Finance Committee on March 7th, 2022

[Angelina Mason]

I would just say that obviously we weren't able to ask specific questions until we saw the regulations themselves. I give the government credit for moving quickly, but it was still very much in real time, whereas—and again I attribute it to the fact that this was an “emergencies act”—under the normal process, you would have an opportunity to do that before things were enforced. However, I appreciate that was the context in which the act was invoked. The question was about the context of our doing this again, now that we have learned.

[Adam Chambers, Conservative, Simcoe North, ON]

Thank you.

Do you think there could have been more transparency, whether on the part of industry or government, in terms of how the powers were being used while they were being used?

[Angelina Mason]

You're talking about powers, so I just want to be clear. We had legal obligations, and for us it was more about understanding what the extent of those obligations was.

[Adam Chambers, Conservative, Simcoe North, ON]

I'm thinking more in the context of transparency for the public.

[Angelina Mason]

I see.

[Adam Chambers, Conservative, Simcoe North, ON]

You mentioned misinformation. One of the challenges that many of us had—speaking as a legislator who was asked to decide or to vote on whether the act was needed—was that there was not a lot of transparency on how these extraordinary powers were being used, both by government and by industry.

I would submit that one of the reasons you saw some potential misinformation was because there wasn't a lot of transparency of how many accounts would be affected, or the thresholds that were being used.

Do you think that more transparency would be helpful in the future?

[Angelina Mason]

I can say that we, as an industry, went out with media messaging. We have the active messaging in place for all of our customers. At a certain point, Finance had made comments about clarifying the very targeted scope.

[Adam Chambers, Conservative, Simcoe North, ON]

Okay. Thank you.

On procedural fairness, we talk a lot about notification and the process through which this might happen normally, having a court order and an opportunity for someone whose regular job is to evaluate evidence to do it. Banks do a lot of good work on the money laundering side, but I'm not sure you're the best equipped to deal with the regular weighing of evidence and determinations on restrictions or whether bank accounts should be frozen.

Are there currently gaps in industry that will now look to be filled to get more information or capabilities on this side of the House?

[Angelina Mason]

I don't see it so much as gaps being filled. I think the difference is that, because this was mandated, versus allowing organizations the discretion to decide when something should or should not be reported—for example, to engage law enforcement or what have you—that is what presented the challenge.

[Adam Chambers, Conservative, Simcoe North, ON]

Perhaps as a final point on procedural fairness, I hope you and others can understand that the reason we care about procedural fairness is that.... It's not so much that you might look back now and say that everything seemed to go okay because it was targeted, etc., but because we have these procedural fairness requirements in the charter and other places in criminal law so that there will be no abuse in the future, even though there could be. It's important for us to understand what some of those gaps might be, so that we can fill them in the future.

I appreciate your answers today.

I would say to other witnesses and, perhaps, to members of the government listening, I've really appreciated your concise answers here at this committee. It's made our job a lot easier and I would hope that other witnesses review your testimony and see how clear and concise you can be.

Thank you very much.

[Angelina Mason]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP Chambers.

Members, we have the Liberals up for five minutes and MP MacDonald will be the last questioner.

MP MacDonald, you have the floor for five minutes.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you, Chair.

I have two or three rapid questions. Your testimony here today really serves a very distinguished purpose in being relevant to what the public was asking. I echo Mr. Chambers' comments. I thought your answers were very well put. We all appreciate your time and your effort and everything you've done. We hope we won't always have to have you back.

I'm assuming that once the review is done, which is mandated through the legislation, we'll end up strengthening and reviewing all aspects of this process and the protocols.

This enforcement played a very significant role in ending this blockade. We're seeing those restrictions and sanctions across the board now internationally. They're playing an integral part, so our financial institutions are going to come to the forefront when you look at Bitcoin and cryptocurrency and how things are non-regulated at some point.

Someone mentioned FINTRAC a couple of times. Did FINTRAC notify you of any irregular transfers coming from abroad during the time the act was invoked?

[Angelina Mason]

No. It would work the other way around. What we would do is provide intelligence to FINTRAC.

First of all, as I mentioned, there is threshold reporting, so any international transactions over the 24-hour, $10,000 threshold would be reported to FINTRAC. If there were any unusual activity, we would report it to FINTRAC. They, as the central repository for that level of intelligence, would then make connections and conduct disclosures to law enforcement.

[Heath MacDonald, Liberal, Malpeque, PE]

Chair, I don't have any more questions. I think we've very significantly covered most questions—maybe even two or three times—but I would appreciate it if Ms. Mason could give us a quick overview going forward of her personal or professional opinion on how we can make things better overall if we have to go through this again.

[Angelina Mason]

Great. I would say that it's basically what we've covered off, which is understanding the scope and the limited nature of this. Again, we were told that it was going to be temporary and very targeted, so we worked within that, but with regard to a proper assessment of the Emergencies Act itself and how it would be invoked, I think it's really not our position to comment on that. That should be covered by the review itself.

[Heath MacDonald, Liberal, Malpeque, PE]

Thank you for your time.

