Finance Committee on June 20th, 2018

[Annette Ryan]

That's a very important question.

The government recently provided important new resources to Global Affairs Canada, which leads on sanctions, to establish the right teams and experts and so on to do essentially that. They will support the sanctions regime in a much more practical, tangible, concrete way with the right information conveyed in the right way, with exactly that objective.

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

Mr. O'Toole raised the point that with Bill C-59 there are more hurdles now for departments to be able to share information. Does that work against the ability to have a consolidated list?

[Annette Ryan]

That is not a bill that we led on. Ian, you have a greater touch point with that.

[Ian Wright, Director, Financial Crimes Governance and Operations, Department of Finance]

Bill C-59 was SCISA, the ability to share information. You obviously have to talk to Public Safety or the lead for that piece of legislation, but our understanding is that the changes didn't limit it. I think it pulled one agency off, but it certainly did not impact FINTRAC or our ability to use SCISA to exchange information.

On the question on sanctions, that's more public information anyway. It's a listing that will come out through due process, and we'd have to talk to our Global Affairs colleagues, but I don't think it would be a SCISA type of national security threat issue.

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

I would certainly hope so. I appreciate your listening.

[The Chair, Liberal, Wayne Easter]

Thank you.

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

That's it?

[The Chair, Liberal, Wayne Easter]

That's it. Three minutes go fast, but you never know; we might get around to you again.

Mr. Sorbara is next.

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

Thank you, Mr. Chair. I'll try to keep it quick.

How can we ensure that when FINTRAC is dealing with some of our smaller institutions, namely credit unions, we're not overburdening smaller financial institutions with compliance just for the sake of compliance?

[Annette Ryan]

That's a great question. It goes to the efforts of FINTRAC officials to make sure that the communication to institutions and the means by which they receive information are commensurate. It goes to an important objective, however, which is that we not leave blind spots, essentially, in our overall regime that would then become the target for money launderers to exploit. Again that word “balance” comes up, and that is what we're seeking.

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

One of the really good things we heard on our visit to New York City, specifically with FinCEN, was this idea of GTOs, geographic targeting orders, which they utilize.

Do we have a similar type of program? It seems to have been very effective on their part. They seem to have a lot more tools at their disposal, if I can use that term. Please correct me if I'm wrong. If we do have a program similar to the GTOs, have you any details, and if we don't, why don't we?

[Annette Ryan]

I think your question touches on the answer. The Americans don't have as many tools in the real estate sector as we do, so they use the geographic targeting orders as almost a complement to some of the areas where they don't have the tools that we do.

That said, we are interested in it as a policy tool that we don't currently have within the regime. It goes to the question of whether we can practically target attention to areas where we think there might be more risk than others. We explore that to a certain extent in our paper, and we look forward to the committee's thoughts.

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

Thank you.

[The Chair, Liberal, Wayne Easter]

We'll go to Mr. Dusseault and then Mr. Grewal.

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

I would like to take advantage of the time I have left to briefly return to an issue raised earlier, that of having one’s bank account closed. We have heard that the American authorities could ask that accounts remain open. They could even compensate and protect the banks from dangers they are exposing themselves to by retaining bank accounts that are so suspicious.

Do we have the same system in Canada? If not, is it something to consider? Is it an issue that the committee should look into?

[Annette Ryan]

I would say it isn't the same regime in Canada. However, there is a similar set of objectives and pressures.

First of all, on the question of de-banking individuals, there are essentially two important questions. One is the social aspect of not having people removed from access to banking for any number of social reasons. There's also the security aspect of not pushing people essentially into the shadows to the extent that they move further away from the formal banking system, which brings its own set of risks. We very much want to get that balance right and avoid de-banking people who absolutely should have access to the banking system.

Part of that goes to being ever more specific and rigorous in terms of what constitutes suspicious transactions and achieving that burden of proof. That's very much the case.

On the second portion of your question, which speaks to how we can work with the different institutions, I'll turn to Maxime.

[Maxime Beaupré, Director, Financial Crimes Policy, Department of Finance]

We have already heard about this issue. Financial institutions and law enforcement have told us that they are feeling this pressure. So we are looking into the issue.

You have heard testimony on this issue, and you travelled abroad to study it. If you have any advice for us, we would certainly be willing to hear it.

There is clearly a problem here. First, institutions have to meet their obligations when they suspect suspicious transactions, and, second, we must make law enforcement’s job easier. So it’s quite complex, but we are certainly willing to hear your suggestions on the matter.

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

I mentioned the compensation that would be given to the banks. We were told that a letter was sent to a bank to ask it to keep an account open, and that it would be protected if ever a problem should arise. Are we currently doing anything similar in Canada?

[Maxime Beaupré]

No, we do not do that, to my knowledge.

[The Chair, Liberal, Wayne Easter]

Mr. Grewal will be the last questioner.

[Raj Grewal, Liberal, Brampton East, ON]

Thank you, Mr. Chair.

Thank you to the officials.

Would there be a scenario in which a financial institution would provide what they think is a suspicious transaction to FINTRAC, FINTRAC would launch an investigation, but the individual account holder would never know that this was taking place?

[Annette Ryan]

One point that's important to keep in mind is that FINTRAC doesn't have investigative powers. It does have a requirement to monitor the overall system of transactions or suspicious transactions. When there is a sufficient standard of concern that's been met, it does pass that information to law enforcement or tax authorities or other competent authorities, who then follow the standard procedures of investigation in Canada. Just as it would be if a neighbour saw suspicious activity and reported it to the RCMP or other police, then all of the normal rights and protections do come into play in a very similar way.

[The Chair, Liberal, Wayne Easter]

Go ahead, Mr. Beaupré.

[Maxime Beaupré]

I just wanted to add on the notion you raised when you used the term “investigation”.

As Ms. Ryan pointed out, FINTRAC doesn't do investigations. However, there might be investigations down the line if FINTRAC reaches a threshold and discloses information to law enforcement. For that reason, there's actually a prohibition—and I can't recall if it's in the act or in the regulations—called “no tipping off”. Basically, financial institutions have to be careful not to tip off a person on whom they are filing a suspicious report, because down the line it could lead to an investigation. Therefore, it is quite possible that the client will not know that they're doing something that may be legal or not. It may look suspicious to the bank, and the bank will provide this information to FINTRAC.

[The Chair, Liberal, Wayne Easter]

Okay, we will have to stop there. Thank you to the witnesses.

Seeing as this is the last meeting of the finance committee into the immediate future at least, on behalf of the committee, we certainly want to thank the clerk, the analysts, the interpreters, and the Hill staff who make these committees function. Certainly we want also to thank the staff of all the parties who try to keep their members on their toes. Staff around here definitely work long hours to help us out.

To members, thank you for your work over the last several months. I hope you have a good opportunity to spend some time with your families.

With that, the meeting is adjourned.