Finance Committee on April 16th, 2018

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

Ms. Saperia, I have some questions about financing terrorism. You mentioned something I had not realized. Money for terrorist groups could be coming into Canada.

When you look into the matter, you often see the opposite, cases when money leaves Canada for foreign terrorist organizations. When it is the other way around, what do the legislation and the regulations say?

Do we have an effective system in place to detect money coming from terrorist organizations to fund—heaven forbid—terrorist acts or radicalization in Canada?

[Sheryl Saperia]

Thank you very much for that question. Can I go back for just a second to the question that you asked the previous witness?

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

Yes.

[Sheryl Saperia]

I believe it had to do with the predicate offence and having to prove it.

With the greatest of respect, if I were a member of the committee—I don't have the authority to do this—I would be really interested in inviting a Canadian prosecutor, an American prosecutor, and perhaps a British prosecutor of these types of crimes to speak to the committee. I spoke to some of my American colleagues, and they have the same evidentiary threshold that we have here in Canada. There's no lower threshold, for instance, for “reckless”, and I believe in the U.K. they use the word “suspect” as a lower threshold. In the United States, they don't have that, and for every element of the crime, including the knowledge that the proceeds had to have been unlawfully obtained in some way, all those parts of the crime need to be proved beyond a reasonable doubt, yet they don't seem to be having problems getting those convictions in the United States.

I would be really interested in comparing what's happening in the system and where we're breaking down here. Then, of course, in the U.K., they do have that different standard of “suspect”. I tried to compare some of the words. It would be a really interesting comparison.

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

Thank you.

[Sheryl Saperia]

As for your question about the terrorism coming here as opposed to it going abroad, yes, it's a very real issue. In fact, in the public safety minister's 2016 “Public Report on the Terrorist Threat to Canada”, he does talk about the fact that there are issues here, including, for instance, Hezbollah, which is a very active terrorist organization here in Canada.

I do believe that the act does account for that. I don't think they're just thinking about the money leaving Canada. I do believe that they're also considering how the money might be going in. But as I indicated in my remarks, I think that in acknowledgement of this government's large emphasis on radicalization, we might want to be doing more for that, because a lot of funds from a number of foreign states are coming here specifically for the purpose of radicalizing some of our young people.

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

Thank you.

My next question goes to Mr. Gibbs; it deals with works of art. It is a more technical question.

To what extent do companies buy works of art through your auction house? What is the percentage?

[Andrew Gibbs]

I'd have to get the figures for you, but off the top of my head, I would say that the percentage of corporate purchases would be less than 5%.

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

Okay. So it is not a lot.

It's not significant.

[Andrew Gibbs]

It's definitely not significant. Yes, nearly all the purchases are by individuals rather than companies.

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

Would you use the beneficial ownership information in your sector to know your client better? If it's a corporate client, would you consider using beneficial ownership information?

[Andrew Gibbs]

Would we consider using that even though at the moment we're not legally required to? Is that what you're saying?

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

Yes, at the moment, you are not required to use the information on the beneficial owner. However, I was wondering, in your business, whether it could be useful for that information to be available.

[Andrew Gibbs]

Yes, I can see that it is the way that everything is moving. Therefore, perhaps, for a company like ours, in the long run it may be that it is the right thing to do. I guess the difficulty that would arise would not necessarily be with a company like ours, because we're like the Royal Bank of the arts industry in Canada. Would the same regulations therefore have to apply to a two-person auction house working in a small town? Maybe. Certainly, with all of our buyers and all of our sellers we do all of the background checks that we can, even though we're not, as you say, legally bound to do so.

[The Chair, Liberal, Wayne Easter]

We'll have to leave that there. We'll probably have another round, Pierre.

Mr. Sorbara.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you, Mr. Chair.

Welcome, everybody.

I'm going to try to go around the table here, starting with the Automobile Dealers Association.

Would it be fair to say that for most high-priced vehicles across Canada, most of them are actually leased by vehicle drivers? I know from some retailers, say like a BMW or a Mercedes-Benz, which at one time was called DaimlerChrysler, about 80% of them are actually leased by the vehicle drivers.

[Peter MacDonald]

I wouldn't have those specific stats broken down that way, but it is certainly a large percentage. I believe industry-wide we're at about 35% leasing, and certainly the percentages for some of our imports are a lot higher than the domestics. That was reversed at one point, but now most of the import stores have very high leasing rates.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

And that 35% number, that's the overall volume, as you would call it?

[Peter MacDonald]

Exactly.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Exactly. Not just—

[Peter MacDonald]

Not just high-end vehicles. I don't have those stats. I can get them for you and the committee, but I don't have them with me today.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

If you could provide those, that would be great. It would be good to know, because one of our past witnesses elaborated on the example of Vancouver, where you have many young folks driving, say, Maseratis and other very expensive, high-end vehicles. There is nothing wrong with that in and of itself, but it may indicate where someone else got the income, and there is the issue of the verification of that income, if it came from offshore or something, so I wanted to clarify that.

We now turn to the ATM industry. Mr. Binns, thank you for coming. So the idea that an ATM located at some enterprise could be participating in money laundering, is that just a fallacy?

[Curt Binns]

That is a myth, actually. ATMs that are operated in a grocery store, or a restaurant, or a small bar are all regulated in the same way as any other ATMs in Canada.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Okay, that is good to know.

We now go to the individuals, first to Mr. Jason. I believe I ran into you several times at the Scotia Tower when I worked there, if I remember correctly.

You do a lot of work for smaller financials, which I would call the schedule II banks, and even smaller ones than that, if I'm not mistaken. Is that correct?

[John Jason]

Yes, and sorry, just to correct you: schedule I now refers to any domestically owned bank, so it includes everything from the largest of large to the newest incorporation on the block, as long as it's domestically owned.