Finance Committee on April 30th, 2015

[The Vice-Chair, NDP, Nathan Cullen]

So, having gone through that experience, in our first iteration of a major piece of anti-terror legislation, and having sections of the act struck down by the courts and therefore not accessible in this effort to stop terrorism, we now have moved forward. We've heard some testimony at this committee respecting Bill C-51, the next effort to counter terrorism. Has the government taken a new approach towards the legal community, having made legal errors in the first iteration from a previous government, or has the same pattern continued?

[John Hunter]

Well, I'm not aware of any consultation that has taken place with the legal community on Bill C-51, but I'm also not aware of anything in Bill C-51 that has the same kind of impact that the—

[The Vice-Chair, NDP, Nathan Cullen]

Well, let me take just one piece, because the third element that you mentioned was around the search and seizure—

[John Hunter]

Yes.

[The Vice-Chair, NDP, Nathan Cullen]

—and warrantless search at law offices in particular. Bill C-51 seeks to have some warrantless search and seizures, not towards law offices but towards a broader section of the Canadian society.

Are those different principles under the law? Are law offices and lawyers' contents a more particular concern than those over warrantless seizures for somebody's phone account or Internet usage?

[John Hunter]

Warrantless searches always raise problems, whether they're of law offices or not. The courts have been particularly sensitive to law offices because of the problem of client confidentiality that is in the files. Protocols have been developed by the courts to deal with that. I think in the general criminal law those protocols are generally observed. They weren't present in the legislation, which was one of the problems. But there are issues with respect to warrantless searches for all Canadians, not just lawyers.

[The Vice-Chair, NDP, Nathan Cullen]

The court said, at least in this particular instance... because we've tried this now; this has gone to the Supreme Court of Canada, and it has been tried with respect to law offices. Judges across all iterations of the courts are hesitant to allow the state warrantless seizures. That is a principle that we hold, that there is some judicial oversight when the state seeks to search an individual's or a lawyer's personal information.

[John Hunter]

Yes.

[The Vice-Chair, NDP, Nathan Cullen]

Okay.

Ms. Napoleoni, I'll start with you and then perhaps go over to Mr. Keatinge.

We've talked at some length in this committee about ISIS in particular. Do you have any sense of what proportion of the funds they are using to fight their war are coming through the sale of oil versus that from transfers from out of country, out of state, coming from Europe and North America?

[Loretta Napoleoni]

I think the bulk of the money actually comes from their fiscal system. They're acting as a proper state, so people who need to access infrastructure pay fees to the Islamic State. We're talking about a very large number of people.

The smuggling is not as important, I think, because the smuggling is taking place through a joint venture with the local population. The people who are actually extracting the oil, smuggling the oil, and carrying it to the borders are not members of the Islamic State but are individuals who then pay a percentage of their profits to the local government.

The structure of the Islamic State is such that, very differently from other armed organizations, including the Taliban or the FARC or even the Red Brigades, we have a group—which is the military wing, let's call it, of the Islamic State—that only fights, and this is predominantly composed of foreign fighters. Then there is an administrative organization, a bureaucratic organization, which is generally composed of local people. At the end of the day we have a sort of interaction between the local population and whoever represents the Islamic State, and this is where the bulk of the money comes from. So it is run exactly as a state.

Can I just say one thing about the Club de Madrid? I was the chairman of counterterrorist financing for the conference of the Club de Madrid 2005 and I wrote the section related to country finances in the proposal. I think the entire proposal that the Club de Madrid did in 2005 is still incredibly valid today. The problem is that in order to be implemented it required cooperation at a global level that, in 2005, we did not achieve. But even today, the entire proposal I think can still be incredibly valid.

[The Vice-Chair, NDP, Nathan Cullen]

Okay.

Thank you very much.

Allow me to just pause for a moment and assume my chairmanship. We have a second motion to adjourn in 18 minutes. Would the committee like to allow five more minutes for Mr. Van Kesteren?

[Andrew Saxton, Conservative, North Vancouver, BC]

We can do five more minutes.

