Finance Committee on April 16th, 2018

[The Chair, Liberal, Wayne Easter]

I call the meeting to order.

Further to our statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, we'll be holding a hearing with several witnesses this afternoon.

I first want to apologize to the witnesses. We had tributes in the House for the Humboldt Broncos, and that took us a little over our start time.

With that, we'll start with the witnesses and then go to questions. We'll start with you, Mr. Binns, from ATM Industry Association Canada.

[Curt Binns, Executive Director, Canada Region, ATM Industry Association]

Thank you, Mr. Chairman.

On behalf of ATM Industry Association of Canada, I would like to thank you for the invitation to participate in the review of the proceeds of crime and terrorist financing act.

My name is Curt Binns. I'm the executive director for ATMIA Canada. We are an independent, not-for-profit industry association engaged in non-competitive promotion of our industry. Our mission is to promote ATM convenience, growth, and usage worldwide to protect the ATM industry's assets, interests, good name, and public trust, and to provide education, best practices, political voice, and networking opportunities for members of our organization.

With over 830 members in Canada, ATMIA is proud to be the voice of the Canadian community. We support over 30,000 Canadian merchants and small business owners who operate ATMs in Canada. Millions of Canadians use safe, high-quality ATMs to obtain convenient access to their cash anywhere, any time, including remote areas and areas considered undeserving by our banks.

As a voice with regard to cash-dispensing ATMs, the ATMIA would like to use this opportunity to address the actual and perceived risks surrounding white label ATMs being used for the purposes of money laundering.

Since 1996, there has been only one criminal case involving white label ATM crimes in Canada. White label ATMs in Canada are regulated. Since 2009, white label ATMs have been subject to specific anti-money laundering regulations that require every ATM owner to provide a significant amount of information, including information about themselves, the source of cash used in the ATM, the location of the ATM, and details about the Canadian bank account to which the ATM will deposit funds to be withdrawn.

If a business owner has multiple ATMs or high-volume ATMs, he or she is also required to provide criminal background checks. The owner must file all of these documents with the regulators for an ATM to be operational. Regulations require annual audits and documentation.

In conclusion, the ATMIA takes the risk of money laundering seriously, and works with regulators and government agencies to help ensure that appropriate procedures and safeguards are in place to mitigate risk.

Thank you. I look forward to any questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much. Mr. Binns.

Turning to the Canadian Automobile Dealers Association, Mr. Hatch, chief economist, and Mr. MacDonald, chairman of the board.

It's always nice to have another Islander here.

Go ahead.

[Peter MacDonald, Chairman of the Board, Canadian Automobile Dealers Association]

Thank you, Mr. Chairman. Good afternoon, and thank you for the opportunity to appear today on a very important subject before your committee.

My name is Peter MacDonald, and I am chairman of the Canadian Automobile Dealers Association, known as CADA. I am also a new car dealer from Prince Edward Island. With me today, as mentioned, is our chief economist Michael Hatch.

CADA is a national association for franchised automobile dealers that sell new cars and trucks. Our over 3,200 dealers represent a vital sector of the Canadian economy. We represent all brands of vehicles available in Canada, and our dealers employ over 150,000 Canadians. Annually, our member stores sell nearly $120 billion worth of goods and services to Canadian consumers. This number is equal to nearly 6% of the GDP. It also represents more than 20% of the retail sales that happen in Canada every year.

So far in 2018, growth in our industry has been consistent after five straight record years in new car sales. The investments the government made in the auto industry, such as the $13 billion credit facility backstop, have worked and have made the taxpayer a profit. I'm also happy to report that our sector continues to make great strides to deliver more fuel-efficient vehicles than ever to the marketplace, using a mix of new technology and light-weight materials.

Turning to the problem of organized crime, this is an issue of great concern to our members. Our retail locations are too often targeted by the concerted efforts of criminal organizations to steal large numbers of vehicles, often with values totalling millions of dollars. As a national association, we have a long history of co-operation with the government when it comes to cracking down on organized crime. Our team has served as part of the federal government's business network in crime prevention, and worked with the Ministry of Justice on the creation of stolen vehicle legislation that also specifically targeted the trafficking of stolen vehicle parts, and the export of stolen vehicles from Canada.

CADA has surveyed and consistently found that large transactions involving large sums of physical cash are very rare in our sector, and are consistently tracked by current banking practices. Our research indicates that hard cash transactions in excess of $10,000 represent less than 1% of sales. Most importantly, when these types of transactions do take place, they are fully documented at the dealership and at the dealer's financial institutions. For new car sales in total, 92% were financed either through loan or lease last year; of the remaining 8%, only a tiny share were physical cash transactions.

