Finance Committee on March 8th, 2011

[Denis Meunier]

There are about 300 employees at the agency. But that isn't 300 analysts. We have a large contingent of employees working in computer support. There are about 60 or 70 analysts. There have been accountants, so they were professionals, and there are lawyers, in particular. However, it isn't necessary to be a tax specialist. What we're interested in is money laundering. So we focus on the conduct of transactions. That is the focus of our attention.

Our role is not to conduct investigations into drug trafficking or fraud or even tax evasion. Our responsibility is to detect money laundering. We work in collaboration with the CRA, which gives us training and indicators of tax evasion. Our analysts use those indicators to determine whether the conduct corresponds to money laundering or tax evasion.

[Daniel Paillé, Bloc, Hochelaga, QC]

In terms of training for your staff, do you have exchanges with other organizations at the international level?

[Denis Meunier]

There is a system of memorandums of understanding that covers 73 countries—

[Daniel Paillé, Bloc, Hochelaga, QC]

Yes, but we're talking about training for your staff.

[Denis Meunier]

For our part, we train other agencies.

[Daniel Paillé, Bloc, Hochelaga, QC]

My next question is more for the representatives of the RCMP.

Not many penalties are imposed in Canada. On that point, I will give you two examples. First, the Voluntary Disclosure Program allows a person who feels a little guilty to disclose things to the CRA without penalty or prosecution. In addition, the general anti-avoidance rule doesn't result in a penalty. You can simply be denied the tax benefit you had claimed.

As a police force, does the RCMP think that this lack of penalties is an incentive for people to get deeply involved in these activities? If they get caught, they just have to beg pardon. It is easier to beg pardon than to ask permission.

[A/Commr Stephen White]

I guess from a law enforcement perspective what we would look at is what would be an effective deterrent, regardless of the type of criminal activity, whether it's tax evasion or fraudulent activity. The greatest deterrent is always being caught. After that, obviously, it would be whether there's a prison sentence or a fine.

[Daniel Paillé, Bloc, Hochelaga, QC]

If they get caught, but if there is no fine and no prosecution, it's like getting your knuckles rapped by your mother.

[A/Commr Stephen White]

The less severe the consequences, the less effective the deterrent, I would think.

[Daniel Paillé, Bloc, Hochelaga, QC]

From what you said, you send the CRA a lot of information, but it isn't entirely reciprocated. Do you think that's reasonable?

[A/Commr Stephen White]

Under current legislation, the Canada Revenue Agency is very limited in their ability to refer tax information of Canadians to us. That's why under the Criminal Code there is a provision for law enforcement to get an order for us to go and get tax information to assist us in an investigation.

[Daniel Paillé, Bloc, Hochelaga, QC]

Am I summarizing the situation properly if I say there is little prevention, that you always come in after the fact and you are chasing after the wrongdoers?

[A/Commr Stephen White]

Not always. If we're doing a criminal investigation such as drug trafficking, for example, and we need to do a further assessment of an individual's revenue, of legitimate income, we use that order under the Criminal Code, signed by a judge, to go and ask Revenue Canada for that information during an investigation.

[The Vice-Chair, Liberal, Massimo Pacetti]

Thank you, Mr. Paillé

Ms. Glover, you have seven minutes.

[Shelly Glover, Conservative, Saint Boniface, MB]

Thank you, Mr. Chair.

I am very impressed with Inspector Rudderham's reputation. We in the police service in Winnipeg are very familiar with the work he's done in Saskatchewan and Manitoba.

I'm going to have to tailor some of my questions; I'll ask them when you come back and we'll be in camera. But I do want to ask you, sir—because we only have seven minutes—with your experience in the proceeds of crime world, money laundering, etc., if you have some recommendations to improve the system, I would ask that you share those with us here and now.

We have listened to the police services across the country, and that's why Bill C-9 has come about. I believe that this is a tool that you are able to use now. What would you suggest that we, as the lawmakers, could do to improve the ability to target these tax havens and these tax evaders?

[Inspector David G. Rudderham, D Division, Financial Integrity (Manitoba), Royal Canadian Mounted Police]

That's a very complex question. It's very difficult. I think when we approach any investigation we look at where the information is lawfully accessible. I think tax havens, from my experience, provided a block because the road ended; your investigative avenues ended at that point.

I know when working with Revenue Canada we are restricted to what information we can get from them. The Criminal Code only allows it under basically three areas of investigation: drugs, terrorism, and organized crime. One of the things I'd like to see is the ability to request tax information from Revenue Canada by way of affidavit for all indictable offences under the code. Specifically, in my work now it's for frauds. For one single improvement, that would be my suggestion.

[Shelly Glover, Conservative, Saint Boniface, MB]

Okay. Proceeds of crime is important. We've just touched on it. I would think that you have some suggestions with regard to how we deal with proceeds of crime when someone is identified as being a tax evader and has gone through the process. Do you have some suggestions on how we improve our proceeds of crime follow-up?

[Insp David G. Rudderham]

Not specifically.

[Shelly Glover, Conservative, Saint Boniface, MB]

In Manitoba we have a proceeds of crime unit at the provincial level. They have a much different threshold in order to seize property. For example, they can actually seize property there before a conviction is obtained. I would think that this is a very good tool in order to go after some of the people we're talking about. Are you familiar with that program in Manitoba?

[Insp David G. Rudderham]

Yes, I am.

[Shelly Glover, Conservative, Saint Boniface, MB]

What do you think of that program, and how could we tailor it to this situation—or could we?

[Insp David G. Rudderham]

I think in one respect we're going to have to. With the law now having changed to include tax evasion as a predicate offence for possession of proceeds of crime and money laundering, we're going to have to look at assisting CRA in any way we can to identify those funds, and we'll now have an ability to restrain those funds wherever they are.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good. I was going to ask you to take me through a case--not a specific case--but I'll ask you that another time.

I'd like you to address the indicators, Mr. Meunier, if you could identify what those indicators are. How long does it take from the time you determine there's an indicator? What is the process, and how long does it take before you finally get to a position where you can go after these folks for tax evasion--well, not you, but share it with CRA so they can do it?

[Denis Meunier]

I can tell you generally in our work, in urgent cases, we can respond within 24 hours, making a disclosure to law enforcement if there's an ongoing investigation. But on average--

[Shelly Glover, Conservative, Saint Boniface, MB]

Give me an example of an indicator and take me through the process.