Finance Committee on March 28th, 2018

[The Chair, Liberal, Wayne Easter]

I will call the meeting to order.

I apologize to witnesses in advance. We're going to run a little further behind because we're going to have to deal with committee business at the start of the meeting rather than at the end.

I would ask the clerk if he could give the subcommittee report to the committee, and then we'll discuss it.

I'll read it:

Your Subcommittee met on Tuesday, March 27, 2018, to consider the business of the Committee and agreed to make the following recommendations:

1. That, in relation to the statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, the Committee dedicate additional meetings based on the remaining lists of witnesses provided on Friday, February 16, 2018; and that, should the Committee's travel to Toronto, Ontario, London, United Kingdom, Washington, D.C. and New York City, New York, United States of America, in Spring 2018, be cancelled, efforts be made to invite these witnesses to appear by videoconference.

I think that's clear to everyone, given the travel difficulties we're having in the House at the moment. If this committee's travel gets cancelled as a result of that or doesn't get authorized tomorrow, then we would have to try to invite witnesses by video conference.

2. That, notwithstanding the Committee's routine motion on the distribution of documents adopted on Wednesday, February 3, 2016, and the usual practice of committees concerning access to electronic documents, Pierre-Luc Dusseault and Pat Kelly be added to the Committee's distribution list and be granted access to the Committee's digital binder site for the remainder of the parliamentary session.

3. That the Committee retain interpretation services in regards to....

I'll not go through all the places again related to the trip related to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

4. That the Financial Consumer Agency of Canada be invited to appear to discuss their review of bank sales practices prior the commencement of the study of a budget implementation bill.

Respectfully submitted.

It is moved by Ms. O'Connell, seconded by Mr. Dusseault.

Is there any discussion on the subcommittee report?

(Motion agreed to)

You have a motion, Ms. O'Connell?

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

I do, if we can distribute it in both official languages.

[The Chair, Liberal, Wayne Easter]

Yes.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Mr. Chair, do you want me to read the entire motion?

[The Chair, Liberal, Wayne Easter]

It is before committee members.

Do you want it read, members? We talked about it at the subcommittee, in terms of what the thrust might be.

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

People might be watching at home.

[The Chair, Liberal, Wayne Easter]

Okay, please read it, then, Ms. O'Connell.

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Thanks.

1. That the Committee begin a subject matter study of Bill C-74, An Act to implement certain provisions of the budget tabled in Parliament on February 27, 2018, and other measures on Tuesday, April 24, 2018, if the Bill itself has not yet been referred to the Committee.

2. That the Committee hear from departmental officials on the subject matter of Bill C-74 on Tuesday, April 24[,] 2018, from 3:30 p.m. to 5:30 p.m.

3. That, if Bill C-74 is referred to the Committee by the House during the subject matter study of the Bill, all evidence and documentation received in public in relation to its subject matter study of Bill C-74 be deemed received by the Committee in the context of its legislative study of Bill C-74.

4. That the Clerk of the Committee write immediately to each Member of Parliament who is not a member of a caucus represented on the Committee, to inform them of the beginning of the subject matter study of Bill C-74 by the Committee and to invite them to start working on their proposed amendments to the Bill, which would be considered during the clause-by-clause study of the Bill.

5. That Members of the Committee submit their prioritized witness lists for the study of Bill C-74 to the Clerk of the Committee by no later than noon on Friday, April 13, 2018, and that these lists be distributed to Members that same day.

6. That the Subcommittee on Agenda and Procedure meet on Monday morning, April 23, 2018, to finalize the list of witnesses to be invited to appear on Bill C-74.

7. That the Committee hear from witnesses on Bill C-74 from April 24, 2018, to May 10, 2018.

8. That the Committee invite the Minister of Finance to appear on Bill C-74 on Thursday, May 3, 2018, from 4:00 p.m. to 5:00 p.m., and that officials appear from 5:00 p.m. to 6:00 p.m., if necessary.

9. That proposed amendments to Bill C-74 be submitted to the Clerk of the Committee in both official languages by 5:00 p.m. on Tuesday, May 15, 2018, at the latest.

10. That the Committee commence clause-by-clause consideration of Bill C-74 on Tuesday, May 22, 2018, at 3:30 p.m., subject to the Bill being referred to the Committee.

11. That the Chair may limit debate on each clause to a maximum of five minutes per party, per clause.

12. That if the Committee has not completed the clause-by-clause consideration of the Bill by 9:00 p.m. on Wednesday, May 23, 2018, all remaining amendments submitted to the Committee shall be deemed moved, the Chair shall put the question, forthwith and successively, without further debate on all remaining clauses and proposed amendments, as well as each and every question necessary to dispose of the clause-by-clause consideration of the Bill, as well as all questions necessary to report the Bill to the House and to order the Chair to report the Bill to the House as soon as possible.

