Finance Committee on Feb. 26th, 2018

[A/Commr Joanne Crampton]

Mr. Chair, if I may, it's certainly possible that there would be cases in which we would receive information and charges would not be laid. That's correct.

[Raj Grewal, Liberal, Brampton East, ON]

Joanne, in your professional opinion, how big is money laundering and terrorism financing in Canada? Is it a problem?

[A/Commr Joanne Crampton]

Money laundering is certainly a significant issue. It's a risk to our economy. It's a risk internally across Canada for investors, as well as externally. When we look at foreign partners and foreign investment in Canada, money laundering is certainly a risk, in that it's taking away from legitimate business.

[Raj Grewal, Liberal, Brampton East, ON]

Trevor, as background I watched a documentary on Netflix called Dirty Money, in which HSBC was a big player. It's well documented that they were seen as a safe haven by criminals all around the world to launder their money.

In terms of the regulatory system in Canada, how do we ensure that the big five at least, or schedule I banks in this country, have accurate regulations to make sure that we know they're not partaking in these kinds of initiatives?

[Trevor Bhupsingh]

Unfortunately, it's out of my realm of professionalism to answer that. It's really a question for the Department of Finance to answer about the regulatory system and the management of the banking system.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you.

[The Chair, Liberal, Wayne Easter]

I can see one difficulty we're going to have as a committee on this issue.

We have the discussion paper. You folks have had experience in the field. If you have any recommendations—and I know the whole group got together and put your points in a discussion paper—if you have anything specific you think we should be looking at to make the system better, then lay it on the table.

Whether we can do it or not, given privacy concerns and all the other angles, we don't know. We are looking for specifics on what we can do to better deal with money laundering and terrorism financing.

Mr. Kelly.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Thank you, Mr. Chair.

To Ms. Crampton, in your presentation you said a number of things that sounded quite disappointingly familiar to me from my career in the mortgage industry, where in cases of fraud, the difficulty of prosecution, the lack of resources—these kinds of things—have been cited by law enforcement, prosecution offices, and indeed industry as reasons that fraud is not prosecuted in Canada in many cases. I would like you to perhaps carry on and give us a little bit more detail about the barriers to being able to investigate and obtain convictions in fraud.

To Mr. Grewal's question, 53 sounds like a shockingly low number of active, open fraud investigations for a country the size of Canada, where I understand that perhaps as much as 50% or more of all the proceeds of crime is laundered through real estate transactions. That figure is from a perhaps dated study, but it is information that I had learned in my career. Could you expand on the barriers to getting prosecutions and being able to obtain convictions?

[A/Commr Joanne Crampton]

Certainly.

With regard to my comment on the number of files, I should have prefaced my remarks by saying the number I cited is strictly within federal policing by the RCMP. It doesn't include investigations that have started outside of federal policing, with a municipal agency or any other area. Those are very high-level files as well. They are tier 1 and tier 2 files, as we call them, which is a ranking system we have within the RCMP for the complexity and level of sophistication of the file. Although it sounds low, that's likely a small piece of what is actually being investigated across Canada.

I would say the point we see as most important would be the exclusion of lawyers and Quebec notaries from the act. It's a gap that we see within the system. Certainly professional money launderers, as I mentioned, have to be linked to the predicate offence, and that's what a professional money launderer will try their best not to be. They will try to be separate from that predicate offence, which makes it very difficult to investigate and difficult to prove.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Is there a specific legislative change you can recommend to address that?

[A/Commr Joanne Crampton]

It would be adding a provision for recklessness, for example, that shows that someone knowingly was investing without asking questions, without finding out why they were doing the investing, where they were moving the money to, so that it doesn't have to be linked to that predicate offence. There is other legislation in the U.K. and in the United States that models that type of legislation where you're not linked to the predicate.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Enforcement agencies probably try not to have to say it publicly too loudly, but certainly privately can say they have difficulty obtaining the co-operation of financial institutions. Is that part of your experience at the RCMP?

[A/Commr Joanne Crampton]

I can't say I would necessarily agree with that comment. We have a very good working relationship with the banks. We have a very strong partnership with them. We have working groups that involve the major banks. No, I wouldn't say that's an issue.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

It's perhaps not so much that they wouldn't co-operate with you if you initiated an investigation, but being reluctant to be forthcoming to report when they, themselves, have been victims of fraud or participation in a money laundering transaction.

[A/Commr Joanne Crampton]

They certainly have their own investigative teams. I'm not aware of what the threshold would be for them to report to the police based on what their own investigative teams would be looking at. I'm guessing they do have a threshold, but I wouldn't know.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

You mention in your remarks a lack of specialized skill and dedication of resources. How will that be addressed? The specialization and the skills are things I've heard about for many years as a complaint from law enforcement. Can we not get to the point where correct training and correct expertise is obtained?

[A/Commr Joanne Crampton]

I think we're doing very well in that area. Working with our partners over the last year, in particular in reviewing the regime and the act, we've been looking at what we could be doing better. It's been a strong focus of our training right across the board, not just within law enforcement but right across the regime. I'm very optimistic that we are moving towards much better training. Given the complexities, though, recognizing that it's an ever-changing world and that money laundering and terrorist financing is ever-changing, it's very difficult to keep up with.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Do you have any current data you could perhaps share with the committee on the scope and scale of money laundering activity? It's hard to quantify these things, I understand, but do you have studies you can point to that would suggest how much money is laundered in Canada and how much of that would be perhaps through bank accounts, real estate, through securities transactions? Do you have any way to quantify the problem with money laundering?

[A/Commr Joanne Crampton]

I would refer to the paper that was produced by the Department of Finance. I believe there are some quotes in there with regard to estimations. I certainly do not have any estimations of that from within the RCMP that we could say have any accuracy.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

Okay.

[A/Commr Joanne Crampton]

When criminal organizations are trying to gain money, some of the ways they will do it is through money laundering, through the financing of various types of crime. So it's very difficult to say, because most crimes are related to money and, subsequently, often money laundering.

[The Chair, Liberal, Wayne Easter]

You have time for one short one.

[Pat Kelly, Conservative, Calgary Rocky Ridge, AB]

The part of it that I'm most familiar with is real estate. I was wondering if you knew how much money continues to be filtered through real estate transactions.

[A/Commr Joanne Crampton]

No. I'm sorry, but I don't.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Dusseault.