Car dealers are a special breed in the retail landscape. We sell very large ticket items. We have a much smaller number of total transactions than other retail stores that sell a greater volume of smaller goods and services. Between the manufacturer and the dealer, and between the dealer and the customer, there is extensive documentation of all new vehicle transactions that take place in Canada, and how these transactions are financed. Because of this, extensive tracking of inventory to purchaser, any cash transaction over the current $10,000 amount is already captured by the bank.

A very straightforward but rare example would be that of a customer who buys a vehicle and pays cash. That vehicle would then be tracked as leaving the inventory, and the bank or the financial institution providing floor plan financing would be alerted to the fact that the car was sold. From there the cash deposit for the car would also be reported and tracked by the bank upon deposit. Dealerships that would avoid this reporting process risk the cancellation of their franchise agreement—a risk greater than a simple fine. That said, as strong corporate citizens, CADA and its members are ready to co-operate with the government with regard to the documentation of these transactions, however rare they may be.

CADA would like to recommend that it is worth pausing and ensuring that any new regulations will actually deliver results before targeting new sectors of the economy. As stated earlier, CADA is ready to co-operate with this committee and the government on any initiative that makes life harder for criminal organizations. Our record on these issues is clear and will not waver.

Thank you for your time. Mr. Hatch and I will be more than happy to respond to any questions later. Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, Mr. MacDonald.

The Foundation for Defense of Democracies, Ms. Saperia.

[Sheryl Saperia, Director of Policy for Canada, Foundation for Defense of Democracies]

I'm honoured. Thank you, Mr. Chair, and all the members of the committee, for inviting me here today to contribute my comments on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

I'm a lawyer by training and the director of policy for Canada at the Foundation for Defense of Democracies, which is a Washington, D.C, based think tank devoted to national security and foreign policy. I also work closely with the Canadian Coalition Against Terror, a non-profit organization comprising Canadians terror victims, counterterrorism professionals, lawyers, and others dedicated to combatting terrorism and assisting terror victims in rebuilding their lives. I was honoured to be awarded a Queen Elizabeth II Diamond Jubilee Medal for my advancement of sound public policy on terrorism issues in Canada.

I mention these credentials only to give you context for my remarks today, which approach this five-year review of our AML and ATF legislation from a broader strategic and policy perspective. My recommendations in broad outlines are as follows.

First, consider creating a subdivision of terrorist financing that would focus specifically on the financing of radicalization activities. Our government continues to emphasize countering radicalization as a foundational component of combatting terrorism. If targeting terror financing is a tool for preventing terrorism, we should also stem the financing of radicalization in order to help prevent it. As long as the foreign patrons of extremist ideologies have an unfettered ability to invest billions of dollars in educational, religious, and cultural institutions in Canada and the west, the threat of extremism and radicalization and, by extension, the threat of terrorism will only grow.

Just as FINTRAC is able to disclose information to the CRA when it has reasonable grounds to suspect that information would be relevant to money laundering, tax evasion, and the risk of terrorist abuse of the charitable sector, perhaps FINTRAC should also disclose information to the CRA when it suspects that information would be relevant to radicalization financing within the charitable or non-profit sectors.

Second, I noted with interest the testimony of Annette Ryan, who discussed the seized proceeds of crime being used to flow into the central revenue fund of the government, which is then the basis for departmental budgets. May I suggest that some portion, even a small portion, of the the seized funds, especially if they relate to terrorist financing, be directed into a fund that provides support for terror victims.

Subsection 83.14(5.1) of the Criminal Code provides that any proceeds that arise from the disposal of terrorist-related property may be used to compensate victims of terrorist activities in accordance with regulations made by the Governor in Council. To my knowledge, the Governor in Council has never created these regulations and the money has never been directed to terror victims. This compounds a larger problem, which is the dearth of government support for terror victims in Canada, particularly those who suffered their loss or damage from a terrorist attack abroad.

Third, from a larger policy perspective in the context of our AML and ATF efforts, and perhaps in respect of subsection 11.49(1) of the act specifically, Canada should be extremely cautious about allowing Canadian companies and financial institutions to conduct business in and with Iran, as it continues to entail profound risk, which the Financial Action Task Force has acknowledged.

