Thank you, Mr. Chairman.
I'm Milos Barutciski, as the chair said, a partner at Bennett Jones, a national law firm. I'm in the Toronto office. It's originally a Calgary firm.
That said, as I am a Quebecker, I will start my presentation in French. Why not? It is worthwhile.
Like Mr. German, I am a lawyer. We know each other well and go way back, but we did not know that we would both be here today. You won't be too surprised to learn that my point of view is somewhat similar, I think, to Mr. German's point of view. It is not identical, and that is because our roots are different. Mr. German was a police officer for a number of decades. I myself am a lawyer and, as such, I have mainly represented businesses for just over 30 years. I began my career in Montreal, and then I continued it in Ottawa. I am now in Toronto, and I have been there for 25 years.
I advise people, I defend companies, mainly, and rarely individuals, in matters related to international economic regulations.
I was chief of staff for the competition bureau for my brief two years in government, but I used to do a lot of cartel work. I don't do much of that anymore because I have other partners who have been doing it as long as I have, and frankly, I focus my attention on other things.
What do I do? For the past 10 to 15 years I've been focusing on corruption work, sanctions—essentially that kind of economic regulatory work. My clients, as I said, are primarily corporate. It's a very different perspective from where Peter comes from, but my views are not entirely different from Peter's.
Let's start with money laundering, which is obviously a real problem. The impact runs through every sector of the economy. We tend to think of it as being the criminal world, and of course it is, but sadly, the billions of dollars that are laundered in this country alone don't only go from one crook's pocket to another crook's pocket. They go through a chain of professionals, legitimate businesses, and thousands of other enablers who are not so much unsuspecting, but rather wilfully blind or willing to look the other way. That is a problem.
I remember back probably 15 to 20 years ago—Peter will remember this—when Norm Inkster retired as commissioner of the RCMP. He used to give this speech that started with about 15 minutes of “Let me tell you about your day”. Nobody smokes anymore, because people walked away from them, but back then, in the early 1990s, when you were waiting at the bus stop, you were smoking a cigarette that was smuggled through customs on a reserve, perhaps, or somewhere else. It was proceeds of crime, and you were doing this, and you were doing that. I won't repeat the story, but basically, what Norm told was a story of how you can't go through the day without being impacted and affected by money laundering.
The answer was the regime we have today, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, albeit that the “TF” was clipped on a little later, after 9/11. It came out of the FATF, the Financial Action Task Force process in Paris, of which Canada has been a member for a long time. The whole idea was to raise the cost of laundering crooked money. As I recall, back in the 1990s, it was six to eight cents. Has anybody ever actually looked at how much it costs today to launder money? It's probably not much more than six to eight cents. In certain segments, it's probably gone up to 15¢, but you know, the crooks don't sleep at night either. They go to a party and then they work all night, too, and they find other workarounds. We'll hear Peter's report in due course, but in his province of B.C., it seems they're taking it at both ends.
The regime was intended to raise the cost of laundering money, and the way it was done was by creating gatekeepers—primarily financial institutions. The idea was that we might make a dent in the problem by making the essential gatekeepers the FIs, accountants, and lawyers, although there's a whole story about lawyers that we don't need to get caught up in. By making the people who facilitate and enable and move the money accountable up to a point at which they at least have to do basic due diligence and then report or keep records, as the case may be, we can actually make a dent in it.
If we're not making a dent, then what on earth are we doing? I can tell you, back in the early 2000s, I was a private practitioner. There were a handful of us advising the FIs on implementation of the regulations, and it was a fairly active business. In the early days of the regulations coming into force—somewhere around 2004-06—I worked on possibly the first AML audit that OSFI did, and on the back of the envelope, based on the work we did to remediate, I calculated that the five schedule I banks and the insurance companies had, between them, spent somewhere around $5 billion just implementing the system.
Since then we have accumulated massive costs. We've downloaded those costs, as Peter said, on the FIs primarily, but also on other sectors of the economy. That would be fine if we were actually getting something—if we were actually fighting and enforcing crime—but we're not. Some of the questions you should be asking yourselves in the course of your study of this bill are about exactly that: implementation.
The FIs, my clients, are diligently trying to follow the law by reporting or recording, and sometimes they slip up, but the default position is that they would rather not take a risk by exercising judgment; rather, they will just cover the floor. It becomes checklist compliance. It's not actually compliance with the law, because the people who are not complying—who are overtly stealing, cheating, and so on—just keep doing it. All we've done is impose costs on the private sector that are ultimately passed on to consumers, yet in the absence of any enforcement, what is it? It's a mountain of paper, or bits and bytes.
I come back to the same conclusion as Peter did. The balancing makes sense, but it needs to be balanced for a purpose, not just putting all the costs on the economy. When I say the banks, sure, they're big players out there, but those costs get passed on to consumers. The question is, you're balancing against what? That's what you need to spend some time on.