[Angelina Mason]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you, MP MacDonald.

I just want to say kudos to Ms. Mason and Mr. Hannah, our witnesses from the Canadian Bankers Association. I think you heard that from MP Chambers and MP MacDonald in this respect, but their sentiment, I believe, is that of all members.

The many questions you answered here today in a very clear, concise way will help inform our committee and this report on the invocation of the Emergencies Act. We thank you so much.

Again, on behalf, of the members, the clerk, the staff and the interpreters, everybody who is involved in allowing this committee to function, we thank you very much.

[Angelina Mason]

Thank you for having us.

[Darren Hannah]

Thank you.

[The Chair, Liberal, Peter Fonseca]

Thank you.

On that note, members, we are going to suspend for five minutes as we transition to our second set of witnesses.

[The Chair, Liberal, Peter Fonseca]

Welcome back. I call this meeting back to order.

We are into our second panel, members. The witnesses with us today are from the Royal Canadian Mounted Police. We have Michel Arcand, assistant commissioner, federal policing, criminal operations, and, I believe, Superintendent Denis Beaudoin, director, financial crime.

With that, I will allow them the floor for their opening statement.

[Assistant Commissioner Michel Arcand, Assistant Commissioner, Federal Policing Criminal Operations, Royal Canadian Mounted Police]

Thank you, Chair.

Good afternoon, Mr. Chair and honourable members of the committee. I am Assistant Commissioner Michel Arcand, responsible for the national picture of ongoing high-priority federal policing criminal investigations, including financial crimes. Joining me, as was mentioned, is Superintendent Denis Beaudoin.

I am here today to discuss the RCMP federal policing program's use of the emergency economic measures order. I can say that from the program's perspective, the measures available to law enforcement under the Emergencies Act and order were welcome. Under this order, law enforcement and monitoring agencies were able to work more closely with Canadian financial institutions and use those financial measures to strongly encourage individuals to leave the illegal protests and deter the counselling of others to commit related criminal offences.

This order gave financial institutions the ability to freeze financial products of individuals and companies suspected of involvement in prohibited activities during the public emergency and for law enforcement to share information with financial institutions for that purpose. Additionally, the order broadened the scope of Canada's anti-money laundering/anti-terrorist financing rules to include crowdfunding platforms and payment service providers, including virtual currency.

With the order in effect, the RCMP worked closely with municipal and provincial partners to collect relevant information with regard to persons, vehicles and companies directly or indirectly involved in the prohibited and illegal activities relating to the blockades—in particular, the owners and drivers of vehicles who did not want to leave downtown Ottawa.

The RCMP federal policing program leveraged real-time policing techniques from the Ontario Provincial Police and the Ottawa Police Service to validate and corroborate the presence of individuals in the illegal protest and then acted as the central point of contact between police-derived information and the financial institutions. Through the receipt of this information, along with other information at law enforcement's disposal, financial institutions could then assess whether or not to take action.

During the eight days when the emergency economic measures order was in place—from February 15, 2022, to February 23, 2022—the RCMP disclosed information on numerous entities to the banks, the Canadian Bankers Association, the Investment Industry Regulatory Organization of Canada, the Canadian securities administration, credit unions and the Mutual Fund Dealers Association.

It is the RCMP's understanding that at least 257 accounts were frozen by financial institutions, and the RCMP disclosed information on 57 entities to financial institutions and other listed entities. Additionally, the RCMP identified and disclosed 170 Bitcoin wallet addresses as receiving funds linked to the HonkHonk Hodl crowdfunding campaign, which raised 20.7 Bitcoin with a value of between $1 million to $1.2 million Canadian during the period when the Emergencies Act was in force.

Many of these cryptocurrency wallet addresses were disclosed to virtual currency money service businesses via a series of cryptocurrency alerts noting that these e-wallets were linked to a joint RCMP and Ontario Provincial Police investigation and directing these businesses to cease the facilitation of any transaction and to disclose any transaction information linked to the RCMP. The RCMP was also very clear to communicate that the measures under the order were not retroactive and to apply them only during the time that the order was in effect.

Finally, it is important to note that the emergency economic measures order does not contain any enforcement provisions. Therefore, no charges were laid by the RCMP under this order.

As per the powers of the order, the RCMP was in constant communication with the financial institutions to ensure that they were provided with the most up-to-date information possible on the status of entities of interest so that the financial institutions could make the most informed determination possible before taking action to freeze, or unfreeze, financial products within their holdings.

The RCMP continues to instruct anyone inquiring about the process of unfreezing assets to contact their financial institution, as the authority for this action rests with them.

To conclude, these measures enhanced the effectiveness of law enforcement's investigations pertaining to the blockades, and helped contribute to a peaceful and timely end to the public emergency.

Thank you for your attention. I would be happy to take any questions you may have.

[The Chair, Liberal, Peter Fonseca]

Thank you, Assistant Commissioner Arcand.

We will now move to our first round of questions. Each party will have up to six minutes to ask questions of our witnesses.

First up is the Conservatives.

MP Chambers, you have the floor for six minutes.