Finance Committee on Feb. 24th, 2022

[The Chair, Liberal, Peter Fonseca]

I call this meeting to order.

Welcome to meeting number 22 of the House of Commons Standing Committee on Finance.

Pursuant to the motion adopted in committee on Thursday, February 17, the committee is meeting to study the invocation of the Emergencies Act and related measures.

Today's meeting is taking place in a hybrid format, pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely using the Zoom application. The proceedings will be made available via the House of Commons website. The webcast will always show the person speaking rather than the entirety of the committee.

Today's meeting is also taking place in a webinar format. Webinars are for public committee meetings and are available only to members, their staff and witnesses. Members enter immediately as active participants. All functionalities for active participants remain the same. Staff will be non-active participants, and can therefore view the meeting only in gallery view. I would like to take this opportunity to remind all participants at this meeting that screenshots and taking photos of your screen are not permitted.

Given the ongoing pandemic situation, and in light of the recommendations from the health authorities as well as the directive of the Board of Internal Economy on October 19, 2021, to remain healthy and safe, all those attending the meeting in person are to maintain two-metre physical distancing, must wear a non-medical mask when circulating in the room—it's highly recommended that the mask be worn at all times, including when seated—and must maintain proper hand hygiene by using the provided hand sanitizer at the room entrance.

As the chair, I will be enforcing these measures for the duration of the meeting. I thank members in advance for their co-operation.

To ensure an orderly meeting, I would like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice at the bottom of your screen of either the floor, English or French. If interpretation is lost, please inform me immediately and we will ensure that interpretation is properly restored before resuming the proceedings. The “raise hand” feature at the bottom of the screen can be used at any time if you wish to speak or alert the chair.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the Board of Internal Economy's guidelines for mask use and health protocols.

Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute yourself. For those in the room, your microphone will be controlled as normal by the proceedings and verification officer. When speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute. Just as a reminder, all comments by members and witnesses should be addressed through the chair.

With regard to a speaking list, the committee clerk and I will do the very best we can to maintain a consolidated order of speaking for all members, whether they are participating virtually or in person.

This meeting is scheduled for a longer duration today. In consideration of the fact that our witnesses may not get an opportunity to leave their virtual set-up, at around the halfway mark of the meeting I'll suspend the meeting for a five-minute health break.

Members, before I introduce the witnesses, I understand that we have an agreement among our committee to speak about the situation in Ukraine.

Parliamentary Secretary Beech, I see your hand up. Please go ahead.

[Terry Beech, Liberal, Burnaby North—Seymour, BC]

Mr. Chair, thank you for giving me an opportunity to speak and to address the news of Russia's unprovoked attack on Ukraine.

Our government, the Prime Minister and the Deputy Prime Minister condemn, in the strongest possible terms, Russia's egregious attack on Ukraine. These unprovoked actions are a clear further violation of Ukraine's sovereignty and territorial integrity. They are also in violation of Russia's obligations under international law and the charter of the United Nations.

Canada calls on Russia to immediately cease all hostile actions against Ukraine and withdraw all military and proxy forces from the country. Ukraine's sovereignty and territorial integrity must be respected. The Ukrainian people must be free to determine their own future.

Earlier this morning the Prime Minister met with G7 partners. Our government will continue working closely and quickly with NATO and our allies to collectively respond to these reckless and dangerous acts, including by imposing significant sanctions in addition to those already announced. In the face of these attacks on Ukraine, Canada will take additional action to stop Russia's unwarranted aggression.

We continue to stand with Ukraine, its people and the Ukrainian Canadian community here in Canada. Russia's brazen acts have profound human consequences and will not go unpunished.

With your permission, Mr. Chair, I'd invite my other honourable colleagues to speak, if they would care to do so.

Thank you very much, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, Parliamentary Secretary Beech.

I do have some hands up. I have MP Lawrence, MP Ste-Marie and then MP Blaikie after that.

Please go ahead, MP Lawrence.

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

Thank you, Chair.