[The Vice-Chair, NDP, Nathan Cullen]

Does that seem okay? That will give us a little less than 15 minutes to get over to the House.

Is that acceptable?

Okay, Mr. Van Kesteren, it's over to you for five minutes.

Thank you, Ms. Napoleoni.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Okay, I guess I get to wrap up.

It's almost impossible to wrap up this conversation, because we have gone in so many different directions, all of them fascinating. I don't doubt your expertise, madame, on terrorism and financing and all of those things, but there are so many aspects that you left out and so many areas—the geopolitical for instance, including Islamism. We had testimony about a week ago about that radicalism. I really don't think we need to go any further on that.

What I'd like to do is bring it back home. The intent of this study was to examine how we as a nation, Canada, can stop the flow of funds so that terrorism—we're going to try to do as much as we can across the seas—will not grow here.

I'm just going to give you all chance in a really quick roundup to say whether the systems we are putting in place are effective and whether you have a suggestion regarding how we can become more effective.

I've used up about two minutes of my time, so I guess that means you have three minutes divided by four. So do the math; that's 45 seconds each.

Let's start with the professor.

[Anthony Amicelle]

It has to be clearly understood that the fight against terrorist financing has in a way come to be inseparable from the fight against money laundering. They start from the same premise, that money is the sinew of war. With that view, we feel that, by attacking their funds, we can disrupt some terrorist groups just as we can disrupt some criminal groups. The question is finding out how important money is for those groups.

Clearly, the Islamic State is a specific armed organization. In a case like that, we can imagine, money is important. However, there are cases in Canada where the importance of cash flow may be questioned. How expensive is it for a single person to go and plant a bomb, or do this, or do that? The idea that we can put an end to terrorism, to terrorist activities, in Canada in particular, just by drying up finances is open to question.

However, in terms of a classic criminal investigation, having access to financial information is appropriate in completing the investigation. That may be the actual issue.

We must not put too high a value on what can be done in the fight against terrorism in Canada, but we must identify what the issues are for us, what kind of political violence we could have in Canada and how we can best use the financial aspect in a criminal context, rather than thinking that we are going to prevent an attack with that type of approach or by drying up financial resources.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Mr. Hunter, do you want to weigh in?

[John Hunter]

My concern here is simply to remind you of the constitutional constraints on some of the things you might otherwise do. Beyond that, I'll cede my time to our experts from Europe.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

We have Mr. Keatinge.

[Tom Keatinge]

Whatever the form of non-violent extremism, terrorism funding, or political violence, I think the question that you should be asking yourselves, as should any country, is whether vulnerable sectors such as remittance companies and charities are being given the support, guidance, and regulation they require to avoid being abused.

Those informal channels need to be continuously scrutinized and assessed.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Ms. Napoleoni, you have the wrap-up.

[Loretta Napoleoni]

I think one thing that Canada could do is to work on radicalization by preventing these young people from being seduced, because we're talking about true seduction from this Islamic anti-imperialist front.

On terrorist financing, I must stress that there is a big difference between money laundering and terrorist financing. Money laundering is always done with illegal funds. Terrorist financing is sometimes done with legitimate funds. Often the funds become dirty or illegitimate only when they are used to carry out a terrorist attack. The key issue we must address is how to deal with money that is earned legitimately and then sent somewhere and then used for terrorist financing or for carrying out an attack.

I did a calculation before 9/11 and the amount of legitimate funds within the total terror economy was about one third. We're talking about large sums.

In reference to Canada, the money that is sent by the diaspora, such as the Iraqi diaspora in Canada or the Somali diaspora, is money that is clean. It is earned legitimately by people. But when it gets there, part of this money is used for terrorist activity. That is an area that requires a lot of research to find the legal framework within which we can legally block these kinds of funds.

[The Vice-Chair, NDP, Nathan Cullen]

Thank you, Ms. Napoleoni.

To all our witnesses, thank you very much.

My apologies for the disruptions. We tried to keep some semblance of order here today. Your testimony is very important to the study. Thank you again

Thank you committee members.

The meeting is adjourned.