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.
9:15 a.m.
Conservative
9:15 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you, Mr. Chair.
Thanks to our witnesses for being here today.
My first questions will be for the Department of Finance.
Mr. Stewart, can you share with us where Canada ranks vis-à-vis our partners in the G-7 with regard to terrorist financing?
9:15 a.m.
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
I'd like to be able to answer that in a quantitative sense but I can't do that.
Canada is on par with other countries in the G-7 in terms of the quality of our regime. I'm using here as the yardstick the review by the Financial Action Task Force, which was conducted in 2011 and then supplemented by further review in 2014. We fully adhere to the FATF standards. In that sense our regime is a solid and effective regime.
9:15 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Do you know, vis-à-vis the quantity of transactions involved, where we rank?
9:15 a.m.
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
No. If I may answer that question, and partly the question that was previously posed, the Department of Finance is responsible for the regime's framework, law, and regulation. We're not privy to operational information. Indeed, the regime, because it stretches across a broad group of partners, segments that information and probably quite appropriately. FINTRAC obtains information from the financial institutions and passes it on to the enforcement agencies. I would suggest that questions regarding the actual operational information would be better posed to the RCMP, CSIS, and CRA. Our department does not track the amount of flows.
That being said, we have done a review and are in the process of producing a broad assessment of threats and vulnerabilities. In that context and using all of the partners in the regime as well as some external partners, we think the risk of terrorist financing in overall terms is relatively low compared to that in other countries.
9:15 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Perhaps you could expand on the role the finance department plays in combatting terrorist financing.
9:20 a.m.
Assistant Deputy Minister, Financial Sector Policy Branch, Department of Finance
We are the leader of the regime as constructed with its 11 partners. We have membership on the Financial Action Task Force and represent Canada on that. The Minister of Finance is responsible for the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations. On an ongoing basis we coordinate meetings and representation of the regime externally.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
My next questions will be for FINTRAC.
Mr. Cossette, could you explain whether there is a preferred method for transferring funds? Is it, for example, by electronic means? What is the most common way for these funds to be transferred?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
Transferring funds can be done in various ways including electronic funds transfers. It can be done through cash smuggling. It may be through the exchange of goods. It may be through an informal mechanism whereby you give the money to a relative here in Canada who knows somebody abroad and then the money is never transferred but there's a promise that the money will be transferred. Basically, terrorists as well as money launderers use all of the methods available to them. Quantifying one method over another would be very difficult to do.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Have we seen an increase in the use of virtual currencies like bitcoin, for example?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
We have not necessarily. I would say we have not, according to our own data holdings.
I don't know, Luc, if you have a more precise answer.
9:20 a.m.
Luc Beaudry Manager, Terrorist Financing Intelligence Group, Financial Transactions and Reports Analysis Centre of Canada
No.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
You have not seen that.
Could you tell us where the money being transferred to terrorists goes?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
Well, the money may go to different groups through different routes. Basically, some people would carry the money with them in order to finance their own operations abroad. It's very difficult in fact to pinpoint which group receives what amounts of money. Maybe CSIS would be in a better position to comment on that, but once the money leaves Canada we have an idea as to where it lands, if it's a financial institution. But where it goes after that financial institution is impossible for us to establish.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Okay. Do you collaborate with your peers in other countries?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
We do. We are a member of the Egmont Group, which is an organization of 147 countries and includes FINTRAC. We do have, in fact, a memorandum of understanding with 90 of these countries.
So yes, we do exchange information with them on an ongoing basis.
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
We do share best practices as well. In fact, we teach one another. In the context of the Egmont plenary in June. FINTRAC will be hosting a seminar on terrorism financing on behalf of the Egmont Group.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Finally, you mention on your website that most of the financing is of smaller amounts. Can you give us an idea of what size amounts we're talking about?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
Well, that's one of the challenges we face. The automatic reports that are higher than $10,000—if you need a different criterion—are reported to us. We know that terrorism financing is done at a much lower level. Since we do not have access to reports under $10,000, again, it's impossible to quantify how much is being transferred. What we see is basically what is reported at the level of $10,000 and more, but we do know that individuals themselves finance $300, $400, $1,000, or $2,000.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Has there been any thought to adjusting that $10,000 benchmark?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
In fact, we're working with our finance partner on the possibility of reducing the electronic fund transfer to $0. So far it hasn't been possible for all kinds of reasons, one of them being technical, because we did not have the technical means to analyze such a huge data holding. I mean, we receive about 20 million reports on an annual basis. That may go up to 60 million, 70 million, or 80 million reports, so we need the capacity to do that and we're in the process of acquiring that capacity right now.
9:20 a.m.
Conservative
March 24th, 2015 / 9:20 a.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Thank you very much.
Mr. Cossette, you said that in October 2014 suspicious transactions increased by 22%. Was that due to a higher level of activity in terms of terrorist financing, or was it due to an increased level of activity by enforcement agencies?
9:20 a.m.
Director, Financial Transactions and Reports Analysis Centre of Canada
I would say, Mr. Chair, it was caused by two things. The first was that, as soon as the unfortunate shootout happened in Ottawa, we sent an email to all the reporting entities asking them—given the fact that the names of perpetrators were public—to go to their holdings and report what may relate to these individuals, as long as it pertains to transactions that seem to show a potential suspicion of money laundering or terrorism financing. So all the entities were asked to do something. They reported to us, hence the significant increase at that moment. Moreover, over recent months we have launched a kind of educational tour, if you will, with all the reporting entities, explaining to them what is a good suspicious transaction report, why they need to file a transaction report, and the kind of indicators they may use to determine whether there is suspicion of terrorism financing.
These two things have led to a significant increase in reporting specifically on suspicious transaction reports, which are very revealing.
