Finance Committee on Feb. 8th, 2024

[Laurel Collins, NDP, Victoria, BC]

Could we get a follow-up to the committee once there's been any start on a plan for market integrity analysis?

[Julien Brazeau]

We can take that back. We have reflected on all of the Cullen commission's recommendations, and we have taken a number of measures. We would be happy to report back on what actions the government has taken to address those.

[Laurel Collins, NDP, Victoria, BC]

The NDP caucus was recently in Edmonton, and we heard from newcomers there about being targeted for money laundering. Newcomers often face barriers when it comes to accessing credit and capital. Often, they are more vulnerable to accepting loans from bad actors. In some cases, newcomers took out loans from what seemed like a safe source, and then that source came to them and told them they needed to run the money through their business. In some ways, they were forced into this money laundering scheme and didn't know how they could access help.

Have you heard anything about this kind of thing? If so, what is the department doing to combat it and what kinds of tools are available to explore it?

[Julien Brazeau]

As we talked about when MP Weiler asked the question, money services businesses, which encompass some of these businesses, have been reporting entities for some time. We've strengthened the regime in the past few years in terms of what obligations are imposed on these businesses. We're aware that new Canadians can be taken advantage of. Obviously that's not an outcome we want.

We've taken measures, but to the extent that the committee would like to reflect on that question a bit more and see how those could be strengthened to identify more gaps, we'd welcome those views.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Collins.

Go ahead, MP Lawrence.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much.

Thank you for your time today and for appearing in person.

I want to outline some of the facts of the situation. If you don't have the numbers off the top of your head, that's fine. I would appreciate your undertaking to provide them to the committee at your earliest convenience.

How much money do you estimate was laundered through Canada in 2023, or 2022 if you don't have that?

[Julien Brazeau]

We can take that back. I think I provided a figure of somewhere between $40 billion to $110 billion per year.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Yes, that was that in 2020. I was wondering if you had a more recent number.

[Julien Brazeau]

That's the most recent we have.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Do you have a number for 2015 as well?

[Julien Brazeau]

For 2015, we can take that back and see what we have.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

That's perfect.

How many individuals, companies or entities were convicted of money laundering offences in 2023?

[Julien Brazeau]

We can take that back as well. I don't think we have those statistics.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

That's perfect. If I could get the numbers for convictions from 2015 to 2023, that would be terrific.

What is Canada's ranking? Of course, currently there are various international organizations with respect to money laundering and defence effectiveness in the OECD or the G7.

[Julien Brazeau]

In the context of AML, we look at the FATF, which is the body that does the mutual evaluations of countries and assets. There's no particular ranking to say a country is number one versus number 50. You're rated on your ability and on how effective you are in different measures under the regime. As we said in our last evaluation in 2016, the regime was viewed as generally having a strong legal framework but being weaker in operational effectiveness.

In an update to that review in 2021, our results were actually increased in some respects but then decreased in others. The standards for the FATF have become more difficult, I would say, not easier to meet over time. Canada is heading into its next mutual evaluation next year, so it will be an important time to look at not just our technical compliance, which is what laws we have on the books, but also the effectiveness of the regime more broadly.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Thank you very much. I appreciate that.

I just want to follow up on my colleague's question. You said that in the HSBC acquisition by RBC, there was a higher level of diligence, including that HSBC should be upholding current AML regulations. If, as in the Sam Cooper story, there were widespread mortgage fraud, would that, in your opinion, violate the condition?

[Julien Brazeau]

We're looking at it in the context of money laundering and terrorist financing. Fraud would be a broader criminal issue for the undertaking as it relates to RBC.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

They're not upholding their AML obligations if they're allowing large-scale mortgage fraud to happen by those of other nationalities.

[Julien Brazeau]

I understood that. The undertaking relates to RBC given that they're the party undertaking the transaction. They are required to apply enhanced due diligence and ensure that they're meeting all the objectives. To the extent that the minister would find that they are not doing that, it would be at the minister's discretion to determine whether she wanted to take measures as a result of that.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Wasn't a condition in the agreement that HSBC uphold the AML standards?

[Julien Brazeau]

Because HSBC is exiting the market, the obligation falls onto RBC as the entity that now owns HSBC.

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Just to be clear, though, if prior to the merger HSBC was not in compliance with regulatory requirements with respect to money laundering, that wouldn't affect.... There were no conditions put in place for that.

[Julien Brazeau]

Do you mean in terms of their previous compliance with the AML and ATF?

[Philip Lawrence, Conservative, Northumberland—Peterborough South, ON]

Yes. I mean to allow the merger to take place.

[Julien Brazeau]

I can't say whether that was a consideration, but no, the undertakings relate to RBC to ensure that on a going forward basis, it is compliant.