Finance Committee on Feb. 24th, 2022

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

It was the greatest question I've ever asked.

In all seriousness here, I just wanted to be clear, from my last round of questions, that the additional powers given to FINTRAC in the emergency measures act invocation or proclamation did not help in resolving the blockades or the illegal protests.

[Barry MacKillop]

I kind of hesitate to say that FINTRAC didn't have any role at all, because we were working 24 hours a day, and we are part of the security intelligence community in Canada with the federal government. But you are correct. While the authority to register crowdfunding platforms and the payment service providers may not have had a direct impact, it may have in fact reinforced the fact that it was at that point illegal to try to donate money to support this blockade or to take money out.

It did certainly put a focus on that. It put a focus on the banks and the financial institutions that may have had any control of any goods or any accounts related to any of these crowdfunding platforms. They probably looked at other crowdfunding platforms as well that were not necessarily mentioned in the newspapers, for example. So I think there was a role, but it was certainly not a direct role in stopping this.

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

[Technical difficulty—Editor] direct role.

I'd like to pivot to a different area. My concern—I think Mr. Blaikie may have pointed this out as well—is that it does appear that we have a hole in our money-laundering dragnet. If you have a foreign entity that is giving to a foreign crowdsource or even to a not-for-profit group that, for example, wanted to stop pipelines, and maybe international actors such as Russia would want to support those types of groups or those crowdsourcing platforms, we don't really have a way to [Technical difficulty—Editor] Canadian financial institution. Correct me if I'm wrong.

[Barry MacKillop]

The audio was cutting out, sir, and I didn't hear everything, but I'll do my best to answer the parts that I did hear.

If there were monies coming in from an international organization or an individual internationally, and they were in sums of $10,000 or more, we would see that, because it would use the international transfer system. Those transactions are threshold transactions that would be reported to FINTRAC. If the transactions were coming into a crowdfunding platform, the crowdfunding platforms that I have researched so far all have fairly strong anti-money laundering, anti-terrorist financing compliance programs in place. They don't want to be misused. They have terms of reference, and as we saw with GoFundMe, if you're not managing your terms of reference, they will cut that page off. They will certainly be keeping an eye on that.

Any organization or individual who is setting up a GoFundMe page or any other type of crowdfunding page for nefarious purposes would nevertheless have a bank account if they're in Canada, so we would not only see the international transfer of threshold funds coming in; we would also have the bank keeping an eye on whether or not the bank account that was set up for this particular social cause, or whatever cause it was, was actually disbursing the money for the purposes for which it was set up. Otherwise, we would see suspicious transaction reports.

[The Chair, Liberal, Peter Fonseca]

Thank you.

Thank you, MP Lawrence.

Now we're moving to MP Dzerowicz for the Liberals for five minutes.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much, Mr. Chair.

My first question might be slightly odd. In the short amount of time that the Emergencies Act was in place—and, FINTRAC, thank you very much for working 24 hours a day—what happens to the information that you collected? Does it just sort of stay on reserve? Does it get eliminated? What happens to that information?

[Donna Achimov]

Information disclosed or received by FINTRAC with legal authority while the order was in effect will be treated in accordance with our legislation and the Privacy Act. We have rigid safeguarding of personal information. That's critical to the way FINTRAC operates. It's hard-wired in terms of the act and our mandate. We have clear principles for how we manage that information.

As of yesterday, when the order was revoked, all activity associated with any information that we have received had to stop, and it did stop.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

My next question is in the spirit of moving forward and assuming that the Deputy Prime Minister is going to continue to move forward and try to introduce legislation to make this something permanent for FINTRAC.

One of the things that has been said about FINTRAC investigations is that they very rarely lead to charges connected to money laundering or extremist financing, and the reason that's given, such as by Transparency International Canada, is that it's largely because law enforcement agencies are hesitant to take on labour-intensive, time-consuming cases.

Is that true? If it is true, is there something that we need to be thinking about in terms of capacity and resources and how we're actually framing any type of legislation or including it in any type of legislation moving forward?

[Barry MacKillop]

Mr. Chair, I think the member is correct that if we measure success based on the number of successful money-laundering or terrorist-activity financing prosecutions we have in Canada, we may not come out with significantly high numbers. However, if we look at the disruption of criminal organizations or the disruption of potential terrorist events, where our financial intelligence may or may not be recognized—because it's not recognized in every successful investigation or prosecution—I think the disruption is significant, and I think the financial intelligence is critical to assisting our law enforcement partners in their investigations.

Certainly, money-laundering charges are difficult. They're difficult to prove and difficult to get prosecutions on, but in terms of my own level of satisfaction with my work, while getting a money-laundering prosecution is great, if I can assist law enforcement in identifying 12 victims of human trafficking and getting them out of a human-trafficking ring so they can become 12 survivors in Canadian society, I see that as success. Perhaps a human trafficker will not be charged with money laundering, but they will be charged with human trafficking, and we will save the victims.

I think it's the measure of success where, yes, Transparency International may have looked at the FATF measure, which is money-laundering and terrorist-financing prosecutions, but for us, we believe that while that's important, saving victims, getting victims out, avoiding terrorist incidents and disrupting organized criminals are as successful as a money-laundering or terrorist-financing prosecution.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you.