Iran has not addressed the rampant money laundering issues that pervade all sectors of its economy, a problem worsened by systemic financial corruption throughout Iran's government bodies. The IRGC, which controls as much as one-third of Iran's economy, produces hundreds of millions of dollars in counterfeit money through its Quds Force, which is a listed terrorist entity here in Canada. The U.S. treasury secretary has said that IRGC Quds Force's counterfeiting scheme exposes the serious risks faced by anyone doing business with Iran, as the IRGC continues to obscure its involvement in Iran's economy and hide behind the facade of legitimate businesses to perpetrate its nefarious objectives.

Fourth, and on a more technical note, it should be a criminal offence for an entity or individual to structure transactions, in other words, to conduct a series of transactions to avoid reporting requirements. In the United States it's a crime to structure transactions. I recently spoke at length with Danny Glaser, who serves on the board of advisers of the Center on Sanctions and Illicit Finance at FDD, where I work. He previously served in the U.S. Department of the Treasury as assistant secretary for terrorist financing in the Office of Terrorism and Financial Intelligence. He told me that they get people in the U.S. a lot on the structuring offences, and he referred me specifically to title 31 of U.S. code section 5324.

Mr. Glaser added that the system with the requirement to submit an SAR or suspicious activity report for certain amounts of money is incredibly antiquated. Artificial intelligence and machine learning will ultimately determine if a person is acting consistently with their profile. Banks are already investing hundreds of millions of dollars in technology to monitor their clients' financial activities. So much will change in the financial world based on technology.

Fifth and finally, armoured car companies, which offer services that specialize in the secure transportation of cash and other valuable materials, need to be subject to our AML and ATF regime, as they are in the U.S. Again, according to Danny Glaser, armoured cars are one of the main ways in which drug cartels have gotten money from Mexico to the United States. It's very important, at least there, that they be regulated.

I have several other comments, but I will stop now due to time constraints. Thank you again for inviting me here today.

[The Chair, Liberal, Wayne Easter]

Thank you very much.

From Heffel Gallery Limited, we have Mr. Gibbs.

[Andrew Gibbs, Representative, Ottawa, Heffel Gallery Limited]

Thank you, Mr. Chair and members of the committee.

I'd like to thank you for giving me the opportunity to attend this meeting as a witness. I was invited to attend as a representative of Heffel Gallery Limited. I've worked for Heffel for 20 years. I am their representative in Ottawa.

I shall start by giving a brief synopsis of the company and its place in the Canadian art auction market. Heffel was founded in Vancouver in 1978 as an art gallery specializing in high-end art. In 1995 the gallery held its first auction. Over the past 22 years, the company has grown enormously, and now has some 30 employees in locations in Vancouver, Calgary, Toronto, Montreal, and me here in Ottawa. We handle about 70% of all art sold at auction in Canada.

Heffel sells around 2,000 artworks a year, almost all by public auction. Around 300 are sold in live auctions. The remainder are sold in online auctions. A live auction will usually have a sale total of around $15 million to $20 million, while the 11 online auctions have annual sales of around $10 million. Heffel's top auction total was $42 million in 2016. The most expensive artwork sold was a Lawren Harris painting, for $11.2 million. The top annual sales were around $70 million, also in 2016. I believe the reason I was invited here is that our nearest competitors in the Canadian art auction market operate at about a tenth of this level. I hope that has given you an understanding of where Heffel stands.

Now I'll turn to the question of the vulnerability of our business to being used by money launderers. I believe there is a misconception that art auction houses operate in a shadowy world of anonymous buyers and sellers, as though we don't know the identities of the people who are asking us to sell their million-dollar paintings, or the names of the mysterious billionaire buyers who bid at our auctions. The truth is that the high-end art auction business in Canada is notably transparent. Knowing our buyers and sellers is probably the most important part of our business. Many of them are among the biggest names in Canadian business and public life. We don't take an artwork for sale unless we feel 100% confident in both the artwork and the owner's right to sell the work.

As well as the ethical barrier to selling an artwork from an unknown source, there are also huge potential financial risks for us if the work is subsequently found to have been illegitimately procured. We never accept third-party payments for purchases, and always remit the proceeds of sale to the consignor, not to a third party.

