Evidence of meeting #111 for Finance in the 41st Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was bank.
A recording is available from Parliament.
Deputy Chief Anti-Money Laundering Officer, RBC Royal Bank
I probably should have been clearer up front, my apologies.
We start off with a baseline RBC policy that applies globally across the organization as a whole, to all our employees and to all our subsidiaries. That's our starting place for all things, so that's effectively the minimum standard.
We overlay local regulations, policies and procedures, and best practices that again we've learned globally.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Okay, thank you.
Can you briefly describe the policies you have in place that ensure your subsidiaries in tax havens or in jurisdictions that are known for their secrecy are not facilitating money laundering or tax evasion?
Deputy Chief Anti-Money Laundering Officer, RBC Royal Bank
There are a couple of things. We always need to be conscious about.... You used the words “tax havens”. I would say that RBC does not operate in any tax havens, which I look at as jurisdictions that don't ascribe to FATF rules around transparency and sharing of information.
RBC ensures that each of our global subsidiaries is adhering to the RBC global standard by regular audits and tests, taking resources centrally from here in Canada to test what takes place in those units.
On top of that, when we look at rules, such as many of the members here have, ultimately the reason all of us have jobs from a global AML perspective is to ensure the exact question you've asked, that those international units are adhering to the standards that we adhere to globally.
NDP
Peggy Nash NDP Parkdale—High Park, ON
Shining a light on the information is really key to knowing what's happening and getting that information.
I have to move on.
Mr. Bartos, you described a number of provisions in place to ensure transparency at HSBC. HSBC, of course, is a huge bank with $2.7 trillion in assets worldwide. I know that over the last year it's paid about $4 billion in fines and settlements due to various investigations. Were these measures that you talked about in place prior to those investigations, or were these changes the bank made in response to those investigations, and therefore you would expect that won't be a problem going forward?
Senior Vice President and Chief Compliance Officer, Chief Anti-Money Laundering Officer, HSBC Bank Canada
Mr. Chairman, the short answer is that high levels of standards and policies have always been in place. We discovered they were not observed as strictly as we had expected they would be. So in the new model for HSBC, we have implemented a compliance assurance function, which sits at the global centre, whose sole task is to go to the various subsidiaries to ensure that not only are the policies and procedures in place, but they're being observed.
Conservative
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you, Mr. Chair.
Thank you to all the witnesses for coming today.
This is a study that all parties agreed to. You can see the importance we place on it, because certainly, we all know that people are evading their taxes in Canada, to the detriment of all of us.
Does your organization have policies, procedures, or standards whereby the same information you would collect on someone opening a bank account in Canada is collected in your subsidiaries? I'm asking for a quick yes or no.
Mr. Richard.
Vice-President and Senior Consultant, Wealth Management Group, BMO Nesbitt Burns, BMO Bank of Montreal
I would refer that to the specialists in compliance. I am not in that field.
Vice-President and Chief Anti-Money Laundering Officer, Canadian Imperial Bank of Commerce
The short answer is yes. We apply the same policies in the other jurisdictions in which we operate as we apply in Canada for client identification.
Senior Vice President and Chief Compliance Officer, Chief Anti-Money Laundering Officer, HSBC Bank Canada
In the case of HSBC, the short answer would also be yes. HSBC group has set a standard global requirement that sets the baseline, which is the minimum standard, and all countries and subsidiaries must observe it. It may be enhanced, if a particular country has higher standards, but there is a minimum threshold that all countries and businesses must meet.
Conservative
Senior Vice President and Chief Compliance Officer, Chief Anti-Money Laundering Officer, HSBC Bank Canada
Actually, in the case of Canada, in certain respects it would set a component of the minimum threshold. If I were to give an example, in Canada we take two pieces of identification, whereas many other countries or many other laws will only require one piece of identification. So many group offices have set that as a minimum standard.
