Foreign Affairs Committee on June 1st, 2023

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you very much, Chair.

I want to thank the witnesses for coming, but there are still so many questions. I think the whole concept of what a sanction is is in question here. What is a sanction? How do you define it appropriately so that everyone knows what that sanction is? How do you decide who, in a country, is going to be sanctioned? For instance, if you have a country like Russia that is in fact violating all of the international laws and waging war against another country, how do you decide exactly whom in that country to sanction, because you cannot sanction everyone?

The question then is, if Vladimir Putin and the Russian government are waging war against Ukraine, do you sanction the army, do you sanction generals, do you sanction his Parliament, do you sanction the Duma? How do you decide whom to sanction? I think a lot of people fear that if you sanction Russia, for instance, any Russian is going to be sanctioned, just because they happen to be Russian.

How do you make those decisions?

[Alexandre Lévêque]

Thank you very much for the question.

The first part, on what a sanction is, is interesting, because if you look at our legislation, you see the word “sanction” is actually not used. It is a generic term, and countries understand what it refers to. It's an imposition of limitations on individuals.

We generally talk about economic measures. Sanctions can of course be of other types, but the main output of our legislation is to limit the economic dealings between a listed individual and Canadian entities.

[Hedy Fry, Liberal, Vancouver Centre, BC]

How do you list those individuals?

[Alexandre Lévêque]

It's through orders in council and the publishing of the names.

To answer the second part of your question, on how we decide, this is done on the basis of what we want to accomplish. Again, that's why it's a flexible tool, but it's not the only tool that we have when we want to send a message or to restrict the ability of a country to act maliciously.

In the case of Russia, for example, we have close to 2,000 individuals and entities listed, and it pretty much covers all the categories you included below President Putin. It's the individuals who are close to him. It's the individuals in the Duma. Hundreds of them are listed, because either we know they are complicit—and we know this because of their voting record in the Duma—or we know they have the ability to change things. We want to exert pressure on them to apply pressure on the regime. It's also the oligarchs, because we know of their proximity to the regime. First of all, there's the fact that they've gained from a criminal regime, and second, they have an ability to put pressure on political decision-makers.

It's all of the above.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Thank you.

I want to focus a little bit on the fact that you said it was people who were close to Vladimir Putin. Does that mean his family? Again, people are suggesting that if you are going to deny visas to certain people to come to Canada or deny refugee status—we're not talking only about economic sanctions—what if people within Mr. Putin's family don't agree with him? What if they quietly disagree with him? What is your intelligence source?

What have you learned, say, from looking at how you were successful or not successful in the Magnitsky sanctions? Have you learned anything? How do you ensure that flexibility isn't so flexible that it brings in innocent people? I think that's what makes people afraid.

[Alexandre Lévêque]

Yes, family members of some Russian leaders and oligarchs are also listed when we have reasons to believe that they'd benefit from the proceeds of their illicit activities.

That's the thing. We list individuals whom we have very good information on, which leads us to believe in their culpability by association. It is absolutely not a tool to block all Russians from coming into the country or from having dealings with Canadians. That's why we have to be very diligent about how we find the information before we list such individuals.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much. I'm afraid you're way out of time.

[Hedy Fry, Liberal, Vancouver Centre, BC]

Okay, thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

Allow me to thank our three witnesses. Thank you very much, Mr. Lévêque, Madame Langlois and Mr. Burridge. We are very grateful for your expertise and for your appearing before us today.

We will be moving to the second panel of officials. We will suspend for approximately three to four minutes to allow them to assume their seats.

For everyone who is joining us virtually, there's nothing you have to do. You can just remain on the current link. Thank you.

[The Chair, Liberal, Ali Ehsassi]

Welcome back to our resumption of the study of the sanctions regime in Canada. We have quite a few officials here helping us navigate our way through this regime.

We have, from the Canada Border Services Agency, Mr. Fred Gaspar, vice-president, commercial and trade branch; and Mr. Richard St Marseille, director general, immigration policy and external review.

Then, from the Department of Finance, we have Mr. Jeremy Weil, acting senior director, financial crimes governance and operations.

From the Financial Transactions and Reports Analysis Centre of Canada, we're grateful to have with us today Ms. Annette Ryan, deputy director, partnership, policy and analysis; Stéphane Sirard, assistant director, program delivery and modernization; Derly Lavertu, manager, international relationships; and Michael-John Almon, manager, strategic intelligence, research and analytics.

Finally, from the RCMP, we have Chief Superintendent Richard Burchill, director general of the financial crimes division; as well as Denis Beaudoin, director of the financial crime division.

