Evidence of meeting #73 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was fintrac.
A recording is available from Parliament.
Liberal
Scott Brison Liberal Kings—Hants, NS
An increase in the level of reporting does not necessarily mean an increase in the level of transactions.
Director, Financial Transactions and Reports Analysis Centre of Canada
That is absolutely right. In fact the increase in reporting, we think, may be because of an increase in activities, but also it might be because we're much better aligned in our work with the enforcement agencies. We're much more responsive to their needs than we used to be in the past.
Liberal
Scott Brison Liberal Kings—Hants, NS
Particularly given the global reach of Canadian financial institutions and the increase of offshore tax havens, is there any overlap between your activities or activities designed to identify terrorist financing, and activities that would be designed to identify those who use offshore tax havens to evade paying taxes in Canada? Would there be some overlap within those activities?
Director, Financial Transactions and Reports Analysis Centre of Canada
There are two things we do right now when it comes to the relationship we have with CRA. The first one is that if we see a report that may look suspicious, we have the capacity to disclose it to CRA if it meets two thresholds. The first one is money laundering and the second one, tax evasion. It has to meet these two thresholds, since our legislation is about ML.
That is the first mechanism and we use it. We have disclosed to CRA in the past.
Liberal
Director, Financial Transactions and Reports Analysis Centre of Canada
They don't have a reciprocal obligation.
What is happening now, as of January 1, 2015, is that CRA does receive the international fund transfer directly from the reporting entities.
Liberal
Scott Brison Liberal Kings—Hants, NS
What is the public policy reason that CRA does not have the same reciprocal responsibility to report potential terrorist financing to you, in the way that you have to report potential tax evasion to it?
Director, Financial Transactions and Reports Analysis Centre of Canada
CRA would have to report to the law enforcement agencies and national security agencies with which we work, so there is a continuum in terms of partnership. But it's difficult for CRA, unless they do specific analysis of international fund transfers, to see terrorism financing. CRA focuses mainly on the use of non-profit organizations when it comes to illicit financing.
Liberal
Scott Brison Liberal Kings—Hants, NS
Do you expect the provisions in Bill C-51 to have an impact on the tracking of terrorist financing in your work?
Director, Financial Transactions and Reports Analysis Centre of Canada
No, not at all.
In fact, FINTRAC has all the tools it needs to receive the information and to disclose the information it has to disclose. Bill C-51 has no bearing on our organization. We keep the authorities we have exactly.
Liberal
Scott Brison Liberal Kings—Hants, NS
You've said that you'll be as forthcoming as possible but that you can't provide certain classified information.
Would you be able to provide to a minister, for instance, more detailed information on algorithms used to track financing?
Director, Financial Transactions and Reports Analysis Centre of Canada
We do not disclose to the Minister of Finance the operations of FINTRAC. We do not disclose names. We do not disclose amounts of money.
We do disclose strategic papers in terms of trends, those kinds of issues, but we do not disclose—and that's specifically why the legislation exists—names, transactions, addresses, and anything of that sort. The legislation is very specific as to which recipients are entitled to the information, and ministers are not part of those recipients.
Conservative
Conservative
Mark Adler Conservative York Centre, ON
Thank you, Mr. Chair.
Officials, thank you all for being here this morning. I want to begin my questioning with a couple of quotes.
First of all, we all know that radical jihadists have declared war on Canada. We're all in agreement on that. ISIS has said that they are coming to the west to drink our blood.
I do want to quote an ISIS spokesman, Abu Mohammad al-Adnani, who said:
If you can kill a disbelieving American or European—especially the spiteful and filthy French—or an Australian, or a Canadian, or any other disbeliever from the disbelievers waging war, including the citizens of the countries that entered into a coalition against the Islamic State, then rely upon Allah, and kill him in any manner or way however it may be.
This is the terrorist threat that we face, not only here in Canada but around the world.
I would like to ask a question, and I'll start with you, Mr. Cossette. Thinking inside the box, we think of people and organizations raising money in the traditional sense of the way that people go about raising money, by soliciting it in various ways. But there are other ways of financing terrorism abroad. What about, for example, the “legitimate business” that purports to be in the export business and may be sending goods for sale abroad that would finance terrorist activities abroad. The business appears to be legitimate here in Canada.
How is enforcement on that front handled?
Director, Financial Transactions and Reports Analysis Centre of Canada
Since we see only transaction reports, we see of course who is transacting money but it is impossible just by looking at transactions to identify whether a transaction is illegitimate or legitimate. That's always a bit of the challenge we face when we're being asked if we track the financing of terrorist groups. Individuals do not identify themselves with specific organizations when they do their transactions, so again, it is the fusion of the transactions and the information provided by the law enforcement agencies that may in fact, from an evidence standpoint, show something.
At the outset, just looking at transactions does not necessarily demonstrate that there are illicit activities or the financing of terrorist activities. There are the transactions and the names. If in fact the law enforcement agencies are asking us if we have something on Gérald Cossette, for instance, we'll look in the database and then see the kinds of transactions that may show a suspicion of money laundering. The enforcement agencies can be more specific about that. They may give us information about the specific case they're working on and then we would look at the data holdings to see if the information we have may be of interest to them, given what they're looking at.
Conservative
Mark Adler Conservative York Centre, ON
So enhanced communication, then, between investigatory powers and between agencies, is better. It's good.
Director, Financial Transactions and Reports Analysis Centre of Canada
Absolutely. In fact FINTRAC, for instance, is a full member of the Canadian Association of Chiefs of Police, so we sit at the table when they identify their priorities and their operations.
Conservative
Mark Adler Conservative York Centre, ON
Going back to what you said before, Bill C-51, although it may not enhance your powers specifically, would enhance the overall objective of targeting terrorist activity and terrorist financing here in Canada.
Director, Financial Transactions and Reports Analysis Centre of Canada
Mr. Chair, that's an issue that is outside the purview of my mandate, but I will just repeat that we in fact have at FINTRAC all the powers we need in order to receive and disclose the information that is relevant.
Conservative
Mark Adler Conservative York Centre, ON
I realize you can only speak on behalf of FINTRAC, but you did agree that enhanced communication and investigatory powers are better and would lead to a better end result, which Bill C-51 would provide.
Director, Financial Transactions and Reports Analysis Centre of Canada
The closer we work with our partners, the better it is for the regime.
Conservative
Mark Adler Conservative York Centre, ON
Okay. That was good. Thank you.
In our environment, you see these signs all over the place: “If you see something, say something.” We're relying on the vigilance of citizens to report if they see something suspicious. For example, if a person has a suspicion of any kind of terrorist financing, who do they report that to? Can you walk me through the process of the investigation and potential end result? How could a citizen initiate a process?
Conservative
Manager, Terrorist Financing Intelligence Group, Financial Transactions and Reports Analysis Centre of Canada
Essentially, Monsieur Chair, one of the first steps that a person should take is to contact local law enforcement, to contact the police. If you see something and say something, it's to the police first.
They can also report to FINTRAC voluntarily. They can go to the FINTRAC website and send us their observations. From there, FINTRAC would look at and assess the information. If we see reasonable grounds to suspect that their information and our financial transactions would be useful in a terrorist-financing investigation, we would disclose the information to law enforcement and CSIS as appropriate. From there on, I think it would be up to CSIS and law enforcement to conduct the investigation because we do not do that.
Conservative
Mark Adler Conservative York Centre, ON
It's important for citizens to come forward and report to FINTRAC directly.