Unlike goods from other industries that can be broken down into anonymous components, an artwork is forever recognizable. One of the best tools we have for tracing the provenance of an artwork is our own database of Canadian artwork sold in auction over the past 45 years. The index includes a full description, photograph, and selling price of each work. We also send these details to independent art auction databases around the world. The art loss register is a body that traces stolen artworks, and the National Gallery of Canada keeps records of all our sales. If anyone wanted to trace a painting that had sold through us, it would take a matter of minutes, even seconds, to find when it was sold and for how much. Because this index is publicly accessible, every artwork can be researched not only by the CRA, the Canada Border Services Agency, CSIS, and anyone else, but also by a member of the general public. If you compare that with the sale of almost any other high-value movable asset, or the sale of art by private sale through dealers, you will see that the art auction business has an inherent transparency that separates us from other parts of the industry and other industries.

The due diligence we undertake to establish the identity, creditworthiness, and interests of our buyers is also important. The last thing we need in an auction process is an untraceable buyer. Imagine the loss of reputation that would follow the sale of a million-dollar painting to a buyer we did not know. It's absolutely in our interest to keep very close tabs on all our buyers. One cannot bid in one of our live auctions without having first presented ID. The registration process for our online auctions requires the inputting of significant personal and banking details. All of our offices are connected by a network to our own central database of buyers, sellers, and artworks.

Around 8% of artworks are bought by international buyers, who have to obtain an export licence to send out of the country any painting or sculpture that is over 50 years old and has a value of $15,000 or more. All of our sales are run through our bank, the Royal Bank of Canada. Heffel's accounts, which include the names, addresses, and contact details of all buyers and sellers, are obviously available for inspection by whichever appropriate authority may need access.

Another misconception that we hear about art auctions is the use of cash in purchases and sales. We encourage buyers to make payment by wire transfer. According to our terms and conditions of business, we specifically say that payment should be made by bank wire, certified cheque, bank draft, or cheque, accompanied by a letter of credit from the buyer's bank. We do also accept credit card payments, but as they represent a significant cut to our commission—the transaction fee is based on the overall value of the artwork, while our commission is based on a percentage of the value of the artwork—we try to discourage this.

We hardly ever take cash as payment. In 2016, when we sold around $70 million worth of art, the total cash payment for the whole year amounted to just over $50,000, with the greatest single amount being $7,500. Meanwhile, not a single seller is ever paid in cash. All payments are made by cheque or wire transfer.

I would expect the same extremely low proportion of cash sales to apply to our immediate competitors in the art auction business.

I hope this reassures the committee that the art auction industry in Canada, certainly exemplified by Heffel, is far from a haven for money launderers.

I look forward to any questions.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Gibbs.

Turning to individuals, we have Mr. Tassé, senior advisor at the Canadian Centre of Excellence for Anti-Corruption, University of Ottawa.

Welcome, Marc.

[Marc Tassé, Senior Advisor, Canadian Centre of Excellence for Anti-Corruption, University of Ottawa, As an Individual]

Dear Mr. Chairman and members of the committee, I would like to thank you for the opportunity to contribute to the committee's review.

I will make my remarks in English. However, I will be pleased to answer your questions in French or in English.

I have worked for the past 30 years as a forensic accountant, an M.B.A. lecturer, as well as an expert on the subjects of anti-bribery and anti-corruption. I'm also a senior adviser with the Canadian Centre of Excellence for Anti-Corruption at the University of Ottawa. The centre is an academically based platform that promotes ethical practices aimed at countering corruption, bribery, and money laundering.

Mr. Chairman and committee members, corruption and money laundering go together. A report issued by the World Bank clearly showed the link between corruption and money laundering. According to some experts and media reports, the term “snow washing” is now associated with Canada as is the term “Vancouver model” for laundering the proceeds of crime.

Canada's reputation must be protected from reputational risk. Therefore, I would recommend that Canada address the weaknesses identified by amending the act and other acts in the following manner.

First is beneficial ownership.

It is essential that Canada make beneficial ownership more transparent in order to prevent abuse from corporations and trusts held by secretive beneficial owners. To that end, an urgent reform of corporate registries across all 14 Canadian jurisdictions is needed to ensure that beneficial ownership information is not only collected but also made available in a publicly accessible registry.

With public access to the beneficial ownership information, the act should also be amended to require all reporting entities to verify the identity of the beneficial owner; verify if their customers are politically exposed persons or their family members or associates; and identify the beneficial owner and verify their identity with government-approved ID before opening an account or completing a financial transaction.

Second is investigation and prosecution of money-laundering offences.

