Evidence of meeting #76 for Finance in the 41st Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was need.
A recording is available from Parliament.
Liberal
Emmanuel Dubourg Liberal Bourassa, QC
Do you think that a company like Western Union does those kinds of transactions?
President and Chief Executive Officer, Clement Advisory Group
I would suggest that Western Union absolutely does. You have to understand that Western Union works on a system of agents. The level of understanding and expertise of those agents varies from no knowledge to a very high level of knowledge. The ones that concern me the most are those who have little to no knowledge and who also could very well be involved in what we're trying to prevent.
Liberal
National Leader, AML Practice Investigative and Forensic Services, MNP LLP
I want to add, on the Western Union point, that fully half of all the suspicious transactions reported in Canada each year come from Western Union. Fully half of 80,000 suspicious transaction reports come from them. The average dollar value of those transactions is $300.
I don't give much credence to the argument that terrorist financing is of low dollar value and that therefore we can't protect against it. Individual acts are very inexpensive—the Madrid bombing cost $10,000—but when you're talking about terrorist financing and its significance, we're talking about maintaining a whole organization. We're talking about the radicalization and the need to run quasi governments.
A harder question to answer than what the difference is between a business transaction and a money-laundering transaction is what a terrorist financing transaction is, since we don't know it's terrorist financing essentially until it's used.
Conservative
The Chair Conservative James Rajotte
Thank you.
Thank you, Mr. Dubourg.
We'll go to Mr. Cannan, please, for seven minutes.
Conservative
The Honourable Ron Cannan Conservative Ron Cannan
Thank you to the lady and the gentlemen for being here this morning.
This is a very complex issue and a study for which we're trying to get diverse expertise from witnesses from around the world. I thank you folks from the U.K. this morning as well.
My first question is to Mr. Clement. I want to piggyback on Mr. Dubourg's comment about the white-label ATMs. Some of the major banks have white-label ATMs as well. Is your concern more with the independent, private ones and not with the big five banks per se?
President and Chief Executive Officer, Clement Advisory Group
Yes, sir, absolutely.
The point has always come up, whenever this has been raised, that there have never been many prosecutions for these. However, that being said, there have been some prosecutions in which they were directly linked to the Hells Angels. I can tell you, from my experience working across Canada on organized crime, that if you go to any hotel across this country, you're going to find a white-label ATM machine. Yes, the transaction can be traced somewhere down the road. My concern is that nobody knows where that cash is coming from. It's not coming in from a Brink's truck, as we would expect; it goes in from that bar. I can tell you that any Hells Angels-owned joint or strip club has a white-label ATM. It's a great vehicle for laundering money.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Is there a linkage between organized crime and terrorism?
President and Chief Executive Officer, Clement Advisory Group
I don't think we've had a case yet in Canada, and I'll defer maybe to my colleague from the U.K. There is literature out there or some evidence to suggest that organized crime is actually collaborating with some terrorist groups, but I think we have to be very cautious.
Conservative
Quilliam Foundation, As an Individual
If we look at the way terrorist entities operate, the way they generate money, in the past a lot of their money used to come from certain countries in the Middle East, from wealthy individuals, donors, etc. Many of these countries have stopped financing, not because they've had some sort of spiritual epiphany but because the very same people they were financing in the past are now threatening their own standing within their own countries.
Over the last five or six years plus, many of these terrorist entities have had to generate their own funds. Let's look at an organization such as ISIL, for example. While it is not in Canada, these are tactics that are used, and they have influence in Canada and around the world. Their main source of income right now is from sales of oil on the black market, but also from the sale of antiquities, from drug trafficking, from racketeering, from kidnapping, and from all of the other things that we know they are involved in. In order to undertake these activities, they have to work in partnership with a number of people who are involved in organized crime.
There are many connections, especially in the drug trade. We know that for sure there is a significant involvement in the drug trade by terrorist entities, and they're using the old smuggling routes from places such as South America. These kinds of activities are now being emulated by other groups in the West—in the U.K., in Europe, etc.—and there have been some cases in which groups and organizations have been found to be supporting terrorist activity through working with organized crime.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
So if there's smoke, there's usually some percolating fire along the way.
Mr. McGuire, I understand, based on your experience and from reading your background information, that charities have also been involved in financing some of these terrorist groups.
Do you have any examples of Canadians being identified as funding terrorist operations?
National Leader, AML Practice Investigative and Forensic Services, MNP LLP
I won't speak to specific examples, but I will say that it's so prevalent that Canada Revenue Agency has a charities directorate that deals specifically with terrorist financing. It screens the principals in every charitable organization in the country against watch-lists and lists of known nefarious individuals. It is a commonly known method.
Part of the reason is the difficulty for any institution, reporting entities included, to evaluate what's normal for a charity. Donations go up and down. Donations can be cash. Evaluating what the baseline is and distinguishing good dollars from bad dollars is very difficult in that context.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
You mentioned in your preamble support for the budget and that there are some additional mechanisms and enforcement for CRA.
From your perspective, is there a lead agency? Is it coordinated? Does it need improvement? What would you say as far as the success of CRA to date goes?
National Leader, AML Practice Investigative and Forensic Services, MNP LLP
In terms of terrorist financing, I think the contributions they've made have been significant.
In terms of coordination, we've certainly seen that escalate over time. CRA with FINTRAC, based on any reports, is conducting real-time investigations into tax evasion. I'm not as keen on CRA having its own separate financial intelligence unit. I think that should be centralized within FINTRAC.
Conservative
Quilliam Foundation, As an Individual
I want to give you a quote from the former head of MI6, Richard Dearlove, who described groups such as the Muslim Brotherhood as being, at heart, terrorist organizations. It is clear that a substantial number of British charities belong to the darker side of the global Muslim Brotherhood network. Even if not directly involved with financing acts of terrorism, they are an important component of the ideological narrative and welfare upon which the brotherhood-aligned terror groups subsist.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you for adding that.
I have one more quick question.
Mr. Christensen, you talked about some of your clients' concerns about all of the regulations and about fewer regulations and about trying to find that balance.
We've heard from Mr. Clement and others that we need to have more coordination, in some cases more regulation. How do we balance that, from what you've heard today?
Conservative
The Chair Conservative James Rajotte
We'll have a very brief response now, and we'll probably return to this as well.
Partner, Fasken Martineau DuMoulin LLP
I think there are really two aspects to it.
Generally I think the first aspect is making sure that in introducing new regulation there's proportionality in terms of the costs it's imposing and the benefits it's achieving. I think the second aspect of it is not so much about whether there's additional regulation but about the nature of that regulation. In other words, it's about making sure you get it right in terms of how we require institutions to do certain things so that we're achieving the objectives in a way that minimally impairs their business objectives.
Conservative
The Chair Conservative James Rajotte
Okay. Thank you.
Thank you, Mr. Cannan.
Mr. Côté, you may go ahead for seven minutes.
Raymond Côté NDP Beauport—Limoilou, QC
Thank you, Mr. Chair.
And thank you to the witnesses for being with us today.
Mr. Clement, I'm going to start with you.
You aren't the first to point out the problems undermining the RCMP's work. In fact, just a few days ago, Deputy Commissioner Mike Cabana told the Standing Senate Committee on National Security and Defence that the reallocation of 600 organized crime resources to anti-terrorism efforts was a serious problem. That really exposed the major issues within the RCMP.
Would you care to comment on what Mr. Cabana, a member of the RCMP's senior leadership, had to say?