We share in the government's condemnation of this unprovoked attack on the people and the country of Ukraine. The attack is a violation, of course, of Ukraine's sovereignty. It's also a violation of international norms and of the system on which Canada and the western world's prosperity has been built—the most prosperous time in recent history.

Putin must immediately cease his attack and withdraw all military forces. Failing to do that would undermine the international system, which Canada played a key part in establishing after World War II, that has been, as I said, the foundation of our peace and prosperity.

As Canadians, we need to commit ourselves to the strengthening of our own security, including the Arctic, and to the renewal of commitments to NATO.

Conservatives, parliamentarians and Canadians all stand with the Ukrainian people in this, one of their darkest hours. Our thoughts and prayers are with the people of Ukraine.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Lawrence.

Now we'll hear from MP Ste-Marie.

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

Thank you, Mr. Chair.

Fellow members, it's now my turn to take the floor to strongly condemn Russia's attack against Ukraine. What is happening is terrible. Soldiers will die. Civilians will die. In fact, at this very moment, the people of Ukraine are being attacked, invaded and bombed. We haven't even turned the corner on the pandemic yet, and we have been plunged into a world at war. Well, war has broken out in Europe, that's a fact—a terrible one, but a fact nevertheless.

We stand united with the Ukrainians, and we support them fully. It is a sad day for humanity, and dark days are on the horizon. I would like to tell the Russian president that it's not too late to put an end to this madness. Sadly, I don't believe that's true.

Therefore, with a broken heart, I will instead address the people of Ukraine: our hearts go out to you, and we will do whatever we can to come to your assistance. It's our responsibility as human beings. In these hard times, know that you are not alone.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Ste-Marie.

Now we'll hear from MP Blaikie.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much, Mr. Chair.

I want to take this opportunity to condemn in the strongest possible terms the actions of Russia in violating the sovereignty and the territorial integrity of Ukraine, and call on Russia to cease all aggression against Ukraine and withdraw all of its troops.

Our thoughts right now, as New Democrats and members of the House of Commons and Canadians, are with the Ukrainian people, who are suffering this invasion of their country, and with all of the people here in Canada and across the world who have friends and loved ones in Ukraine who are worried about their well-being.

I think this also tells us something important about Russia under the leadership of Vladimir Putin. We have to recognize that the war isn't happening just physically. We know that Russia has also been very active in the digital space, in Ukraine and indeed here in Canada, spreading disinformation. Russia's actions in Ukraine are also related to a larger campaign to sow discord in the west. I think that's something we need to bear in mind. We need to be cautious of the influence Russia is having here at home through social media and other avenues where it can spread disinformation to try to keep people distracted while it pursues the very real agenda of territorial expansion in Ukraine.

Thank you for the opportunity to put these thoughts on the record at a very bleak time in the world's history, Mr. Chair.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Blaikie.

MP Lawrence, you have your hand up. Go ahead.

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

First, I'd like to thank all the members for their excellent statements.

Second, because we were unable to get the RCMP here today and have just FINTRAC, who already testified at some length at the public security committee, I'm wondering if we would move this from a three-hour meeting to a two-hour meeting.

[The Chair, Liberal, Peter Fonseca]

I'm seeing a lot of hand clapping and thumbs up from everybody. We love you, FINTRAC, but yes, two hours is the time we will have with FINTRAC today.

Thank you, MP Lawrence, and members for those bold, strong statements showing Canada's support for Ukraine. I can tell you that, here at home, my wife is of Ukrainian descent. In my riding of Mississauga East—Cooksville, we have a large Ukrainian diaspora community. “Slava Ukraini, Slava Canada” I hope I said that right. I'll hear from MP Baker on that, I am sure.

At this time, I would like to introduce our witnesses for today. We have FINTRAC with us, the Financial Transactions and Reports Analysis Centre of Canada. We have Donna Achimov, the deputy director and chief compliance officer of the compliance sector, and Barry MacKillop, the deputy director of intelligence.

You now have an opportunity to make an opening statement for members and then we will go to questions. Thank you.

[Barry MacKillop, Deputy Director, Intelligence, Financial Transactions and Reports Analysis Centre of Canada]

Thank you, Mr. Chair.