In view of the difficulty prosecutors encounter in proceeding with money-laundering charges because of the complexity of linking money laundering to predicate offences, we recommend that the government bring forward Criminal Code amendments to make money laundering easier to investigate and prove, and that more resources be available to law enforcement and prosecutors to enforce the money-laundering provisions of the Criminal Code.

Last is the role of legal professionals in the money-laundering scheme.

Legal professionals are inherently highly vulnerable to money laundering. Journalists have mentioned that “Company owners who don't wish to be identified in Canadian corporate registries can pay a lawyer or a stand-in to appear on all public filings.”

Where lawyers are conducting financial transactions on behalf of clients, and the clients are using negotiable instruments at risk for money laundering, lawyers should be required to know who their clients are and to be accountable for conducting due diligence, meeting their obligations, and inquiring about their clients' sources of funds and wealth.

In order to do so, it is recommended that the government bring legal professionals into the AML/ATF regime in a constitutionally compliant way; and that the act designate as high-risk all financial transactions by legal professionals, especially those using trust accounts, and require reporting entities to take enhanced due diligence measures on those transactions, including identifying the beneficial owner and the source of funds.

In closing, I want to emphasize that Canada must immediately take action in order to change the perception that it welcomes, or even encourages, corrupt behaviour.

I would like to thank you for your time. I sincerely hope that my comments will be helpful in combatting the laundering of proceeds of crime and the financing of terrorist activities in Canada.

I will be happy to answer any of the questions you may have.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Tassé.

I'll turn, now, to the counsel for Cassels Brock & Blackwell Limited Liability Partnership, Mr. Jason.

Welcome.

[John Jason, Counsel, Cassels Brock and Blackwell Limited Liability Partnership, As an Individual]

Thank you, Mr. Chair.

It's important given the comments Mr. Tassé made that I immediately distance myself from being a lawyer.

In addition to my role at Cassels Brock, I also lead a company called the Canadian Compliance Group. Together with our software partner, Resolver Inc., we provide compliance risk management software to just over 20 Canadian financial institutions. About 15 of those are small-to-mid-sized Canadian banks.

In 2012, I, along with Warren Law from ICICI Bank, formed an ad hoc group of compliance officers of the small and medium bank community in Canada. We have met consistently since 2012 as a forum for compliance officers to share information and issues about compliance with one another. As that has evolved over time, because of my roles working with the small bank community, people have now come to associate me with having some insight and knowledge about the issues and concerns of that community, so it's under that side of what I do that I'm here today.

In terms of the small bank community, if I were to say anything about what their concerns and issues are, I would first say that I'm a little distinct from the rest of the witnesses here today, because I represent a group that is actually a currently regulated group as opposed to an unregulated group. For us it's an issue of balancing. Since the late 1990s, successive governments have had a policy of supporting new entrants into the banking industry, and we find that with the advancements particularly in technology, what's been labelled as FINTRAC of late, the small bank community is actually starting to develop, be strong, and be successful. They're finding new and innovative ways to deliver their services to Canadians, and now we have in excess of 20 or 25 small Canadian banks that are serving the country in addition to the large six that we all know so well.

When it comes to AML or to any regulatory matters, the issue is balancing that need to support new entrants, and new competition into the industry without unduly stifling that competition through excessive regulation.

The group that I work with was surveyed by OSFI a couple of years ago. OSFI asked the group two questions: if you look at the regulation that applies to your institution, please tell us about both those regulations that create the highest burden for your organization, and those regulations that provide you the most value. By value, I'll give you an example. While complying with their current capital requirements is a large burden for a small bank, the banks themselves would acknowledge that it creates a huge benefit for them as well, because it really gets them focused on strong risk management practices, ensuring that they have sufficient capital to support their business models, so there's a real benefit that comes with that burden.

The single area that the banks identified as having the largest mismatch was anti-money laundering compliance. They view it as having the highest burden of any regulatory requirements imposed on the sector, and providing the least value to the institutions themselves. That is not to say that the institutions don't recognize the greater value of anti-money laundering compliance, and doing their bit to assist that good cause, but in terms of balancing the two priorities, balancing the priority of wanting to encourage the sector to ensure that the sector can be successful, we have to understand what the burden is doing in terms of those competing objectives.

If there were anything that the industry might suggest to you it is to have more principles-based regulations, which would allow the institutions to look at the objectives of the regulations and how they can best meet those objectives without unduly shackling their business with expense.

