Evidence of meeting #126 for Finance in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was money.
A video is available from Parliament.
12:10 p.m.
Associate Assistant Deputy Minister, Department of Finance
We haven't been re-evaluated formally by the FATF since 2016. It can only happen every five to seven years, but there was a reassessment in 2021 and our ranking went up in some regards and down in others.
12:10 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Did all the rankings still stay in the lower end or did they go down overall?
12:10 p.m.
Associate Assistant Deputy Minister, Department of Finance
I would say they remained sort of stable.
12:10 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Okay. I'll move on.
I wanted to know about the investigations. How many investigations have there been since 2015 until now?
12:10 p.m.
Associate Assistant Deputy Minister, Department of Finance
We can take that back. I don't have the numbers.
12:10 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
I'd like to get a follow-up as well on how many of those investigations led to actual fines, what the total number of fines was and the percentage of people who were set free where there were no charges whatsoever. Can we get those specific areas covered in what you return to this committee?
12:10 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
From 2015 on, did any specific legislative changes take place that made our ranking, in your words, go down, or were there any hindrances when it comes to investigating any type of money laundering taking place?
12:10 p.m.
Associate Assistant Deputy Minister, Department of Finance
No. Since the last review, the government has been trying to address a number of gaps. There are some long-standing gaps, like the coverage of lawyers in Canada's regime. The Supreme Court determined that solicitor-client privilege stopped lawyers from being covered, but—
12:15 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
I just have a bit of time.
Transparency International ranks us absolutely at the bottom in the G20. Regarding the rise in auto thefts and the money laundering that we know is taking place right now, what are some of the barriers...or why is this increasing in Canada with all the rules we have in place? It seems like it has gotten a lot worse since 2015.
12:15 p.m.
Associate Assistant Deputy Minister, Department of Finance
On transparency in particular, I will point to the beneficial ownership registry, which has just been launched and is aimed at attracting transparency.
12:15 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
If it had been implemented before, would it have been effective now for some of the auto thefts we're seeing?
12:15 p.m.
Associate Assistant Deputy Minister, Department of Finance
To the extent that organized crime groups are hiding behind shell corporations, yes, potentially.
12:15 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
There is no definitive...that it would have stopped this, so it may not have made any difference at all. Is that right?
12:15 p.m.
Associate Assistant Deputy Minister, Department of Finance
It may not have. We don't know the nature of the criminal organizations here.
12:15 p.m.
Conservative
Jasraj Singh Hallan Conservative Calgary Forest Lawn, AB
Okay. There's no proof that this change, which took place in November, may do anything for the car thefts happening now.
12:15 p.m.
Associate Assistant Deputy Minister, Department of Finance
On car thefts in particular, I'm not sure. I think we'd have to talk to police services. They have a better understanding of how criminality is set up. The goal of beneficial ownership is to provide more transparency on who the ultimate owners of corporations are.
12:15 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you, Mr. Chair.
Getting back to your earlier point, only 15% of companies are incorporated federally, so it's very important that we have the provinces step up with similar beneficial ownership registries for corporations.
I want to touch on a number you mentioned earlier. You said there were 24,000 entities reporting to FINTRAC. I saw in the last annual report that about 35 million transactions are reported to FINTRAC every year. In some ways, that's a tremendous amount of information. A lot of times, for a lot of these transactions reported, it's like trying to find a needle in a haystack.
I was hoping you might be able to explain what the government is doing to make sure the information shared with FINTRAC can get to the appropriate authorities in a way that's useful for decisions and investigations, so they can determine whether any suspicious transactions for organized crime are involved.
12:15 p.m.
Associate Assistant Deputy Minister, Department of Finance
Sure. I'm happy to talk about the issue broadly.
Again I'll turn to Charlene. I think Charlene listed a number of new disclosure partners for FINTRAC. The goal there is to allow FINTRAC to use its intelligence products and disseminate them to a broader set of law enforcement agencies and regulators in order to inform their review. That has been the focus of our work over the past few years.
You're right. There's a huge volume of information gathered by FINTRAC. FINTRAC tries to consolidate that and look for trends. When they see those trends, they refer them to federal and provincial police services.
Charlene, did you want to talk a bit more specifically about how we strengthen information sharing?
12:15 p.m.
Director, Financial Crimes Policy, Department of Finance
The value add FINTRAC offers is that it can take all the information coming in to it from reporting entities, look for the information that Julien spoke about—trends, comparisons, putting people together and networking—and can digest that information and prepackage it to go out to law enforcement partners.
There are two ways that's done. Law enforcement, through a voluntary information record, or VIR, can submit information to FINTRAC on a potentially ongoing investigation or case it may be developing. If FINTRAC finds reasonable grounds that the information, paired with information it already has in this database, can be disclosed to an investigation that's related to money laundering or terrorist financing, it will disclose it.
The other type of disclosure is what's called proactive disclosure. This is for the beginnings of a case. It's financial information that FINTRAC puts together on its own and sends out proactively to the relevant police department in the hope that it will begin an investigation.
Ultimately, the use of that financial intelligence and the types of investigations that are taken up are a decision for law enforcement.
12:20 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you.
One of the recent changes made was a new offence for structuring transactions so that avoid being reported as obligations under the act we're talking about today. I was hoping you might be able to explain how that might aid in tackling the issue we're talking about today.
12:20 p.m.
Director, Financial Crimes Policy, Department of Finance
As you may know, one of the methods criminals can use to integrate their money or place their money into the financial system is through structuring. A simple example of this is depositing large sums of money in cash just under the reporting threshold, which is $10,000—so $9,900. They can do this over multiple days with the same financial institution or many financial institutions. Budget 2023 introduced a new criminal offence for purposely structuring financial transactions to avoid having the financial institution do the reporting.
12:20 p.m.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
This is my last question. I'm curious to know what type of work is being done to help with education for reporting entities and other organizations so that we can ensure we have the best possible compliance with the objectives of the act.
