Finance Committee on May 2nd, 2019

[Paul Saint-Denis]

When the FATF came to assess Canada's measures to fight money laundering and terrorist financing, we held several discussions on the distinction between the prosecution of a possession offence and a prosecution of a money laundering offence.

The FATF is particularly interested in money laundering and terrorist financing. When we explained to its representatives that we institute proceedings for the related offence of possession, they were less interested because the offence wasn't money laundering. Yet these two offences are very similar. In Canada, the crown will opt for the least difficult method to achieve the same result. In other words, the crown will institute proceedings for possession. However, for the FATF, this method isn't ideal. I think that we were penalized because we don't choose the ideal solution, which would be to prosecute for money laundering.

That said, we must nevertheless recognize that money laundering offences are extremely complex. The investigators must have extensive financial analysis expertise, which is very costly. As your committee likely learned during its study, not only was the RCMP reorganized, it also reassigned its staff to focus more on national security issues. Since fewer investigators were available, fewer money laundering investigations were conducted.

As a result, the FATF has described Canada as less than stellar in the investigation and prosecution of money laundering.

[The Chair, Liberal, Wayne Easter]

Mr. Wright, I believe you wanted in. Go ahead.

[Ian Wright]

Yes, maybe I'll add a little bit to that. This change to the Criminal Code is, we feel, necessary, but it's not necessarily sufficient for us to address the broader issues that we have with prosecuting and trying to enforce money laundering and terrorist financing.

Budget 2019 has quite an extensive suite of other activities and other funding that we're bringing forward. There's the ACE team. There's this trade-based money laundering centre that's being created. There's funding provided to the RCMP to support the federal policing and funding for FINTRAC.

I think we should look at this as one part of a broader effort by the government to strengthen overall, and hopefully that will then lead to stronger enforcement, prosecutions, investigations and such.

[The Chair, Liberal, Wayne Easter]

Mr. Fergus, is that it?

[Greg Fergus, Liberal, Hull—Aylmer, QC]

I'm fine for the moment. Thank you.

[The Chair, Liberal, Wayne Easter]

If there are any other witnesses who want to come in at any time, just raise a hand and I'll catch you.

Mr. Dusseault.

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

Thank you, Mr. Chair.

Obviously, this is a step in the right direction. However, I'm not convinced that it will help catch people who are involved in professional money laundering. It's often a chain of people, as we said earlier. The person at the end of the chain, a money laundering professional, is well protected. They've set up barriers and walls everywhere to protect themselves and to avoid knowing everything that goes on with the offence until the money or proceeds reach them.

Will this really resolve the issue? The person can still protect themselves fairly easily from charges, even with the addition of the recklessness test.

[Paul Saint-Denis]

Your observation is fair.

Of course, people who engage in professional money laundering are three, four or five degrees removed from the offence that generates the proceeds of crime. We know that. The addition of the recklessness test may help in some cases, even in the case of money laundering professionals.

However, you're right to believe that this tool won't resolve the issue. That goes without saying. However, we believe that this tool will help us in cases where the current tools wouldn't give us the means to successfully institute proceedings.

We hope that this will be a useful additional tool. That said, no single response or legislative amendment will resolve the issue of professional money laundering. The things that we have here will help, but I think that professional money laundering will remain an issue.

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

We need to find one, however. That's the challenge.

[Paul Saint-Denis]

If there were a solution, I'm fairly certain that we would have found it by now.

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

Indeed.

Thank you.

[The Chair, Liberal, Wayne Easter]

Thank you, both. Thank you, all.

We'll turn to subdivision C, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Ms. Trotman, go ahead.

[Tamara Trotman, Director, Financial Crimes Governance and Operations, Financial Systems Division, Financial Sector Policy Branch, Department of Finance]

I will be dealing with amendments relating to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or the PCMLTFA.

The first set of proposed amendments would add the Competition Bureau and Revenu Québec as disclosure recipients of the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, intelligence. This is intended to support the investigation of tax evasion and mass marketing fraud.

The second set of amendments modifies the timing and the discretion of the director of FINTRAC to make public certain information related to an administrative monetary policy. These amendments will also clarify the information for which confidentiality orders could be issued in an administrative monetary penalty litigation, which would exclude the identity of the reporting entity, the nature of the violations and the amount of the penalty imposed.

Finally, there are technical amendments that clarify terminology and improve readability of the text.

Thank you.

[The Chair, Liberal, Wayne Easter]

Does anyone have any questions?

Just to start, can you expand on what mass marketing fraud is?

[Tamara Trotman]

Sure.

The Competition Bureau has a central role in the fight against deceptive marketing practices and mass marketing fraud, which can include communication via traditional mail, telephone or email. The Competition Bureau included them as disclosure recipients in these proposed amendments to the legislation because they do have a large intelligence-gathering function.

[The Chair, Liberal, Wayne Easter]

Is that also via the Internet, via phone calls?

[Tamara Trotman]

That's correct.

[The Chair, Liberal, Wayne Easter]

Are there any other questions?

Mr. Dusseault.

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

My question has to do with the administrative monetary penalties and the issue that was flagged by a court, I believe. The court deemed the process to be overly vague and subjective, saying it lacked clear criteria.

Does this remedy the problem?

[Tamara Trotman]

Thank you for the question. I'm going to switch languages to answer.

Yes, this is intended to remove the discretion of the director of FINTRAC, so it would make the naming automatic when an administrative penalty has been either issued or following an appeal process. The entity would be named automatically.

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

It concerns only the naming of the entity. However, does it remedy the underlying issue, in other words, the overly vague and broad nature of the director's discretion? Entities being penalized didn't really know how the director had arrived at the specified amount, finding it excessive.

[Tamara Trotman]

Exactly. The second piece of the proposed amendments would allow for an ongoing court proceeding, and if the courts had issued a confidentiality order, FINTRAC would still be able to name the entity, the amount of the penalty and what it was for.

[Ian Wright]

I would also add that outside of this FINTRAC is revamping the process, and they are working on issues around ensuring greater visibility and transparency within how fines are determined and how the process works. That's separate from this. This is just a procedure talking about the naming process, but FINTRAC is working quite actively to address the issues raised by the court in the proceedings you're referring to.

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

Therefore, the problem still stands. Only part of it has been addressed.

[The Chair, Liberal, Wayne Easter]

Is there anyone else on this section?

Thank you on subdivision C. We'll move to subdivision D, the Seized Property Management Act.