Finance Committee on Feb. 8th, 2024

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I have just one last question. If this turns out to be of concern to the department and the minister and the transaction doesn't close until March, does the minister have the ability to pause or revoke the approval of the merger?

[Julien Brazeau]

The minister has ultimate approval over the transaction and can choose to revoke or endorse that at any point.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Thank you very much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Morantz.

Now we'll go to MP Dzerowicz.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

I want to thank all of our panellists today. This has been a very interesting discussion.

I'm on my iPhone. For some reason, the Internet in my office keeps going out.

One of the first questions asked was about Canada and where it stands compared with other countries. It was articulated that Canada has a strong framework, but it needs some work on its operational efficiency in that we don't have a dedicated police force.

In budget 2022 we created a new Canada financial crimes agency. That's meant to become Canada's lead enforcement agency. Is that not meant to be the dedicated police force for money laundering? How is that working?

[Julien Brazeau]

You're right that budget 2022 spoke about the potential creation of a financial crimes agency. Work is ongoing. Public Safety has had leadership over that file.

These are complex conversations given the potential integration of prosecution services into investigation teams and how we can improve operational results. Those discussions are ongoing, with advice expected to be provided to the government on the potential options, the scope of crimes that would be covered and how that would be funded.

Those discussions are ongoing. At this time, the financial crimes agency has yet to be formally created.

[Julie Dzerowicz, Liberal, Davenport, ON]

What I've also been hearing is that money launderers are constantly evolving their methods and how this works. I was looking at past budgets. I know that every fiscal document since 2019 has consistently updated the AML regime to make sure we try to keep up to date and are plugging as many holes as possible.

Is it fair to say that there's no magic-bullet solution to money laundering and that governments and regulators will constantly need to be plugging holes in the regime?

[Julien Brazeau]

That is certainly a fair statement. Criminals tend to be sophisticated. When you plug one hole, they will find the next weakest point of entry.

The nature of transnational crime has changed as well. The use of technologies to perpetrate crimes has evolved. It's an ever-evolving sector, which is why we continue to assess risks as they evolve and broaden the scope and number of reporting entities as a result.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

I was also noticing that this finance committee did a fairly extensive study on money laundering in 2018, I believe. It's about time we come back to it. I think it's a very important area.

Could you talk to us about some of the key areas of improvement in the AML regime? What can our committee focus on as part of our parliamentary review? In what areas can parliamentarians provide you with some constructive recommendations?

I know you talked quite a bit about provinces and territories and the need for them to step up. Maybe there's some federal leadership or enticement we want to focus on there.

Is there any advice on any of those questions?

[Julien Brazeau]

I think it speaks to the question asked by MP Chambers about areas of focus for the committee. I'm happy to speak about those.

As we talked about, successive reviews have pointed to the issues around operational effectiveness. We would certainly welcome the committee's views and reflections on how we can move the dial on the issue of effectiveness in Canada's regime, being mindful that the trend on prosecutions in Canada is not in line with Canada's risk profile.

We'd also welcome the committee's views on evolving risks posed by new technologies. We've taken some measures for the use of cryptocurrencies, crowdfunding platforms, “white-label” ATMs, etc., but we welcome the committee's views on how that landscape is evolving and what risks it represents.

[Julie Dzerowicz, Liberal, Davenport, ON]

That's helpful.

I have another quick question. You already spoke a bit about this. Can you speak more about some of the ongoing enforcement issues with the AML regime?

[Erin Hunt]

That's an excellent question. I would answer it this way. The enforcement landscape involves investigations, laying charges, prosecutions and depriving criminals of the proceeds of their crimes. It's a spectrum of actions that need to work together. When we look at effective enforcement and how we can improve that, we try to see how we can improve each one of those elements and create a stronger framework to achieve more prosecutions and charges and to deprive criminals of the proceeds of crime. This looks at criminal aspects, civilian forfeiture regimes and other elements, and it links to both what the federal government can do and what provincial counterparts can do. They are all involved in all four of those aspects of effective enforcement.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thanks so much.

[The Chair, Liberal, Peter Fonseca]

Thanks, MP Dzerowicz.

Now we go to MP Ste-Marie.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you, Mr. Chair.

Does your department have information about the money that is extracted fraudulently by the criminals in the crimes we are talking about: money laundering?

Do you have information to show that a portion of that money is used for major international crime or international terrorism, or is used, rather, by local criminals? Are those criminals connected with international terrorism networks, for example?

What information do you have on that subject?

[Julien Brazeau]

I can confirm that these are not crimes that are committed solely within Canada. There is actually a very international aspect. The crimes and money laundering are very closely connected to cross-border crime and terrorism financing.

With regard to the information we receive, we are considering developing policies. In my opinion, the intelligence services and police services know the nature of these crimes a little better than we do, but yes, I can confirm that these crimes are committed not just in Canada, but also outside Canada.

[Gabriel Ste-Marie, Bloc, Joliette, QC]

Thank you for confirming that.

So identity theft, to access a bank account or use a credit card, can be used to support and finance international terrorism. That is very concerning.

Ms. Hunt pointed to the technologies being developed at present. My colleague Mr. Chambers said that in order to manage the situation better, we have to look at what the United States is doing and make sure that someone who initiates a transaction is actually a resident of the country.

If I understand correctly, that is not the case in Canada at present; instead, it is complete anarchy.

Do you agree that there should be better oversight and we could look to how it is done in the United States? It is far from perfect and there are a lot of problems, but it would still be a step in the right direction.

[Julien Brazeau]

We are always trying to draw on what is happening in other countries' financial regimes and we do a lot to follow the advice of the FATF, the Financial Action Task Force, the international organization that develops standards on money laundering and terrorist financing issues.

The new technologies actually present a major challenge and complicate our investigators' work. We have invested large amounts of money in the Financial Transactions and Reports Analysis Centre of Canada and other organizations, to enhance their capacity to detect this type of crime. However, we still want to know your thoughts on the subject.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Ste-Marie.

Now we'll go to MP Collins, please.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

Thanks again to our witnesses.

I'm sorry. I'm going to follow up on my last question because I'm not really clear on the answer.

Has the Department of Finance conducted a market integrity analysis in order to identify suspicious transactions and activity in real estate?

[Julien Brazeau]

In terms of a specific market, no, we haven't at this point.

[Laurel Collins, NDP, Victoria, BC]

Is there any plan to do that?

[Julien Brazeau]

We are still actively looking at all the Cullen commission recommendations. The goal is to address all of them.

[Laurel Collins, NDP, Victoria, BC]

Has an action plan been developed to address the data gaps we were talking about that were identified in the provincial-federal working group?

[Julien Brazeau]

Yes, we do have detailed work plans with regard to information sharing.