Finance Committee on Feb. 8th, 2024

[Charlene Davidson]

That's actually one of the main roles that FINTRAC plays. FINTRAC has a dual mandate. It's Canada's financial intelligence unit, but it's also Canada's regulator for the PCMLTFA. That means it has the primary oversight to ensure compliance with all reporting entities—the 24,000 businesses you mentioned.

One of the first things FINTRAC does is work with new reporting entities or new sectors that come on board or have new obligations under the act. It spends quite a bit of time—one to two years—working with the sector, educating it on what its obligations are and what a good compliance program would look like within its institution.

I am sure this committee will eventually speak with FINTRAC. That is something it can elaborate on.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Weiler.

Go ahead, MP Ste-Marie.

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

Thank you, Mr. Chair.

I am going to start by commenting on what Ms. Davidson said about the voluntary disclosure program.

I think that in many cases in Canada, this program has strayed from its purpose. For example, it is being used as an escape hatch for people who are trying to structure transactions in connection with tax havens so they don't have to pay their fair share. When they get caught and are held to account, they use this program, so that goes against its actual purpose. These people are not penalized in any way; they are just asked to pay what they were required to pay in the first place.

In Quebec or in other countries, like the United States, there is a truly significant penalty when a person gets caught or uses a program like the voluntary disclosure program. That program is an incentive for clients and big corporations doing this kind of structuring. They tell themselves it is worth it to try to commit the fraud, because, anyway, the little rap on the knuckles they get doesn't hurt. This situation has got to change. I wanted to make that comment.

My question relates to what Ms. Hunt said at the beginning of the meeting and also somewhat to what Mr. Hallan talked about.

Why does Canada rank less favourably than the other countries in terms of what is done to combat these crimes?

Ms. Hunt, if I understood correctly, the fact that there is no police force dedicated to financial crime or money laundering.

Does Ms. Hunt or anyone want to answer my question: can you explain why there is no such police force? What arrangement has been made at present to have that kind of service? Should each province have its own specialized police force that would work in coordination, given the legislative system in the federation? Could you answer all these questions in a few minutes?

[Erin Hunt]

Thank you for your question.

I would like to start by pointing out that unlike other countries, Canada has no specialized police force. Some countries have a very high level of effectiveness, and that is one of the points that distinguishes them from Canada. That is a point I really wanted to make clear concerning Canada.

It is an important question, in my opinion. We would like to know the committee's views about how to improve this aspect in Canada. The government has introduced the possibility of creating a Canadian financial crimes agency in Canada. That work is underway, and we would like to know the committee's views about how an agency of that kind could be created. We would also like to know whether it is an important idea, to make progress on this issue and improve the process of investigations and trials in Canada, and so on.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. Hunt.

Thank you, Mr. Ste-Marie.

We will now go to MP Collins.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair, and thank you for all the good work you folks are doing.

I was looking at the money laundering threat assessment and some of the things that were ranked as very high threat ratings. One that jumped out at me was pollution crime.

Before becoming a member of Parliament, I was involved in the fight to save Shawnigan Lake. There was contaminated soil being dumped close to a watershed. We know the impacts of this kind of contaminated soil on the environment and human health. Through that campaign, it was uncovered that the company had a secret profit-sharing deal with the engineers who were doing the safety assessments for it. Luckily, we were able to stop that from happening. It took four years.

I'm curious. What is the connection between money laundering and this kind of pollution crime?

[Julien Brazeau]

As you say, it's an area of focus and one that was identified in the NIRA. Recently, I believe, it was in the fall economic statement. We put forward measures that would allow FINTRAC to start sharing information with the Department of Environment and Climate Change, with a view to addressing some of the risks that are arising and the link between money laundering and environmental crimes.

[Laurel Collins, NDP, Victoria, BC]

Thank you for that work.

I was looking at a few of the other ones, such as Ponzi investment schemes and telemarketing and mass-marketing schemes. This is something that impacts my constituents. Many people have lost money through these kinds of schemes.

What work is being done, because that was one of the very high threats?

[Charlene Davidson]

That kind of threat is getting larger in Canada. The role of organized crime and transnational organized crime is also increasing, especially in that space. Canada does have the anti-fraud centre, to which people can report cases of fraud.

Fraud is actually one of the larger predicate offences in Canada. It produces a lot of proceeds of crime. That is certainly one of the areas of focus on which FINTRAC produces strategic intelligence and discloses information.

[Laurel Collins, NDP, Victoria, BC]

Do I still have time?

[The Chair, Liberal, Peter Fonseca]

I think that's time.

[Laurel Collins, NDP, Victoria, BC]

Okay, not to worry.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Collins.

We will move to MP Morantz.

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

Thank you, Mr. Chair.

Ms. Hunt, I just want to follow up on something you mentioned earlier regarding non-profits. You said there was a gap in the system as it pertained to the operation of non-profits. Is there a concern that non-profits could be utilized as a vehicle to raise funding for terrorism?

[Erin Hunt]

That's an excellent question.

The Financial Action Task Force has identified that non-profit organizations, as well as charities, do have a risk with respect to terrorism financing in particular.

FATF's recommendations focus in particular on having a sector understand its risks so that it makes sure it has processes in place for the risks in that space. Canada's evaluation was with respect to ensuring that our sector understands the risks it may face. It's not a blanket statement; it's just that the sector itself understands the risks.

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

On that subject, specifically as it pertains to the IRGC, do you have any information or knowledge that the IRGC may be raising money for terrorism through Canadian non-profits?

[Erin Hunt]

I can't answer that question. I'm sorry.

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

Is it that you can't answer or that you don't know?

[Erin Hunt]

I don't know.

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

You don't know. Okay.

Could you maybe look into if there is anything and come back to the committee with it?

[Julien Brazeau]

We can certainly undertake that. I think that would probably be more within our intelligence and enforcement partners, but we can take that back.

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

That's fair enough.

I just want to go back to the 2018 report that had some fairly specific recommendations with respect to changes to the Criminal Code. One recommendation was to “bring forward Criminal Code and Privacy Act amendments in order to better facilitate money laundering investigations”. That was six years ago now. Was that done?

[Julien Brazeau]

There have been some changes to the Criminal Code.

To be honest, the Criminal Code rests squarely under the Department of Justice's purview. They would certainly welcome your questioning of them. I know they've worked on a number of measures in that regard, but they'll be able to provide you with a more fulsome answer on those—

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

Maybe this falls under your purview.

The next part of the recommendation was that “any necessary resources be made available to law enforcement and prosecutors to pursue money-laundering and terrorism financing activities”.

Given that you're in the Department of Finance, I presume that you know the answer to that question.

[Julien Brazeau]

A number of resources have been provided. I think I spoke about the $320 million that has been given to different regime partners to move that forward, including to the RCMP. They have created teams dedicated to money laundering. There was the creation of what we call FC3 within Public Safety Canada, which is charged with the coordination of the regime more broadly as well.

Yes, there have been a number of investments in that regard.