Finance Committee on March 8th, 2011

[A/Commr Stephen White]

Yes, definitely. It's a mix. In a lot of them we have laid charges. In some of them we don't lay charges for whatever reason. We can't just get to the necessary threshold of evidence that we need, but we still have identified enough evidence that we think we can refer it to the Canada Revenue Agency to look at it in terms of a possible tax assessment.

But in terms of offshore proceeds of crime, whether it be bank accounts or property, we would lay charges here in Canada. If it's offshore property, we can ask for a restraining order here in Canada. That would be a prelude to criminal proceedings and a possible forfeiture order. If it is in another country, whether a restraining order or otherwise, we can ask, through the mutual legal assistance treaty that we may have with that country, for a Canadian order to be enforced in that country.

[Cathy McLeod, Conservative, Kamloops—Thompson—Cariboo, BC]

I'd like to go to Mr. Meunier now.

You gave an example of information that comes in that sort of raises red flags. It sounds like it would be a dumb criminal who would actually open a business knowing that FINTRAC has all these capacities and abilities.

Do you have some sort of system whereby you're actually able to, first of all, make sure that you're not targeting people who are doing very innocent kinds of transactions? Do you have reasonable confidence in your processes and systems?

Again, I would suspect that the people who are using tax havens and are evading taxes often have much more sophisticated processes and systems.

[Denis Meunier]

Yes. I gave you a very simple example, because we were referring to indicators, and I didn't want to make it too complex. I didn't really come here prepared with charts. But most of the cases are fairly complex.

With respect to very complex situations, where you may have comingling of funds or large corporations perhaps using offshore locations, because some of those sites might raise a red flag, among many others, yes, there are cases. We have referred those to the CRA, particularly in cases where there may have been drugs or fraud or information from the police about investigations of fraud or drug trafficking.

Now that the law has changed and regulations have changed, we can focus on some of the more complex, exclusively tax evasion cases.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Madam McLeod and Monsieur Meunier.

I'm going to take a round for a couple of questions.

Monsieur Meunier, this body brings in information. But how do you trace it?

For example, if I make a deposit of $10 at the Bank of Nova Scotia and then transfer $9.99 to Toronto Dominion, don't you lose track of that money? You're just getting information from one entity and from another entity. You don't necessarily follow or trace the money.

[Denis Meunier]

Chances are that this particular amount would not be reported to us unless the bank thought it was suspicious.

I'll give an example of a cash deposit of more than $10,000. If an individual transferred that amount outside the country, I would be getting an EFT, an electronic fund transfer, from that bank. I would have received a large cash transaction when that amount was deposited.

[The Vice-Chair, Liberal, Massimo Pacetti]

Let's use $1 million. I deposit $1 million into the Bank of Nova Scotia. They report to you that I deposited it in the Bank of Nova Scotia. I transfer $300,000 to Toronto Dominion and $300,000 to the Royal Bank, and then it's sent offshore. You would lose track of that money, wouldn't you, because the $1 million has been broken down?

[Denis Meunier]

First of all, if the $1 million is suspicious, they would send it to me, so I would get that. If the $1 million is deposited in cash, I would get that.

[The Vice-Chair, Liberal, Massimo Pacetti]

Right, but once the money is in the account, you sort of....

[Denis Meunier]

No, if you transfer that internally or offshore, if it's suspicious, they will report that to me as well.

[The Vice-Chair, Liberal, Massimo Pacetti]

The only reason I'm asking is because you said you are not authorized to receive reports of domestic EFTs.

I would just take the money, send it to different banks, and then from those banks, send it offshore, would I not?

[Denis Meunier]

Yes, but as you transfer the money internally, domestically, if it is suspicious, I would get a report on it. I wouldn't get an EFT, an electronic funds transfer, within Canada, but I would potentially get a suspicious transaction report.

[The Vice-Chair, Liberal, Massimo Pacetti]

The Bank of Nova Scotia, where I deposited the money, would not necessarily report to you that the money had been transferred.

[Denis Meunier]

Transferred where?

[The Vice-Chair, Liberal, Massimo Pacetti]

Even if it was internally, would they still tell you?

[Denis Meunier]

If it's suspicious they would.

[The Vice-Chair, Liberal, Massimo Pacetti]

Okay, so they would once it's tagged as suspicious.

Would there be a trace also according to name?

[Denis Meunier]

They'd give me your name, your bank account, whatever.

[Daniel Paillé, Bloc, Hochelaga, QC]

But you're not suspicious.

[The Vice-Chair, Liberal, Massimo Pacetti]

I'm very suspicious—I just want to know where I stand.

In your brief you say that the feedback from CRA—their disclosure—has been useful to them in carrying out their investigations. How do you know they've been useful? They told you?

[Denis Meunier]

Yes.

[The Vice-Chair, Liberal, Massimo Pacetti]

You said that over the last three years you have worked with the Canada Revenue Agency to develop indicators of tax evasion. When in doubt, you're not sure whether to disclose cases to the CRA, but now it's a lot easier? What is the determining factor?

[Denis Meunier]

We can't be in doubt. I must make that determination. It's either that I suspect or not. And when we reach that threshold, we must disclose.

[The Vice-Chair, Liberal, Massimo Pacetti]

What if you are in doubt and you refer the case to CRA? Are you saying that CRA is not able to determine whether the transaction is suspect, or is that within the legislation?

[Denis Meunier]

I'm not sure about the wording you've used in respect of “when in doubt”. When we have reasonable grounds to suspect that it's money laundering, and also reasonable grounds to suspect that it's related to an offence of tax evasion, then I would refer it. I must refer it.

[The Vice-Chair, Liberal, Massimo Pacetti]

Okay, so in both cases you would refer it?