I'd like to start by acknowledging the statements of the members on the situation in Ukraine.

I want to thank you, Mr. Chair, for inviting FINTRAC to participate in your review of the Emergencies Act, which was revoked by the federal government yesterday afternoon. As you mentioned, I am joined today by Donna Achimov, who is our chief compliance officer, as well as the deputy director responsible for compliance.

As committee members know, FINTRAC is Canada's financial intelligence unit, and anti‑money laundering and anti‑terrorist financing regulator.

We are responsible for ensuring the compliance of more than 24,000 businesses that have requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, including financial institutions, casinos and money services businesses.

FINTRAC has a robust, risk‑based approach in place to ensure that businesses fulfill their requirements, such as identifying clients, keeping records and reporting certain types of financial transactions, including international electronic funds transfers, large cash transactions, large virtual currency transactions and suspicious transactions.

With the reporting that we receive from businesses subject to the act, and when appropriate thresholds are met, FINTRAC provides actionable financial intelligence to Canada's police, law enforcement and national security agencies in support of their money laundering and terrorist financing investigations. Our financial intelligence disclosures are often based on hundreds, or even thousands, of financial transactions. These disclosures may show links between individuals and businesses that have not been identified in an investigation and may help investigators refine the scope of their cases or shift their sights to different targets.

A disclosure can pertain to an individual or a wider criminal network, and can also be used by police and law enforcement to put together affidavits to obtain search warrants and production orders. In total, last year, FINTRAC provided more than 2,000 disclosures of actionable financial intelligence in support of investigations related to money laundering, terrorist activity financing, and threats to the security of Canada. Since becoming operational in 2001, the centre has provided more than 22,000 financial intelligence disclosures to Canada's police, law enforcement and national security agencies.

In 2020-21, our financial intelligence contributed to 376 major resource-intensive investigations and many hundreds of other individual investigations at the municipal, provincial, federal and international levels. These agencies continue to seek our financial intelligence in record numbers. FINTRAC received 2,109 voluntary information records from Canada's police, law enforcement and national security agencies last year. These records contain information on alleged criminals and terrorist financiers, and are often the starting point for our analysis and the financial intelligence that we are able to generate and disclose.

Many of the recipients of our disclosures have told us that they would not start a major project-level investigation without seeking out our financial intelligence.

Mr. Chair, under the emergency economic measures order, certain businesses, including financial entities, money services businesses, crowdfunding platforms and payment service providers, were required to take specific actions in relation to the financial activity of individuals who were engaged in the blockades, as laid out in the emergency measures regulations. For example, crowdfunding platforms and payment service providers were required to register with FINTRAC when they were in possession or in control of property that was owned, held or controlled by an individual or entity who was engaged in an activity that was prohibited in the emergency measures regulations.

Following the invocation of the Emergencies Act, a number of crowdfunding platforms and/or payment service providers began the registration process with FINTRAC. This has, however, now been halted with the revocation of the Emergencies Act. Crowdfunding platforms and payment service providers that were required to register with FINTRAC were also required to report suspicious transaction reports, large cash transaction reports, international electronic funds transfer reports and large virtual currency reports when thresholds set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations were met. This, too, has been halted with the revocation of the Emergencies Act.

As a financial intelligence unit, and under our legislation, we cannot speak to the reporting that we receive from businesses or the financial intelligence specifically that we provide to Canada's police, law enforcement and national security agencies.

Mr. Chair, I want to be very clear about FINTRAC's mandate. As one of 13 federal departments and agencies that play a key role in Canada's anti-money laundering and anti-terrorist financing regime, FINTRAC was established as an administrative financial intelligence unit, not a law enforcement or investigative agency. We do not have the authority to monitor or track financial transactions in real time, freeze or seize funds, ask any entity to freeze or seize funds, or cancel or delay financial transactions. This was done very deliberately by the Parliament of Canada to ensure that we would have access to the information needed to support the money laundering and terrorist financing investigations of Canada's police, law enforcement and national security agencies, while protecting the privacy of Canadians. This did not change under the Emergencies Act or the emergency economic measures order.