My last question again might be an odd question. If we were to add cryptocurrency and crowdfunding as part of the monitoring powers that FINTRAC would have, is there anything we would have to change if the definition of terrorism or money laundering because of these digital features? I don't think so, but I just wanted to pose the question to you.

[Barry MacKillop]

I don't believe that money laundering is linked to fiat or anything else, so any virtual money, any crypto money, can be used in money laundering and terrorist financing and there would be no need to change the definition of the type of currency that's being used to launder. As long as it's the proceeds of crime, it would be considered eligible for money laundering.

[Julie Dzerowicz, Liberal, Davenport, ON]

Thank you so much.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Dzerowicz.

Members, we are moving into our final round. I'm looking at the time. As we do on this committee, when there is not enough time to allow for a full round, we will divide it up equally among the parties. We are starting, for four minutes each, with the Conservatives and MP McLean.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

I'm going to go back to where I left off with my last round of questioning.

All these Canadian crowdfunding platforms are regulated through provincial securities regulators. They are covered under FINTRAC when the transactions go there. The crowdfunding platforms in Canada, specifically GoFundMe, are regulated. When activities were deemed to be illegal, they ceased to provide funds to the organization. The one gap we have is GiveSendGo—an offshore non-Canadian entity, to which some Canadian funds and some other funds were going—which we are not sure where it fits in the regulations. That's where we are at.

This is the part that I think concerns many of the members of this committee, namely the implications of foreign funds and foreign organizations that are not regulated by Canadian institutions such as FINTRAC being able to destabilize operations or governments in Canada.

I'm not sure how FINTRAC is going to be able to regulate these foreign platforms. Can you comment on that?

[Donna Achimov]

Mr. Chair, thank you.

With regard to looking at the gaps and at the regime and our regulatory partners, we are having conversations with them. Additional gaps and policy gaps come under the purview of our colleagues at the Department of Finance.

I think that question would best be routed to them.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

With respect to the Emergencies Act, it seems that we were clear that everything was going according to the law. The only gap in understanding we seem to have here is with respect to the regulations regarding entities' distribution of funds to a Canadian illegal operation.

The issue we have insofar as the freezing of bank accounts in Canada is concerned is with the order in council that was issued. Freezing bank accounts for participating in an illegal activity, even when the activity wasn't illegal or deemed to be illegal, is the basic overstep at which many of our constituents really balk. Is it going to destabilize the Canadian financial system if the government has the ability to reach into the accounts of people—who are participating in an action and doing nothing illegal—and suddenly freeze those accounts? I'm not talking about accounts of $10,000 plus. I'm talking about your Mas and Pas who may have given to an organization that was not performing anything illegal at the time.

Can you comment on that, please?

[Barry MacKillop]

The seizing of the bank accounts and the invocation of the act are well outside the purview of FINTRAC, so I do not have a comment on that.

[Greg McLean, Conservative, Calgary Centre, AB]

Is there anything else you'd like to comment on? It seems as though the Emergencies Act didn't have any role to play in the actions as far as the accounts and the crowdsourcing go. That seemed to occur under current Canadian legislation, and the Emergencies Act was really not required in order to freeze any of those accounts. The account freezing was the one aspect of the Emergencies Act that was really a gross overstep.

Do you have any comment on that?

[Barry MacKillop]

Again, Mr. Chair, that is outside of the purview of FINTRAC and the role that we play with regard to money laundering and terrorist financing.

[Greg McLean, Conservative, Calgary Centre, AB]

Would anything be accomplished with that?

[The Chair, Liberal, Peter Fonseca]

Thank you, MP McLean.

We are moving to the Liberals and MP MacDonald for four minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Chair.

I do want to say that with the last time FINTRAC was here, and this time too, of course, I learn more all the time. It's certainly reassuring that there are organizations like FINTRAC. It's appreciated. Even mentioning the human trafficking relevant to what you do is most beneficial.

I certainly don't know how you deal with the flood of misinformation and disinformation that we've seen over the past few weeks, but I'm going to go back to what may be more of a local issue when you're dealing with financial institutions such as a credit union or something like that.

What are the weaknesses of those institutions, I guess, that could have consequences for you as you're trying to do your job? What changes would you like to see in those institutions for betterment in your doing your job?

[Donna Achimov]

Mr. Chair, I think some of that is answered by having robust compliance programs. Whether we're talking about credit unions or financial institutions, we go to great lengths in education and strongly endorsing the requirement to put a robust compliance program in place: appointing a compliance officer who's responsible for a program, developing policies and procedures and conducting risk assessments. Those are key fundamentals for a robust compliance program, as is ensuring that they have training programs and that they monitor the evolution of risk and those training programs.

For part of our education, I must go back to what my colleague Barry indicated. Every time FINTRAC is mentioned in the context of a successful law enforcement operation, and especially when we can put a human face to the damage associated with money laundering or terrorist financing, we bring that back to our reporting entities in the institutions. They have to understand that they play a critical role not only in mitigating the damage, but in really having that robust program where they know their clients, and when something is wrong, they have reasonable grounds to suspect and they come back to us.

For us, I think the best way to continue is educating and ensuring that we have sound appreciation for the roles these entities play in disrupting financial crime.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you.

I'm good, Chair. Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald.

We are moving to the Bloc and MP Ste-Marie for four minutes.