Finance Committee on March 21st, 2013

[Shelly Glover, Conservative, Saint Boniface, MB]

That's right.

Mr. Blackburn.

[Steven Blackburn]

We comply with the regulatory requirements of the jurisdictions in which we operate and, as one of my colleagues mentioned earlier, we are subject to their privacy laws among other regulatory obstacles that will not allow the sharing of information. However, as I mentioned earlier, at CIBC we have a common denominator based on Canadian regulations that we apply across our operations, so if we are to identify any activity, we will report in those jurisdictions.

[Shelly Glover, Conservative, Saint Boniface, MB]

Very good. I'm sure that applies to all of you, so my question is, and I'm not going to ask all of you, how can we, as a government, help fix that, the fact that the privacy laws sometimes prohibit that information sharing? Aside from TIEAs, is there anything we could be doing better to make sure we get that information flowing?

[The Chair, Conservative, James Rajotte]

Perhaps we could get one person. Mr. Blackburn, could you respond to that?

[Steven Blackburn]

First of all, there are global organizations that allow the sharing of information between regulatory bodies that are established. Canada sits on those organizations, so I believe that sharing is already under way. In addition to that, we spoke of TIEAs earlier, which I think is an appropriate answer.

[Shelly Glover, Conservative, Saint Boniface, MB]

Yes. Okay, excellent.

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Glover.

Mr. Jean, please, for your round.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Thank you, Mr. Chair.

Thank you to all the witnesses for appearing today.

To follow up on Mr. Rankin's question, do you have the same policies abroad as you have domestically? Are they identical in nature? I'm talking tax evasion policy. Policy and procedure for your employees, are they the same locally in Canada as you enforce abroad?

[Carmina Hughes]

Yes, we have enterprise standards in that regard.

[Nanci York]

Yes, so do we.

[Russell Purre]

Yes. As I mentioned earlier, we start with a Canadian standard, use that as a baseline, and build on top of that.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Are they identical standards, as far as your policies and procedures are concerned, in your employees manual, for instance, for senior management, for people who deal with transactions?

[Russell Purre]

Absolutely.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Would that be fair to say, Mr. Bartos?

[Scott Bartos]

Yes, it would.

[A voice]

Yes.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Great.

You didn't answer, but would it be to fair to say, Mr. Richard, it's the same?

[Jean Richard]

It would be the same.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

The CBA came here several weeks ago and said, “...member banks have comprehensive governance and compliance regimes to prevent tax evasion”. Would anybody here today disagree with that statement? No?

My simple question is how people do this. How do they use Canadian banks to undertake this type of behaviour without being caught? We've talked about suspicious transactions. We've talked about large cash transactions, which I imagine is the $10,000 route. Is it standard across the board that you report anything over $10,000? Is that fair to say, Mr. Purre?

[Russell Purre]

Yes, it is. That's the regulatory requirement.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Yes. You would do that in any jurisdiction. What initiates suspicious behaviour? Is it computer algorithms? What is it? You must go through a tremendous number of transactions.

[Carmina Hughes]

It's both. I think one of my colleagues said that there is the front line and then there's after-the-fact monitoring. There are activities that occur at the time of the transaction that we may be aware of, that are red flags and may cause us to raise a suspicion. Those front-line folks then take what they have seen and put it in a report called an unusual transaction report. That goes into our financial intelligence unit, and then we investigate further and determine whether an STR, a suspicious transaction report, should be filed. We also have automated monitoring systems, and there are certain things that hit those thresholds, be they jurisdictional or the types and frequency and volume of activity that might come out of a particular account.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Do all the banks here follow the same practice?

For instance, Ms. Hughes, how often would your particular company change your algorithms and your computer-generated...? Obviously they change dramatically.

[Carmina Hughes]

Yes, we review them at least on an annual basis. We test them; we don't just change them. We change them based upon where we think they are productive, in terms of providing us with the best information. Then we test below the thresholds to make sure we're not missing anything if we raise those thresholds or change them.

[Brian Jean, Conservative, Fort McMurray—Athabasca, AB]

Is that how all the banks do it: a yearly review, with changes depending on what's happening in the marketplace?