We are committed to working with Canadian businesses and our domestic and international partners to protect the safety of Canadians and the integrity of Canada's financial system.

Thank you. We are now ready to take your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. MacKillop and Ms. Achimov.

We are now moving to our first round of questions from members. Each party will have up to six minutes to ask questions.

We're starting with the Conservatives and MP Lawrence. You're up for six minutes.

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

Thank you very much.

I'd like to thank Mr. MacKillop for his excellent opening statement and, I might say, his strong testimony at the public safety committee, which I've had the opportunity to review.

I want to summarize some of the testimony you've already given so that it's clear to Canadians. Now, in the emergencies measures act, they sought to give you...I don't want to say “authority”, because it's probably the incorrect word. They sought to give you the additional ability, as registrars, to get information from cryptocurrency and from crowdsourcing platforms.

Prior to the act—and the way it stands now, because it's been revoked—they weren't required to be registrants, and therefore you weren't getting information from them directly. Is that correct?

[Barry MacKillop]

It's correct for the crowdsourcing. They are not considered reporting entities. Crypto dealers, however, virtual currency dealers, are in fact registered with FINTRAC. They have been reporting to us since 2020.

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

Okay.

Those would constitute the intermediaries, for lack of a better term, the companies like Wealthsimple, but peer-to-peer cryptocurrencies aren't currently required to be registered. Am I correct on that?

[Barry MacKillop]

You are correct. Peer-to-peer is not covered. When the transactions go through a virtual currency dealer and we see large cash transactions or large purchases, for example, of crypto, or disbursements of crypto money, that is reported to us.

I can defer to Donna if she would like to add anything else, as she is responsible for the compliance sector.

[Donna Achimov, Deputy Director, Chief Compliance Officer, Compliance Sector, Financial Transactions and Reports Analysis Centre of Canada]

Thank you.

That's correct. It's virtual currency dealers, not one-to-one virtual currency dealers.

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

Okay. Thank you very much.

That being said, though, if I understood your testimony at the public safety committee—and let's just stick with crowdsource funding here, even though they aren't direct registrants—you do sort of have eyes on those transactions through other means, such as through Stripe and Interac, and the money flows into, and I guess out of as well, a crowdsourcing platform.

Have I understood that?

[Barry MacKillop]

Yes. Anytime a crowdfunding platform got used, there would be a touchpoint at a financial institution. There would be a requirement, if you were setting up a page or if you were receiving the donations in order to disburse them to others, for a touchpoint at a bank. There would be a financial institution in a position as a reporting entity to report transactions to us if they were threshold transactions or if there were reasonable grounds to suspect that the transactions were relevant to a money-laundering or terrorist-financing activity.

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

Thank you very much.

My next question builds on that. The emergency measures act invocation gave you the ability to make crowdsourcing a registrant, but I suspect you weren't able to get very far in those four or five days. I also suspect it had very little impact on the actual disbursement of the illegal protest.

As far as you can comment on that—I realize there might be some limitations—I'd really appreciate your thoughts on it.

[Barry MacKillop]

Mr. Chair, the member is correct that we would have started the preregistration process, but within a week there's only so much that can be done by way of registration. At the preregistration stage, anybody who or any platform or any payment service provider who pre-registered would have been in the position to report to FINTRAC if they had reasonable grounds to suspect that the money they were seeing was relevant to a money-laundering or terrorist-financing activity.

That being said, the goal of the emergency measures act was really to choke off the funding to what was determined to be the illegal blockades, and in fact it did serve its purpose. In—

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

Sorry; but that didn't go through your body. That was directly from law enforcement to the financial institutions. FINTRAC really didn't get involved at all in the cessation of funding—unless I'm incorrect. Please do correct me if I'm wrong.

[Barry MacKillop]

No, that is absolutely correct. FINTRAC was not involved at all. The point was simply that once the funds were frozen in the financial institutions, there would be no transactions to report to FINTRAC. There would be no transactions through those bank accounts, because the accounts themselves were frozen.

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

Mr. Chair, my time is coming to an end, I assume.