Finance Committee on March 29th, 2007

[Dean Del Mastro, Conservative, Peterborough, ON]

I have a bit of a supplementary to that. Concerning Bill C-25, which we passed a little while ago, we thought that in passing that bill it would assist Canada in becoming a world leader in tracking money laundering and terrorist financing. Your position, therefore, is that by providing this additional funding, this will assist us in putting FINTRAC as a world leader, or certainly amongst world leaders on this front.

[Mark Potter]

I think we've always been, for some time now, among the world leaders. I think the standards by the international FATF are evolving because the challenge is evolving. So all of us, as an international community, need to adjust to the new standards and put them in place.

I think what Bill C-25 will do is very much keep us among the very leading agencies like ours around the world. We are also going through an evaluation process by the FATF, which is a very comprehensive examination of where we're at, and I think that will also provide some useful guidance to us in Canada as to further areas we need to develop once we come back to Parliament for another five-year review, or changes in advance of that, if required.

So there are a number of processes in place to maintain our leadership.

[Dean Del Mastro, Conservative, Peterborough, ON]

Mr. Gosselin, to what extent and for what purposes does the CITT use contracted suppliers rather than in-house resources to conduct its activities?

[Pierre Gosselin]

By “its activities”, I take it that you are talking about our inquiries. We use, essentially, in-house staff to do that. If we have a request from the government, or if we have a case that requires an expertise that we don't have, then we go outside, but that's rather unusual. In most of our work in dumping and subsidy cases, it's essentially an adversarial process, where the domestic industry is on one side and the importers are on the other side, and they bring the resources, really, to the tribunal in terms of witnesses.

It's only where we want a third opinion that we might go outside. Oftentimes we will subpoena witnesses, and all we do in that case is pay their costs.

[The Chair, Conservative, Brian Pallister]

Each time we have FINTRAC here, I like to use the opportunity to revisit the long-standing issue of lawyer-client privilege. Although it's something that might cause you, if it were ever resolved, to have a lot more work to do, I don't think it has been resolved. Maybe you'd like to give us a little bit of an update on where we're at in respect of that particular issue.

[Mark Potter]

Thank you.

I can comment briefly, but I think the best place to pose your questions would be the Department of Finance. They have the policy lead for the regime, and I understand they will be here in the next three or four weeks, so that would be a good opportunity to discuss this matter with them.

I think, as some of you may be aware, through Bill C-25, lawyers will be included. They won't be included in precisely the same way as other reporting entities, because we do have to be sensitive to the solicitor-client privilege aspect. So for example, they will not be filing reports, and there will be a degree of self-regulation by the law societies with respect to the provisions that will be put in place. We will be working with the law societies, along with the Department of Finance, to assure ourselves that they are respecting the provisions in Bill C-25.

[The Chair, Conservative, Brian Pallister]

Okay, thank you.

We will continue with Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you for stealing my question, Chair.

In another life, I used to practise law, and--

[An hon. member]

Now I know why I don't like him.

[The Chair, Conservative, Brian Pallister]

I should go on record as saying that it's the only profession where you get paid fairly well for practising.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's right. You certainly don't get paid well in this business. But that's another issue.

We've now brought lawyers into the regime, and the Law Society of Upper Canada will now require me to file something. Can you describe what it is that I'm going to be required to file? I would literally flush millions of dollars through my trust accounts on a weekly basis, and I would imagine this to be a horrendous experience in terms of trying to identify every $10,000 transaction.

So can you describe what this has been?

[The Chair, Conservative, Brian Pallister]

I see you looking for help, Mr. Potter, and I invite any assistance you might wish to bring forward to come forward now.

Identify yourself, please, sir, to the committee.

[Yvon Carrière, Senior Counsel, Financial Transactions and Reports Analysis Centre of Canada, Department of Finance]

I am Yvon Carrière. I'm senior counsel with FINTRAC.

All law societies in Canada have enacted rules that prohibit their members from receiving more than $7,500 per file. That's not a Department of Finance regulation; that's a rule that was enacted by each individual provincial law society. Now, to ensure that their members respect that obligation, I understand that some law societies require their members to file a statement saying they haven't received more than $7,500 per file. I think some law societies might go beyond that and ask for more details. What cash did you receive? What are the amounts? What files did they relate to? I think maybe that's what's being alluded to.

But again, it's not a federal government requirement, but a requirement established by individual law societies.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I find that this is an extraordinary response given that retainers would routinely be way more than $7,500. That's nothing in the law business. And in real estate transactions, it's not unusual for people to walk in with $100,000 certified cheques, so I don't understand how that works.

[Yvon Carrière]

I understand that the rules passed by the individual law societies exclude certain amounts of cash. I think they focus mainly on cash received as an intermediary, not cash received as fees, bail, or certain other exclusion costs, court costs.

[John McKay, Liberal, Scarborough—Guildwood, ON]

So if it's cash, it's a problem; if it's a certified cheque, it's not. Is that the way you describe it?

[Yvon Carrière]

Again, I'm speaking from what I understand to be the provincial law society rules, not the federal government regulations. I understand that the prohibition against receiving cash applies to only certain types of cash. It doesn't apply to cash received as fees or bail. That's my understanding, and again, it is subject to verification. Now, the prohibition against receiving cash in those rules, I think, does not apply to cheques. So if it's a certified cheque or just a personal cheque, that prohibition would not apply. It would apply to cash received--

[John McKay, Liberal, Scarborough—Guildwood, ON]

So cheques are out of the regime. The only thing you're talking about is cash.

[Yvon Carrière]

That's correct. Those rules, I understand, apply only to prohibition from receiving certain types of cash, not cash received as fees or bail.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That sounds like a very big loophole.

[The Chair, Conservative, Brian Pallister]

But the reason is that cheques are easily traceable through other sources, correct?

[John McKay, Liberal, Scarborough—Guildwood, ON]

I would think that might be the....

Are paralegals covered?

[Yvon Carrière]

My understanding is that these provincial rules do not apply to paralegals. Certainly the regime as it stands now does not apply to paralegals.

[John McKay, Liberal, Scarborough—Guildwood, ON]

All right.

Sometimes these regimes create way more paper than they do intelligence. I'm a little curious; if as a practising lawyer I received, say, $10,000 in cash, what would be the steps by which I would disclose that? And what would be the intelligence significance in that transaction?

[Mark Potter]

First of all, the current provisions would not require lawyers to report that. There would be some ongoing monitoring by the law societies themselves with respect to their compliance with the $7,500 cash rule. Working with the Department of Finance and the law societies, we would look to put in place some means by which we could ensure that compliance was taking place, that those rules were being complied with.