Deputy Chief Anti-Money Laundering Officer, RBC Royal Bank
What's interesting about the question is that when we look at the developments internationally around the requirements from an anti-money laundering perspective, as more countries sign onto the OECD guideline, you see very similar rules and regulations when it comes to things such as verification and beneficial ownership, collecting the purpose of the account, and determining the ultimate intent of transactions within that. For us, Canada is the minimum standard. On top of that, we overlay local regulations and best practices on a global basis. When we talk about those core elements, that's a global standard for us.
You said something earlier which I thought was interesting about the importance of addressing individuals who evade taxes. I think that is a key point. The evasion of taxes is a criminal act and is illegal. When we talk about reverting to the code of conduct for our organization, certainly if we ever had an employee who was facilitating the evasion of taxes in any way, those are grounds for dismissal, and we would act on them.
Vice-President, Enterprise Regulatory Projects, Scotiabank
At Scotiabank we also have global standards, which are detailed from our global AML office in Canada. We do layer on that the local requirements in the jurisdictions where we operate, and we always apply the higher standard.
Head, Global Anti-Money Laundering Compliance, TD Bank Financial Group
At TD we follow the same courses you've heard of from the other banks. We have a global standard. We have to assure ourselves that we have reasonable proof as to who we are dealing with in terms of our customers. Of course, in different jurisdictions there are different peculiarities arising from the regime there, and that's what we adhere to wherever we are.
Conservative
Cathy McLeod Conservative Kamloops—Thompson—Cariboo, BC
Thank you.
We do understand that there are countries that have bank secrecy laws, and that tends to be part of the issue. Do you find that some of these bank secrecy laws in place in some countries actually preclude you from moving forward in areas you are concerned about, regarding possible tax evasion? How directly do these secrecy laws in the countries that you operate in impact your ability to deal with concerns and issues?
Conservative
Vice-President and Chief Anti-Money Laundering Officer, Canadian Imperial Bank of Commerce
I think there are two answers to that question.
Absolutely, the legal framework in the jurisdictions in which we operate internationally may be different from that in Canada and to the extent that they have different privacy standards from those that apply in Canada, there may not be a free flow of information between those jurisdictions and Canada. That's not to say, however, that it in any way impairs our ability to run our compliance program and run our AML program. On the contrary, because CIBC takes the approach of applying a very strict standard based on our Canadian operations, or the higher standard required in other jurisdictions, we will pursue the same measures we pursue in Canada to identify any suspicious activity, including tax evasion.
Conservative
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you, Chair.
To the witnesses, thank you very much for joining us today.
I'll begin with Ms. York. Last week I was at a conference and met Omar Davies, a former finance minister in Jamaica. He reminded me that the Bank of Nova Scotia was in Jamaica before it was in Toronto. That just indicates the degree to which our banks in Canada are not only prudentially strong but are among the most global banks in the world.
Canada played a leadership role in the genesis of the G-20 as well.
Given that confluence of factors, could Canada be playing a leadership role in building global governance, with the operative vehicle being the G-20, to create a more effective vehicle than FATCA?
Vice-President, Enterprise Regulatory Projects, Scotiabank
I think Canada, with its strong banking system, its strong support to combat tax evasion and tax avoidance, can certainly play a key role, along with the other members of the G-20, to form a global multilateral approach to dealing with this issue.
Liberal
Scott Brison Liberal Kings—Hants, NS
Is the Canadian government playing that role within the G-20?
I mean, it was Paul Martin as finance minister who actually led the charge in creating the G-20.
Ms. Hughes, perhaps.
Head, Global Anti-Money Laundering Compliance, TD Bank Financial Group
Actually, I'm not sure how extensively the Canadian government is involved in leading the charge, but certainly it's a well-respected member of the G-20 along with a number of other international initiatives. When I was at the Federal Reserve Board, for instance, Canada took the lead in redrafting the 40 recommendations for FATF.
I can tell you that not only is Canada involved in all of this, but the various banks, TD among them, are very involved with the OECD.
