Finance Committee on May 2nd, 2019

[Nicholas Trudel, Director General, Specialized Services Sector, Receiver General and Pensions Branch, Department of Public Works and Government Services]

Thank you, Mr. Chair.

I am going to briefly describe the status quo in relation to the Seized Property Management Act and, then, explain how it will work after the amendments are made.

Currently, my organization is responsible for administering seized property that's being seized pursuant to federal criminal charges only. There are specific charges for which the act is eligible. These are specific charges under the Criminal Code, the Controlled Drugs and Substances Act and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. These are very specific charges for which we are able to serve, and this would be upon issuance of a management order by a judge.

The current legislation and the limits that it has prohibit serving cases such as the fraud case that was described pursuant to your question, Mr. Chair.

Also, these criminal cases I think are not static. Although they may start out as a federal criminal charge, as a prosecution proceeds and investigations proceed, what began as an expected federal criminal charge may conclude ultimately in some other outcome: acquittal, a lesser charge, a plea bargain, etc.

The inability to provide services beyond the current scope of the act has some challenges associated with it. Firstly, if we're unable to serve law enforcement as a service provider for the management of these assets, that law enforcement is required to manage the assets themselves. If they are laying charges beyond or haven't laid charges yet, these assets remain with law enforcement to do. That means they spend law enforcement resources managing assets.

Certainly, the uncertainty of outcome from the outset of an investigation through to the end can prohibit the confiscation or seizure of assets or suspect assets. Lastly, as a challenge, it could spell inefficiency, in that we have multiple levels of organizations—provincial, municipal, federal—all maintaining the capacity to deal with seized assets.

The changes to the act would allow my organization to serve any federal public official, provincial public official or municipal public official. We would be able to serve any offence: a specific violation of any provincial or federal law for assets that are connected to an offence, or when assets are believed to be intended for the commission of an offence. It's a much broader ability to support and we'll be authorized to manage and dispose of those assets and provide advice to client organizations.

It would require consent. Provinces, territories and municipalities would choose to use those services. This is not imposed. It's available to them if they so choose. Our minister or his representatives would be required to agree to provide the service, with a mutual agreement between the two of us. They would also need to agree to share the net proceeds, so if the outcome is that a seized asset is forfeited to the Crown and sold or liquidated and costs are recovered—that's how the program is paid for under the current act and how it will continue to be paid for after the proposed amendments—then the net proceeds of sale are shared with the jurisdictions that participated in the law enforcement action. That's also part of the existing regime.

Really, it represents a broadening of who we can offer services to and in what context, but the core function remains as it is today.

[The Chair, Liberal, Wayne Easter]

In terms of proceeds from the sale of assets, is that shared now?

[Nicholas Trudel]

Yes.

[The Chair, Liberal, Wayne Easter]

It is shared now and based on an agreement with the provinces or whatever.

[Nicholas Trudel]

That's correct. The current regulations, which aren't affected by these amendments, specify the sharing methods, both within Canada and abroad with foreign jurisdictions that participate in a prosecution.

[The Chair, Liberal, Wayne Easter]

Could you give me an example of an asset that would need management? Would it be a yacht or whatever?

[Nicholas Trudel]

It's pretty much anything you can imagine. There are two general categories of assets. These are assets that are used in the commission of an offence. These are offence-related properties such as a vehicle used to smuggle, a property used for a clandestine lab, etc., and then there are the proceeds of crime themselves: the cash, the fancy cars, the luxury properties that folks would buy. They also include things such as businesses that can be used to launder money.

Prior to conviction, these assets, although seized, remain the property of the accused, so they need to be maintained. A business may need to continue to be run or a luxury vehicle may need to be preserved in the state in which it was seized. Even a residence may continue to be occupied by the accused while the process unfolds, and that can take years.

[The Chair, Liberal, Wayne Easter]

Okay. Are there any other questions?

To the witnesses, if you have anything you want to add, just put up your hand and we'll catch you.

Mr. Fergus.

