Finance Committee on Feb. 28th, 2018

[Daniel Therrien]

I don't know if my colleague will have an opinion because she is responsible for the group doing the reviews. I'm not imputing bad faith. It may be a question of wanting to do the right thing, acting in good faith, and informing a government institution of what they believe is suspicious. Training may be part of it. Are financial institutions properly training? I know there is training, but what we see objectively on the ground is some level of over-reporting by the financial institutions.

Do you have anything else?

[Lara Ives]

I wouldn't add much other than I think it's a combination of factors. I would agree that there's no malintent, but it's probably a combination of, maybe, a misunderstanding of the exact rules and then some reporting with a narrative or subjective component as well. So they opt to report in certain cases.

[The Chair, Liberal, Wayne Easter]

Thank you all.

Mr. McLeod.

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you, Mr. Chair.

I'm listening with interest to the presentations today. I have to agree with your opening comments that this is a very complex issue and we've heard from a number of organizations now. I'm really trying to get a handle on how everything fits together. There are many different departments and organizations. We have the Department of Finance, the Department of Justice, Global Affairs, FINTRAC, the Public Prosecution Service of Canada, Canada Border Services Agency, Canada Revenue Agency, Royal Canadian Mounted Police, Canadian Security Intelligence Service, Public Safety Canada, and Office of the Superintendent of Financial Institutions all involved.

I've spent a good part of my life as a politician working with governments, and I know that they don't always have the best flow of information or communication links.

I wanted to ask, and maybe you all could give me a little bit of an answer, about how well the information sharing takes place. Is it something you're happy with? If there is an area that needs improvement tell us what that is.

[The Chair, Liberal, Wayne Easter]

Who wants to start?

CRA looks anxious on information sharing.

[Stéphane Bonin]

Thank you for the question.

CRA always starts with the confidentiality provision of the Income Tax Act. We always see section 241 of the Income Tax Act as some kind of bubble that every employee who gets into CRA defers to. The briefing they have is don't share information, but there are always ways whereby we can share information.

There are five or six ways when we can share information with the law enforcement community, and also with FINTRAC. The examples I shared earlier in my appearance relate to the Panama Papers. We were almost at a loss there as to how we could generate a good, solid investigation when we only had business structures overseas. By having met our threshold to initiate an investigation and then sharing information accordingly—because it was in the best interest of the administration of the Income Tax Act—with FINTRAC, FINTRAC then provided us with the financial transaction. That relationship is key for the criminal investigation division.

If I just look over the last few years we had 125 disclosures from FINTRAC in 2013-14 and in 2016-17 we had 209 disclosures, and for just the first three quarters of 2017-18 we're almost at 213. So we receive more information from FINTRAC than ever, but at the same time we also contribute information to FINTRAC when we have active investigations. As it relates to information sharing with law enforcement, there are also provisions there for the CRA to share information with law enforcement when law enforcement comes to us with either a tax order or when they are investigating serious crimes. There are provisions in the Income Tax Act to share information.

Then when we have a joint investigation with law enforcement, there are provisions there so that we can share information. Although CRA is always perceived to be a taker of information, we are becoming more of a partner in the fight against money laundering and tax evasion.

[The Chair, Liberal, Wayne Easter]

Public services, any thoughts? Or the privacy commissioner, who usually wouldn't share too much?

Public services.

[Lynne Tomson]

I can maybe start, and then you can chime in.

Yes, there are many partners. We're mandated, as I mentioned, by the RCMP, so they're our main conduit. They will get the information from CRA. You've heard how they share from CBSA and FINTRAC. We analyze that information, and if there's information that's missing, we go back to the RCMP, and then they get the information. We're not directly asking for any of the information.

[Michael McLeod, Liberal, Northwest Territories, NT]

My question, is it working well for you, for your organization?

[Lynne Tomson]

We're getting the information when it's available. We've talked a little bit about some of the difficulties being able to trace money and getting information if it's in overseas accounts, and then it's getting a production order and getting that information, which takes a lot more time, and there are other considerations.

[The Chair, Liberal, Wayne Easter]

Mr. Therrien.