[The Chair, Liberal, Wayne Easter]

Do you so move?

[Jennifer O'Connell, Liberal, Pickering—Uxbridge, ON]

Yes.

[The Chair, Liberal, Wayne Easter]

Is there a seconder?

It's open for discussion.

Mr. Albas.

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

Thank you, Mr. Chair.

I certainly appreciate the member reading it out for the people at home. I really want to make sure we're being clear on exactly what we're doing. This is a pre-study. The bill itself was tabled in the House yesterday. A technical briefing was given about eight hours later, I think. There were a number of us who raised concerns publicly in yesterday's meeting that it's not a good process.

That being said, the only question I would have here is about how, when we go through it, there is a provision such that the chair may limit debate to a maximum of five minutes per party. Could you just reassure me, Mr. Chair, on what the typical practice is? Not every clause receives five minutes of attention.

[The Chair, Liberal, Wayne Easter]

I guess that if things get really sticky we'll have to limit it to five minutes. In the past, in terms of the budget implementation act, we have taken as long as 20 minutes or half an hour on some points that seemed to require a lot of debate, and I think we're open to that flexibility again. I do understand where the government comes from. If we get into filibusters and those kinds of things, we'll need to be able to limit the debate to meet the conditions that are laid out in number 12. From my perspective, I think you'll find that we'll be fair.

Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Out of respect for the witnesses with us today, I will be brief.

Bill C-74, which is 547 pages long, has not even been voted on yet, but the government is already predicting that it will be passed. In other words, it is anticipating the result of a vote in the House of Commons. I would like the record to reflect my disagreement with this practice.

I would also like the record to reflect my disagreement with points 11 and 12 of the motion, which limit the time allocated for the clause-by-clause consideration of the bill as a whole. They are seeking to limit the attention parliamentarians may devote to this 547-page bill. We want to make sure that, at the end of the process, we have done our due diligence.

I would simply like the record to reflect my disagreement with such an undemocratic process.

[The Chair, Liberal, Wayne Easter]

That's noted. Is there any further discussion?

Go ahead, Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I'm going to point out something here. I'm holding the bill in my hands, but the clause of this motion says that we'll start clause-by-clause consideration of Bill C-74 on Tuesday, March 22, and by May 23, if we haven't finished it by 9:00 p.m., all the remaining amendments submitted to committee shall be deemed moved. The chair shall put the question forthwith and successively. This means that there's very little way we can actually get through this. I remember that the last time we went through it, I reserved my remarks to about 12 to 15 clauses with which I had serious issues, where I proposed some amendments. This is a bigger bill than last year's, and it goes into far more detailed taxation issues that I need to read up on and on which I need to get up to speed, because it goes outside of just strict budgetary matters, I would say.

You're severely limiting my ability as an individual member to represent, which is why I kind of have an issue with the “limiting it to the party” thing as well, not that I'm all that verbose at times. I'd like to be able to thoroughly review the budget bill in its entirety, and in its minutiae as well, because a lot of these odd clauses get caught in that moment. I remember that in clause-by-clause you actually learn more about the budget bill than at any point because you hear from others on their viewpoints. I'm just a little bit concerned that we won't be able to give this bill the due diligence it deserves.

[The Chair, Liberal, Wayne Easter]

Is there any further discussion?

(Motion agreed to)

We'll turn now to the witnesses.

Go ahead, Mr. Kmiec.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

Mr. Chair, in talking right before the meeting, I advised the clerk that I'm just giving notice of motion. I have two motions. The first is:

That the Chair of the Committee writes, as soon as possible, to the Chair of the Standing Committee on Industry, Science, and Technology, inviting that Committee to study the April 2017 report of the Office of the Superintendent of Bankruptcy (OBS) entitled “Review of Licensed Insolvency Trustee Business practices in relation to administration of consumer insolvencies.”

I have five copies in French and English.

[The Chair, Liberal, Wayne Easter]

The notice is given.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I do have one more motion.

[The Chair, Liberal, Wayne Easter]

Go ahead.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

This is my second motion:

That the Standing Committee on Finance undertake a study over a period of four meetings to review the tax revenue losses to the federal government, including but not limited to royalties, personal and corporate income taxes, and levies, as well as review the fiscal impacts, including loss of business and economic activity, resulting from the construction delays of the Trans Mountain Expansion Pipeline, that the Committee review the potential long-term federal benefits, including employment opportunities that the project would generate, and that the Committee would report back to the House and make a recommendation as to whether or not the Government of Canada declare the Trans Mountain expansion project to the national advantage of Canada and invoke Section 92(10)(c) of the Constitution of Canada.