Now, I understand that no one would like to make opening remarks, which leaves us with more time for the members to ask their questions.

We first go to Mr. Chong.

Mr. Chong, you have six minutes.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Thank you, Mr. Chair.

I'd like to build on some of the questions I asked the first panel.

Thank you for appearing.

In the United States, the State Department has the lead responsibility for the designation of sanctions, but the treasury department has the lead role for the administration, coordination and enforcement of sanctions.

Here in Canada, Global Affairs, like the State Department, is the lead for the designation of sanctions. We know, obviously, that the RCMP and the CBSA have the lead for the enforcement of sanctions, but my question is slightly different: Who is the lead for interdepartmental and agency coordination on sanctions enforcement?

[Fred Gaspar, Vice-President, Commercial and Trade Branch, Canada Border Services Agency]

It's an iterative process. Certainly, officials have great working relationships. There are working-level committees and regular committees. There is no one person who is in charge of interdepartmental organizational models. I can certainly tell you that there is no organizational barrier to our working well together. We do it every day.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Well, I would suggest that this, in itself, is a problem. There needs to be a lead department or lead agency that is responsible for the administration, coordination and enforcement of sanctions. As we've seen in other cases, if there is no lead, things get lost in the shuffle. The buck has to stop somewhere on enforcement. It is my view that one of reasons we don't do that well in sanctions enforcement is this problem within the machinery of government.

We have a number of new initiatives coming online to try to beef up our enforcement of sanctions. That's just going to add to the organizational complexity of the current system, which is already complex. I think about the new federal beneficial ownership registry that's going to be coming online. That's going to be under the industry department. We have the proposed new Canada financial crimes agency. That will be another organization within the machinery. If there's no lead with those proposed entities, with FINTRAC, with GAC or with Public Safety, then I think it's going to lead to weaker enforcement.

Perhaps I could ask you a question on this proposed Canada financial crimes agency, which was announced over 12 months ago. Where is that going to fit into sanctions enforcement?

[Superintendent Denis Beaudoin, Director, Financial Crime, Royal Canadian Mounted Police]

If I may, I'll just go back. Maybe I can shed some light on your first question. The RCMP views GAC as the lead on sanctions.

I think that enforcement encompasses two prongs. When sanctions evasion becomes criminal, the RCMP and the CBSA are definitely the leads to investigate criminality. As far as deciding who is designated goes, which asset is going to be frozen and whether it's going to be forfeited, that falls under Global Affairs.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Yes, but if FINTRAC is not giving you the information you need, then whose responsibility is it to lead the charge on fixing that flow of information?

[Supt Denis Beaudoin]

As of now, I know measures have been announced. Jeremy is better placed to answer.

[Jeremy Weil, Acting Senior Director, Financial Crimes Governance and Operations, Department of Finance]

I'm happy to add a bit of context. As you noted—I listened to your questions earlier—budget 2022 announced the creation of the financial crimes agency. Budget 2023 provided a bit of an update. Our colleagues at Public Safety Canada are currently developing options for the potential scope and mandate of such an agency.

What I'm privy to at this point is that sanctions evasion as a financial crime—just like fraud, money laundering and terrorism financing—is in the universe of the potential sorts of crimes that such an agency could potentially provide support on, be it in an advisory capacity or in an enforcement capacity.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

That's helpful.

Can you tell me when that agency is going to be stood up?

[Jeremy Weil]

I think budget 2023 promised Canadians an update in the fall economic statement for 2023.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Budget 2022 promised that in the fall economic statement of last year, and we never got it. Do you have any more sense of when this agency is going to be stood up?

[Jeremy Weil]

I'm sorry, but I don't have any more for the committee in terms of timing, except that there will be more to share in the fall.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Just to go back to this question of information flows, if FINTRAC isn't providing the RCMP with the information it needs, who's responsible for ungluing that stuck problem?

[Jeremy Weil]

I was listening to the previous panel. Mr. Lévêque mentioned that it really is a shared effort, a collective effort. That's why you have all of us here today.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

That's a problem. We had the same issue with evacuating Afghans who had enduring and significant ties to Canada. There was clearly a lack of interdepartmental coordination. I'm hearing similar things here. I think there is a machinery problem. Within the Government of Canada, there has to be a lead on enforcement. If it's GAC, so be it. If it's Public Safety, so be it. When we're adding complexity to the system, with a new registry and with a new financial crimes agency, if we don't clarify who is the lead within the Government of Canada, who can be hauled on the carpet to explain why sanctions are not being enforced, I think it will be all for naught.

Thank you, Mr. Chair.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Chong.

We next go to Mr. Zuberi.

You have six minutes.