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

I have a simple question, Mr. Trudel.

Was the amendment added at the request of the provinces and territories so that the government would help them with the disposal of assets?

[Nicholas Trudel]

My program staff are very engaged with their provincial and municipal counterparts.

In some cases, we already have mutual aid agreements in place. A number of provinces have signed memoranda of understanding regarding either the management of a particular case or the rules and procedures for co-operation. It's important to understand that a criminal case involving an asset is ever-changing. The process can be initiated with the expectation that it will take place at the federal criminal level, but the outcome can be completely unexpected. The asset may indeed be seized, but by another authority.

Therefore, we need to make sure we dovetail our approaches. The support being proposed is very much in line with the active co-operation that already happens between municipal, provincial and federal police authorities. They, too, work together very closely to determine how best to pursue the investigation.

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

Thank you, Mr. Trudel.

[The Chair, Liberal, Wayne Easter]

Are there no other questions?

Are there any questions on subdivisions A, B, C or D, on this section in total, division 2?

Yes.

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

I guess I could go back to subdivision C, then, since you're opening that door.

[The Chair, Liberal, Wayne Easter]

It all interrelates. Ask them now or we'll never get them answered.

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

I guess I would try to figure out how we are taking into account, of course, the advent of Bitcoins, or cryptocurrencies, the abstracted term for it. How are we dealing with that, with crypto-wallets and the like?

[Tamara Trotman]

We're currently following the previous parliamentary review of the PCMLTFA at the regulatory stage. We're currently developing—

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

That's the 2013...?

[Tamara Trotman]

It was 2012, but yes, that's correct.

We're currently in the process of the second phase of regulatory amendments. We're developing regulations related to virtual currencies, which include things like Bitcoin, etc. I guess it was in June of last year, in 2018, that we went out with the prepublication version, and are trying to finalize, before the end of this session, the regulations in that respect.

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

I have other colleagues around the table who are more adept than I am at understanding cryptocurrencies and that whole aspect. Forgive me if I'm out of my league on this one. It just seems like we're catching up to the last report, of 2012, in 2018. My sense from a lot of the testimony....

Sorry, Kim, you weren't there, but Pierre-Luc and Tom were there, or Dan was there, and Francesco.

I'm just trying to figure this out. There were a lot of demands for us to really try to get ahead of the game, because the market has evolved enormously since six years ago.

[Tamara Trotman]

Currently the Financial Action Task Force, which is the international standard-setting body in the space of financial crimes—money laundering, counter-proliferation and terrorist financing—is in the process of developing guidance around what they call virtual “assets”, what we call virtual “currencies”. Our legislation is largely compliant with the direction they are moving in. However, we're coming out in advance of the agreement on that standard internationally. We are slightly ahead of other jurisdictions in that respect.

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

Very good. Thank you.

[The Chair, Liberal, Wayne Easter]

I believe Mr. Trudel wanted in.

[Nicholas Trudel]

To carry on with regard to the question, we've already seen some confiscation of virtual currency. We're dealing with our first case. Part of the benefits of the amendments we're proposing is that we will be able to lend that expertise to other jurisdictions within Canada. You can imagine a small municipality or provincial detachment that comes across a virtual currency confiscation. They may not have the capacity to know exactly how to handle it technically.

That's something we've worked on with the RCMP, in contact with colleagues internationally, in terms of figuring out how best to do this. We know that in some instances the real owner is invisible and not necessarily in Canada, so you can't necessarily lay a criminal charge within Canada. The amendments that we propose here and the expertise that we have, with the other changes that are proposed, would help us to get after these kinds of more complex assets that are used by more sophisticated operators.

[The Chair, Liberal, Wayne Easter]

Are there no more questions?

All right. Thank you very much to all those folks who have come forward on division 2.

We turn to part 4, division 3, the Employment Equity Act.

[Gertrude Zagler, Director, Employment Equity, Compliance, Operations and Program Development Branch, Labour Program, Department of Employment and Social Development]

Good afternoon.