[The Chair, Liberal, Wayne Easter]

It is noted that notice is given.

With that, thank you all.

Thank you, witnesses, for your patience.

As I think everyone knows, but just for the record, the finance committee is continuing its study on the statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

We welcome the witnesses.

First we have the Canadian Bankers Association with Ms. Stephens, Assistant General Counsel; and Mr. Davis, Chief Anti-Money Laundering Officer. The floor is yours.

[Sandy Stephens, Assistant General Counsel, Canadian Bankers Association]

Thank you very much.

The Canadian Bankers Association would like to thank members of the committee for inviting us to participate in the review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. On behalf of our member banks, we welcome the opportunity to contribute our comments on this important piece of legislation.

From the beginning, the financial industry has taken its responsibility in this area very seriously and has worked co-operatively with the Department of Finance, law enforcement agencies, prudential regulators, and FINTRAC on the development and implementation of the regime. Banks in Canada are fully committed to supporting the fight against money laundering and terrorist financing. The banks' central role in the regime gives them hands-on experience and insight into where the regime could be improved to be more effective and efficient in its fight against money laundering and terrorist financing.

Today I will speak to our recommendations with respect to the following three topics: strengthening the regime, information sharing under PIPEDA, and client identification in a digital economy.

With regard to strengthening Canada's AML-ATF regime, we note that new provisions, regulations, and guidance are always being added to the AML-ATF regime in order to keep pace with the changing landscape for financial services. While we fully support ongoing efforts to strengthen the regime, it is becoming increasingly complex, with significant regulatory, resource, and operational costs that continue to grow.

In that regard, the banking industry is a strong supporter of using a more risk-based approach to the regime. Reporting entities should be encouraged to focus on risk typologies and customers who demonstrate significant AML-ATF risk. By focusing on high-risk transactions and patterns, banks would be able to effectively dedicate resources where they can achieve the greatest benefit.

The CBA also recommends that the regime be enhanced through greater collaboration, communication, and information sharing between governments, law enforcement, and financial institutions. This includes, one, using a more aligned and consultative approach to legislation and guidance; two, working jointly to develop typologies and identify high-risk transaction patterns; three, sharing information on individuals or entities under investigation; and four, allowing FINTRAC to request additional information once it has reasonable grounds to suspect money-laundering or terrorist financing activities.

We believe that overall, these changes would help strengthen the regime. Also, in order to ensure the regime is functioning effectively, we support the collection and publication of data with respect to investigations, prosecutions, and convictions.

The next topic I'd like to go over is information sharing under PIPEDA. We believe the ability of banks to help protect against financial crime would be enhanced if PIPEDA were amended to allow financial institutions to share information among themselves to detect and prevent other types of serious criminal activity beyond fraud. Currently, the relevant provision in PIPEDA is limited to where it is reasonable for the purposes of detecting or suppressing fraud, or of preventing fraud.

This makes it challenging for the financial system to effectively restrict a customer who is considered to present higher risk for money laundering or terrorist financing from having access to services. If one financial institution, for instance, believes that one of its customers is involved in one of these activities and accordingly terminates the relationship, there's virtually nothing to stop them from just moving down the street and going to another institution.

We strongly support the recent ethics committee's recommendation that PIPEDA be amended to allow for a broader range of instances where financial institutions can share information. It should go beyond financial fraud to include money laundering and terrorist financing, to strengthen the regime as a whole. At the same time, we recognize that any measures taken to enhance information sharing must be balanced with privacy considerations.

My last topic is related to client identification in a digital economy. It is imperative that the AML-ATF regulations continue to be flexible and adaptive in an environment of rapid development and adoption of emerging technologies. Banks need to harness the ever-changing world of digital technology solutions, including innovative and secure means of performing identification, to meet the consumer demands of banking in a non-face-to-face environment. There is still a reliance on physical viewing of identification documents. We believe the legislation needs to be expanded to allow for the use of advanced technology that has the ability to perform remote identification.

This can be done through mechanisms such as online scanning, data extraction, and document authentication; live video connections; blockchain; biometrics; and other methods as they become available in the near future. Many of these methods have the potential to provide greater security and accuracy for client identification than reliance on the viewing of physical documentation at a branch.

In closing, we would like to reiterate the strong support of the banking industry for the AML-ATF regime. We are pleased to have an opportunity to work co-operatively with the government and parliamentarians to ensure that Canada's system is effective and efficient.

Thank you once again for providing the CBA with this opportunity to offer our views.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Ms. Stephens.

Turning then to the Credit Union Association, we have Mr. Pigeon, Assistant Vice-President; and Ms. Kellenberger, Senior Manager, Regulatory Policy.

Welcome.