which restricts access to information to FINTRAC officials. If a voluntary statement is produced, FINTRAC officials analyse the data and, if there is any relevant information to report, then they report it.

I don't quite understand why the Canada Revenue Agency could directly request information about certain designated persons, when neither the RCMP nor the provincial police has the authority to do so.

Why is CRA the only agency with that authority? If the feeling is that the privacy protection mechanism doesn't work well, then everyone should be allowed to request information directly. Conversely, if the feeling is that this is a sound mechanism—and I believe that's the case—then it should apply to all agencies.

[The Chair, Conservative, Brian Pallister]

We'll go to Mr. Pacetti to respond.

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

From questioning, because of the limited amount of time we had with FINTRAC—and we didn't have CRA appear—and from what I understood from FINTRAC, the materiality limit

the threshold is not the same for FINTRAC as it is for the CRA.

Sometimes the Revenue Agency is going to be testing certain transactions, and it will be easier for them to determine which ones they would like to see investigated, rather than the other way around.

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

That's even worse. If their threshold is even lower, then all the more reason not to provide them with information that otherwise they would not be able to access. If their criteria for using this information are even lower than those of the RCMP or some other agency, then there is even less justification for allowing them direct access to it.

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

The evidence will be the same, except that the threshold, in dollar terms, will be lower. FINTRAC will only analyse transactions exceeding $1 million or $2 million. In other words, perhaps Revenue Canada will analyse transactions of a lesser value than those analysed by FINTRAC.

[Pierre Paquette, Bloc, Joliette, QC]

I see that Ms. Lafleur is reacting to these comments. I'd like to hear more from her on the subject.