Evidence of meeting #35 for Foreign Affairs and International Development in the 42nd Parliament, 1st session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
When new sanctions are introduced, typically we will learn about them when they're published. We subscribe to various services. Global Affairs will give email updates through RSS, and we scan all the sites every day.
It's interesting you raised that, because some of the names, when they are first published, appear in various sources. Sometimes...and we'd never seen this before, but it was through a news release on the Prime Minister's website. That was new for us, and we didn't even think to look there. We typically just look at the Global Affairs website every day. We do look at the Justice Department website every day.
We may or may not receive notification. I think that when the Russian sanctions came down, I believe we got a heads-up from OSFI because they knew that they were coming, and that was nice. I also have my team. I have five lawyers on my team, and we have a legal department. We each pore over them and we analyze the impact.
If it's just adding to a list, then it's fairly simple. They're added to this list, and we ingest them. Either our service provider does it, or we do it manually. Then it goes into our system, and it's done usually the same day, or the very next day. If we get a hit, or blocks, then we take appropriate action. We freeze property or assets. If we get a false positive and we can't reconcile that, then we go back to the client and ask for additional information. We may ask for additional information from a remitting bank or an originating bank, if it's a wire type of transaction.
For something like sectoral sanctions.... Let's say they're opening a whole new sector. Let's say they want to add fishing somewhere. We hadn't seen that before, so usually we'll convene a CBA meeting. We'll have members get together and we'll talk as an industry and figure out what to do. We may reach out to our legal service providers and ask them for their interpretation, and we do our best.
It would be fantastic if we could go to Global Affairs, have them host the call, and have them walk through the new sanctions. That would be ideal. Those are some of the things that we're asking for. That's what other jurisdictions do. Then they can publish frequently asked questions that could come up, or they could even anticipate questions in advance. That would be great.
Liberal
Michael Levitt Liberal York Centre, ON
Would you benefit from a consolidated list? This is an issue that we've heard at a couple of meetings, the notion that there could be more comprehensive lists, rather than having to jump around various sources. I think that's something that's done in the States.
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
Absolutely. Yes, it would definitely be beneficial, and it's something we've been asking for over a number of years. Your esteemed committee member mentioned the credit unions and the small financial institutions, and we believe for them especially it's a burden. For smaller banks, we know it's a burden having multiple lists. We know it's a burden for our service providers, because sometimes they miss a list. They're either U.S.-based or U.K.-based, and they're not aware that we have 19 different sources.
Liberal
Michael Levitt Liberal York Centre, ON
Beyond just the Canadian sanctions, you're also required to abide by sanctions and regulations in other jurisdictions, notably with the EU and the U.S. How does the patchwork of sanctions, regimes, and differing jurisdictional standards complicate compliance? What could the government do to reduce this burden for the banking sector?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
I'm not sure, quite frankly, if the Government of Canada could do much to impact sanctions from other regimes. That's always going to happen. We would encourage collaboration between states. It would be great if they could harmonize sanctions. It would be great if they could come up with an international harmonized sanctions list. That would be a dream.
We do appreciate that the Government of Canada has made a policy decision to have stand-alone sanctions, and that's fine. We can deal with that, but it does get complicated. I mentioned that earlier. Using Iran as an example, we have two very different regimes. We have to plow through either transactions or potential clients, drill down, get a lot of details, and make sure that there isn't a nexus to the United States.
That's not new, though. We've been dealing with having two different regimes and two different approaches for years in the case of Cuba. We've set up different infrastructure, for example, to make sure that U.S. employees recuse themselves from transactions. We insulate them to make sure that there's no tie whatsoever to the U.S. so that we can complete transactions for companies that are doing business in Cuba.
In the future we hope there will be some greater harmony, but we expect that there will always be differences.
Liberal
Michael Levitt Liberal York Centre, ON
I know you've touched on some of these things, but ideally what would the financial services industry look for? What kind of support from the government do you see as ideal to help ensure compliance with the Canadian sanctions regime? You've pointed out some examples. Are there any you would like to add to that?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
No, it's fairly basic. FAQs would be fantastic guides. We're not asking for 500-plus FAQs, such as OFAC has. A few would be great. Maybe even consider adopting something like the general licence regime that they do in the U.S., whereby you have common types of questions that come up. Rather than just issuing permits or licences on a one-off basis, they say, “Here's this type of transaction; everybody can do it”, and they publish it. That would be fantastic. It would make it a lot more efficient.
