Finance Committee on March 21st, 2013

[Scott Brison, Liberal, Kings—Hants, NS]

Finally—

[The Chair, Conservative, James Rajotte]

Last question means the last question.

This is the last, last question.

[Scott Brison, Liberal, Kings—Hants, NS]

If somebody says yes, and indicates there's an investment, is there a separate form and could you provide it?

[The Chair, Conservative, James Rajotte]

Thank you, Mr. Brison.

We will go to Ms. McLeod, please.

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

Thanks again, Mr. Chair.

I just want to say one thing before I head into my questions. We were very enthusiastic about this opportunity to talk about the nuts and bolts of the banking system to help us understand in moving forward on this important issue, so I'm a little disappointed that BMO didn't send someone who actually could speak to those issues. You clearly indicated up front that you weren't prepared to address what was the thrust of the subject we're investigating. Hopefully BMO can look to some of the questions that have been asked today in our study and actually respond directly in terms of some of the issues that Mr. Richard isn't able to speak to because it's not his area.

[The Chair, Conservative, James Rajotte]

Is this a point of order, Mr. Brison?

[Scott Brison, Liberal, Kings—Hants, NS]

Yes, it is a point of order. I just want to make the point that in fact somebody in wealth management understands these issues.

I'm just saying this respectfully, Cathy, that somebody in wealth management does understand from a different perspective, so it's not—

[Shelly Glover, Conservative, Saint Boniface, MB]

This isn't a point of order, Chair.

[The Chair, Conservative, James Rajotte]

That is a point of debate, Mr. Brison, as you know.

Ms. McLeod.

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

Again, I think there were many questions that he indicated he wasn't able to respond to.

[Jean Richard]

May I say that all the answers you have heard from the other witnesses would be essentially the same from a BMO representative, essentially the same. They would be similar. So what was the purpose of my coming here? It was simply to bring another angle.

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

Thank you.

There are two areas I want to touch on in terms of my specific questions.

One, which follows up on my initial line of thinking, is on the whole question of reporting. I understand that if you're in a jurisdiction you do your own investigation and you report to local authorities, but if there are bank secrecy laws in those local authorities, do you actually do the reporting? Again, I'm going back to where I was originally questioning. Do the bank secrecy laws in those jurisdictions.... Even though you said that when you have suspicious transactions you sort of follow them through and then you would report them to local authorities, is there anything in those laws that preclude you from doing that reporting?

Maybe Mr. Blackburn and Mr. Bartos could respond.

[Steven Blackburn]

There is nothing in the laws and in the jurisdictions in which CIBC operates that would inhibit us from reporting suspicious transactions, for example.

I would make a point of clarification. The only limitation is in respect of the flow of information between jurisdictions. There are no limitations on what we can report in those jurisdictions. Every jurisdiction in which CIBC operates is either a FATF member or a subsidiary organization member, so they are all subject to the same requirements. Their legislative requirements are similar to those of Canada, though they're worded differently.

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

I would presume that's the same answer for everyone else. If no one has anything different....

I was a little puzzled on whether there were any challenges with local authority reporting.

My next question is this. Certainly one of the tools we have is the unnamed person, and there is often some frustration with that, certainly from Canada Revenue Agency's point of view. Could you talk as an organization about the pros and cons or about what some of the challenges are for you, in terms of how this unnamed person tool we have presents you with challenges?

It looks as if Mr. Blackburn is ready to answer.

[Steven Blackburn]

I'm afraid I don't have the experience to respond to that question. I apologize.

[The Chair, Conservative, James Rajotte]

Is there anyone who would like to respond?

Go ahead, Mr. Purre.

[Russell Purre]

Maybe you could provide us with more details on it. I don't want to be in the same position as my colleague from BMO. If you would expand on the question possibly....

[The Chair, Conservative, James Rajotte]

You have about one minute left.

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

Perhaps you could move that question into your organizations and someone who is more familiar with how the unnamed person requirement works could actually get back to us in regard to what the challenges and positives are. Basically it's a tool we have that's available.

[The Chair, Conservative, James Rajotte]

Thank you. If you could all submit that to me, as the chair, the clerk will ensure all members get that.

We'll go now to Mr. Caron, s'il vous plaît.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I asked Mr. Purre this question before, but I would also like to have the opinion of the other witnesses who are here with us.

I quoted a definition given by Geoffrey Colin Powell, who is a former economic advisor to the island of Jersey. That island has been recognized as a tax haven. His definition of what constitutes a tax haven is a tax structure established deliberately to exploit a worldwide demand for opportunities to engage in tax avoidance.

I would like to know from each of you, except for Mr. Purre who has already answered, whether you think this is a good definition. Otherwise, what is your own definition? It seems there is no agreement at present on what constitutes a tax haven.

Perhaps we could go from left to right, starting with Mr. Richard.

[Jean Richard]

The definition of a tax haven can vary widely and depends on many things. You have given one from an economist. To some Canadians, Alberta is a tax haven. To some people, it is always the place where you pay the least tax. To others, as you say, it will be a place where there is a structure that favours avoidance. It all depends on the situations and the structures. However, in the usual definition, a tax haven is essentially a place where there are protections that allow aggressive tax avoidance. Tax evasion is the more usual term. When we are talking about tax evasion, as Mr. Purre said, that is an entirely acceptable definition. However, other people might go further and even include Alberta as being a tax haven within Canada. So the concept is an open one.

[Steven Blackburn]

My response would reflect that provided by Mr. Purre earlier.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Mr. Bartos, what do you think?

[Scott Bartos]

To my knowledge at least, HSBC does not attempt to really define what a tax haven would be; rather, we try to look at the various countries from a combination of risk factors. There may be corruption within the country, and we would look at the corruption perception index. It might be things like secrecy laws. It might be FATF ratings. Rather than focus on trying to define a specific definition, we look at a combination of factors by which we then rate the country for its risk.