The only concern the industry would also share is that the regulators have to meet that burden as well, so any principles-based regulation requires sophisticated supervisors who can understand and accept that the small institutions are different from the large institutions. I'm sure you will have heard the expression “one size fits all”. The regulators cut their teeth, if you will, learning what the large institutions do with the vast resources those institutions can put against the issue, and they then try to bring that learning and apply it exactly in the same way to a small institution, which would have a very different risk profile. If we're going to move to principles-based regulation, it becomes very important that we also ensure that the regulators are up to the task.

Those are my comments. As with everyone else on the panel, I'm pleased to take your questions.

[The Chair, Liberal, Wayne Easter]

Thank you very much, Mr. Jason.

When we're starting our questions, probably a good place to start is your point on finding the balance. I think that's what our task is: to try to find the balance here.

Ms. O'Connell, you have seven minutes.

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

Thank you, all, for being here.

I'm going to start with the Canadian Automobile Dealers Association.

Mr. MacDonald, you spoke about how small the transactions in cash were. Do you have any sense of the percentages, and, specifically, is this number going up? We recently had representatives from the jewellery industry here. Jewellery was a particular form of money laundering, but I think in this day and age luxury vehicles might be a hot target. Even though you've said that the number of cash transactions was low, have you seen any sort of increase in those requests?

[Peter MacDonald]

If anything, I think we're actually seeing a decrease in those requests. I think that over the last number of years, we're seeing an increase in the number of vehicles that are either purchased through loan or lease through our banks. Now we're down to about 8%, and of that 8%, they may be coming in with a money order or a cheque, and very little of that is cash. It's probably less than 1%.

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

Okay, thank you.

Does your organization represent the large international luxury dealers as well? Actually, maybe the better question is, what group of automobile dealers does your organization represent?

[Peter MacDonald]

Yes, we represent all makes. Any dealer of a vehicle sold in this country is pretty well a member of our association.

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

Okay, perfect.

Thank you.

[Michael Hatch, Chief Economist, Canadian Automobile Dealers Association]

If I may, I can interject with some numbers.

Just in the last eight years, for example, between 2010 and 2017, the share of new vehicle sales that were fully cash purchases decreased from 17% of the market to 8% last year. That means, again, that more than 92 cent of new car buyers are either leasing or purchasing via a loan, as opposed to doing a total cash transaction.

Now, that's just a proxy for what we're trying to say, because, of course, you could have a large cash down payment and still take out a loan on a half of the vehicle, for example. But whenever there is a large cash portion of the transaction, it's essentially never physical cash anymore, which goes to Peter's point. It might be a fraction of 1%, but it's an insignificant level. Maybe a generation ago in certain parts of the country it would have been more common to have large physical cash transactions, but in today's economy, today's reality, in this day and age, it just doesn't happen. That share of cash transactions has gone down, and the portion of that share that's physical cash has also gone down, in our view.

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

My questions were around the actual cash, because that's what we're talking about in terms of the laundering. Thank you for that.

I want to turn to Ms. Saperia. Your testimony was really interesting. You came forward with really specific recommendations, and I think we all appreciate that, so thank you. If you had additional comment, could you send it to the clerk so the committee could read that at a later date?

[Sheryl Saperia]

Sure.

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

Thank you.

I was really interested in your comments around the crime of structured transactions.

I don't know, Mr. Tassé, if this is an area of interest to you as well, but I find that interesting because in Canada obviously we have a court ruling dealing with lawyers acting on behalf of their clients. I'm wondering if the crime to structure a transaction would, in your view, or in the way it was established, actually then capture from the client-solicitor privilege because it's really not client-solicitor privilege, but the crime of structuring. Is that generally where this is looked at, or is that the U.S.'s experience, or is it something different altogether?

[Sheryl Saperia]

My understanding is that they actually are two distinct issues because, in the United States, as I said to my colleague Danny, the lawyer-client privilege is sacrosanct there as well. I think, a while back, there had been some controversy about trying to find a way to bring lawyers under the regime. There was too much push-back within the country and it never happened.

At the same time, they do have these structuring offences. They get people on them very frequently, so clearly the two are distinct.

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

Is that how they see how to include the legal community, who are acting on behalf of the criminals and money launderers? Obviously this is certainly not every lawyer in every industry. Is the crime to structure the way they went at certain lawyers' roles in the money laundering activities or the structuring of corporations, and things like that?

[Sheryl Saperia]

Again, when it comes to the structuring, I think in the United States they've got an offence for the client themselves, as well as for the financial institution. Neither is allowed to create a situation whereby the reporting requirements can be undermined.