However, just providing outreach and the ability to contact and provide guidance....
Assistant General Counsel, Canadian Bankers Association
I think we mentioned a hotline or a telephone line for advice as well. The banking industry is appreciative of all the support the government has provided us. We're just looking for enhancements in that collaboration.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Thank you both for coming. This is probably the most interesting conversation so far, because it's about the technicalities and the administration of it too.
You said that you support sanctions regimes and you just want to comply with them in the easiest way possible. I'm one of those politicians who likes the details, so I'm glad you're here, because I get to ask you details.
Concerning these 19 separate lists, there are different ways that you go about checking them over, but they're not all Canadian lists, are they? You seem to be intimating that these are U.K. lists, UN lists.... Are these all in Canada?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
Just off the top of my head, I know that there are at least....
We're talking about not just lists but sources that you would find on various websites. It may not be actually 19 under the legislation or the regulations; I think it's just that the locations at which you would actually find the potential listings are in 19 different places all across the web.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Would it be fair to say, based on some of the answers you've given to other committee members' questions, that you would prefer to have a sectoral or a very generic sanction and a more specific one aiming at specific individuals?
On the administration side, is it easier to find a list that says, “Such and such a person, who's the captain of such and such organization, is a person who is designated as someone you can't do X transactions with”, and just list them, as distinct from saying “anybody involved in offshore drilling who does business in Russia”? What's easier to administer?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
There are two things. One is that from a list perspective and for list administration, we're asking just to put it in one spot, as OFAC does. There would just be one list. It doesn't matter whether it comes from different pieces of legislation. Have one central list, and then you can even put in links or codes or colours—I don't know—to link it to a separate act, appreciating that there are different definitions of what you have to do. Ultimately, for screening purposes, just have one list.
The other piece of it that you mentioned is more around clarity and specificity. It's harder to do, because that's when you're drilling down into sectoral types of sanctions, or you may have an entity—let's say Russia, for example—that is a schedule 2 entity. Yes, they're on a sanctions list; however, what they're sanctioned for is debt transactions in excess of 30 days, so you're prohibited from entering into those. I'm not going to go into the details or dictate how the government should handle this. Maybe keep it in a separate schedule or something, but in the same spot, or code it differently. I'm not sure. Make it easier to use somehow.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Let me ask you this, then. Could there be something more like a global Magnitsky Act that would be like a clearing house for sanctions, a place for you to go to find this consolidated list? There would be some agreement with other countries as well about what this would look like, so there wouldn't be the situation in which you would have to recuse some staff from dealing with certain specific cases, such as Cuba. You would be able to say, “On these particular cases, this group of countries agrees to sanction this individual or this sector in this country in the same way and the same fashion”, and then you would have a list that all these sanctioning countries agreed to. Russia is the example we're using right now.
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
That would be helpful.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
It would be helpful—something like a global Magnitsky Act?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
Yes, that would be very helpful. Let's take Russia for that example. There are subtle differences among the U.K., the U.S., Australia, and Canada, but if those regimes could just agree on uniformity of language and approach, it would be ideal.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
Can I ask one more question? You're still waiting for the government to respond to some questions. Are you saying it's 16 months?
November 23rd, 2016 / 5:20 p.m.
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
That's for a permit application.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
That's for a permit application. Basically, you haven't heard at all, despite the change of government. There still has been no response, nothing from Global Affairs.
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
Correct. Our lawyer follows up, and asks what's happening with it. The response is just that it's still in process.
Conservative
Tom Kmiec Conservative Calgary Shepard, AB
It's still in process.
You were mentioning this general licence concept whereby you wouldn't need to come back and reapply for another person when you had just told another company you're allowed to do this type of licence.
In the case of Canada, does this happen in any specific sanction, or does this not happen at all? Does it have to be a unique application every single time?
Senior Director, Sanctions, Global AML Group, Canadian Imperial Bank of Commerce
Yes.
