Finance Committee on Feb. 14th, 2018

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Just to be clear here, there's a clear difference here between having efficacy and efficiency. Credit unions in my area and right across the country often are small. Banks and other financial institutions may move out. I hear they have common reporting standards and must show FATCA as well as FINTRAC compliance. Those costs are continually going up, and you come here and say you don't track that. I understand your mission is absolutely necessary, noble, and needs to be done, but that kind of attitude doesn't really promote confidence that you're doing this in the most efficient way.

What gets measured gets done, but you can also improve upon those things, so I really would hope you're also looking at this.

I have heard through my discussions—and I've spoken with hundreds of credit unions—that there have been cases of FINTRAC placing a fine over the designation of a particular type of work that someone does and fining that particular institution for every transaction that person did.

Have you ever heard of that before?

[Joane Leroux]

Maybe I can help bring some clarity to that, especially with the credit unions.

They are a big centre in the regime. When we do look at a fine, it starts with a compliance examination. As I said before, we have a risk model that selects entities for a compliance exam to see if they're fulfilling their obligation under the act. That's the extent of it. It's not an investigation.

We look at a scope, a sample. We would look at a particular scope or period of time in the transaction, and at a certain sample, and it's only in cases of very egregious non-compliance.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Have you heard of that before? A small administrative error was made, and they were fined for every single transaction after that clerical error. To me, that doesn't sound like an effective use of anyone's time.

[Joane Leroux]

Well, I haven't heard of that.

We look at a sample, as I said. It wouldn't be all transactions. Usually we look at a six-month period. We'll do a sample of a hundred large cash or bank deposits, or whatever. Our program itself works on instances, so it will look at each instance of non-compliance. It's probably from that angle that you're hearing that. There's reasonable judgment. We go at the heart of it and find the cause, but if it's a system glitch or whatever—

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Okay. I would hope so, because it sounded a bit over the top. Again, it's hearsay.

That said, I'd like to talk to OSFI.

In the last session, we had Department of Finance officials here. They said FINTRAC follows a lot of transactions in the non-regulated mortgage space, and they have a lot of data. In your memorandum of understanding with FINTRAC, do you receive that information in any shape or form on the unregulated market?

[Christine Ring]

We do not. We only receive information pertaining to the institutions we regulate, which are the federally regulated institutions.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

My understanding, though, is that you're also responsible for financial stability. Do you just assume that it only applies within the federally regulated space, then? Wouldn't it be of interest to decision-makers to know more information about the unregulated space, from a federal perspective?

[Christine Ring]

With respect to the mortgage issues, it is not an area of my specialty. My focus is on AML only, and OSFI's mandate is only pertaining to the federally regulated financial institutions.

[Dan Albas, Conservative, Central Okanagan—Similkameen—Nicola, BC]

Just to make a statement—and again, I have asked FINTRAC at previous meetings in regard to this point—I think there is a lot of data that could be aggregated that would not violate any personal privacy or charter rights of any individual and that could give decision-makers, whether here in Ottawa or whatnot, whether it be in CMHC, OSFI, the Department of Finance, or the Finance Minister himself in this case.... By aggregating some of that data, we put.... As we know, there are a lot of compliance costs. Good work gets done, but there is also a lot of aggregated data, and I would really encourage that, because it's a gap I see in our current system.

[The Chair, Liberal, Wayne Easter]

When I look at this discussion paper, I think we're probably going to have ample time to discuss those areas.

With that, is it possible for you to show the committee a mock report that either a credit union or a bank would have to fill out, with ABC company or something on it? It's easier to understand the burden of paperwork, of filling out a form, once we see it. There's no doubt you are going to be called back again, so if you could, please bring that with you.

Mr. Bell, if you could have an answer by about the 28th, we meet then as well.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Seeing as this is the last meeting before the February break week, I just wanted to know what your plans are for the supplementary estimates and whether your intention was to call the minister for that, because I think we only have three meetings. There are many breaks between now and when the supplementary estimates can be considered, by the end of March.

[The Chair, Liberal, Wayne Easter]

We haven't made any plans yet, but I can see that we're going to have some extra meetings. We have to deal with supplementary estimates at some point, and I think we only have two weeks in March. We will deal with it. We may have to call an extra meeting.

With that, the meeting is adjourned.