[Daniel Therrien]

Mr. Chair, I think you won't be surprised by the answer. What I would like to do is to remind the committee of how exceptional this regime is. So, yes, the privacy commissioner will usually ask for prudence in terms of information-sharing. We see the need for this exceptional regime, given the importance of the harms of money laundering with organized crime and terrorism, but I would guard against, what will not surprise you, over-broadening information-sharing because this is a special regime where you have the financial transactions of people who have done nothing wrong. They're just doing a financial transaction over a certain financial threshold, being collected. This may be okay for the purpose of tackling the harms that the legislation is meant to tackle, but be prudent not to extend this too much.

[The Chair, Liberal, Wayne Easter]

I'll have to move on to Mr. Albas, we're substantially over.

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

Thank you, Mr. Chair.

I just want to thank Mr. Therrien for that comment because there's a tremendous amount of power that is given to these different agencies to act under the law, so it's just a helpful reminder. Again, there's always a balance to be found, so I appreciate you raising that point of view.

I'd just like to talk to CRA in regard to some statements that have come out of British Columbia again. B.C.'s attorney general, David Ebey, stated that he's been made aware of serious, large-scale, transnational laundering of the proceeds of crime in British Columbia's casinos. To the best of your knowledge, is this true? Has CRA been part of any investigations with the authorities in British Columbia?

[Stéphane Bonin]

Yes, we are working in several joint investigations, whether it be money laundering or when there is a tax-evasion element. I think it has already been confirmed in the media in British Columbia that CRA is part of an RCMP investigation that was made public, so, yes, we are indeed aware and we are working collaboratively with the RCMP on those cases.

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

I'm very happy to hear that. Is this a B.C. problem, or is this something that is happening in other jurisdictions in this country?

[Stéphane Bonin]

I would say that money laundering has no boundaries.

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

We see this type that has been raised specifically, because again the attorney general has stated that it's happening. I want to know, is this a B.C.-specific phenomenon, or are there other cases that CRA is aware of that these kinds of transactions are happening?

[Stéphane Bonin]

The CRA is involved in several criminal investigations that relate to money laundering to that scale across the country.

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

Okay.

I'd like to ask Public Services and Procurement Canada, is there a particular region of the country where you are seizing more assets involved in money laundering, or other activities? Where are the hot spots for the work that you do?

[Nicholas Trudel]

Our collaboration is primarily in Ontario. We work very closely with the OPP in the province of Ontario. I believe B.C. is the second most active jurisdiction for case volumes.

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

Okay. Now, I recognize that sometimes there's a case of being left with the bag, so to speak, where no one wants to say who owns a particular asset, but the courts, I guess, will say something needs to be done, and they need to be disposed of. Are quite a number of cases like that, or do you do a lot of investigative work to be able to find out where these are? It's a practical function, and I'm sure you're given quite a bit of authority by the court, but I'd just like a little more explanation on exactly how you do what you do.

[Nicholas Trudel]

Generally, our services are provided to law enforcement where there is a criminal accusation, so they've got an accused. There are provisions under the Criminal Code—I'm not an expert in them—for abandoned property or property without an identifiable owner. That generally would be a minority of the cases we deal with. Mostly, there is an accused. They go through the legal process, and then we deal with the decisions handed down by the court.

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

Yes, but, again, these are all court ordered processes, though, right? There's a chance for someone to make sure... Again, my comment is there is a lot of authority that is given to government agencies in these regards.

I would like to go back to the Privacy Commissioner one more time, because this is an issue that's been bothering me, because, for example, I have one of those smart watches, so I can't tell if the information about my heart rate is that mine or is that Apple's. I think we need to have a very good discussion in this country about the use of data and then who retains and who actually owns that information. I would say that data was generated from my activities from my purchase.

Are these issues that your office is seized with as to who actually owns that personal and private information versus....Have you been discussing these with some of the banks or the Minister of Finance when we're talking about these things?

[Daniel Therrien]

We start from the premise that if the information relates to you and you produced it and you sent it to a company, it is your personal information. Of course, you may or may not want to look at the contract that you have with the company that sent you the watch, it may tell you differently, but we work from the premise that it is your information.