Evidence of meeting #74 for Foreign Affairs and International Development in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was regime.
A video is available from Parliament.
5:35 p.m.
Conservative
5:35 p.m.
Professor, Law, As an Individual
Thank you.
I'd probably agree with Professor Charron.
I also think the importance of these kinds of reports and the kind of transparency Professor Charron is talking about.... She's absolutely right that the EU and the U.K. are far more advanced in this area than Canada. It's not just about measuring effectiveness, and by the way, when we talk about effectiveness, we have to stop and ask ourselves how we measure that when we don't necessarily even articulate objectives. It's impossible to talk about effectiveness unless you know precisely what the objective is.
There's also the importance of the human rights aspects, particularly when we're talking about targeted sanctions. You need to have this transparency in reporting in order to assess whether, in fact, the sanctions are targeting the appropriate person and whether the evidence upon which that sanctioning designation is based is still current, accurate and just.
All of these factors are vitally important, yet right now there is a lack of that kind of transparency.
5:35 p.m.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
Thank you.
I want to follow up on your earlier testimony.
You referenced the aspect of a cost-benefit ratio and also gave a caution around the legality, if I understand you, of the Canada sanctions regime within international law.
Please explain to my non-lawful mind—I don't mean that the way it sounds—whether there's a cost-benefit analysis in that.
5:35 p.m.
Professor, Law, As an Individual
When we say “cost-benefit analysis”, we have to differentiate what kinds of sanctions we're talking about. When we're talking about broad sanctions against Russia, for example, the cost-benefit analysis.... Again, you have to identify what your objective is. If the objective is to stop the war, these sanctions are not going to be effective.
What I'm getting at more precisely are targeted sanctions, with which we're targeting, for example, Russian oligarchs. The purpose of that is to try to exert some pressure on Russian policy.
When you're talking about cost-benefit analysis, I think it's more to the point that you have to look at the possible due process or human rights violations that are part of this. Do we have the right guy? What is the evidence it's based on? Is it appropriate that we are effectively punishing by seizing or freezing assets?
More to the point, when you get to the suggestion that you're going to expropriate the individual's assets and assign these to victims as a form of reparation, you are implicating serious issues of due process. You would not be able to do that in a criminal justice system absent a trial, a conviction and so forth. How is it that we are simply moving automatically beyond all those procedures and expropriating an individual's assets without providing the information—
5:40 p.m.
Conservative
Dave Epp Conservative Chatham-Kent—Leamington, ON
I'm sorry to cut you off. If I could get one more question in for Ms. Marineau—
5:40 p.m.
Liberal
The Chair Liberal Ali Ehsassi
I'm afraid not, Mr. Epp. You are a minute over.
We'll go to Ms. Chatel. You get the last question. You have three minutes.
5:40 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you very much, Mr. Chair.
First of all, let me say how honoured I am to be joining this very important committee. It's a great pleasure for me to be here with colleagues who are interested in international affairs.
As far as sanctions are concerned, a recurring theme in the testimonies was the need for more guidance and transparency to help companies navigate the sanctions regime. Obviously, there's no question of enlarging the size of government, since we're in a period of fiscal restraint. So we have to be creative.
Canada isn't alone. It imposes sanctions with allies. Can you think of a coordinated approach to sanctions? For example, we could explore pooling our resources to impose coordinated sanctions, which would make them easier to enforce, or we could enter into multilateral agreements.
I'm going to ask you my second question right away. Given that these sanctions have a major impact on the financial sector, is it possible for experts in this sector to work with the government? Is it also possible to approach networks of professionals such as accountants, lawyers and bankers, and pool our resources? It's not true that we're going to create 1,000 new positions to offer everything that people are asking for. We can't afford to do that, because we have to be fiscally prudent.
I'd like to hear from Mr. Martin, then Dr. Charron and Ms. Marineau.
5:40 p.m.
Professor, Law, As an Individual
Thank you.
I do think that there is obviously a benefit in coordination. I think there is a fair amount of coordination now, but to your point, and getting back to the arguments that Professor Charron has been making about transparency and reporting, that's rather difficult to do in a coordinated fashion.
If you look at the United States, you see that OFAC does report and does produce a great deal of information. That information may overlap and they may be reporting on an individual who is designated both under American sanctions law and by Canada, but Canada has to do its own reporting.
In my view, that individual deserves to know what evidence Canada is designating them for and on what basis they are being designated. That's a little bit more difficult to coordinate. It may be that there's information sharing between the United Kingdom, the United States and Canada, for example, but at the end of the day, Canada still has to produce the information and the reporting.
When you talk about the—
5:40 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Thank you. I apologize for interrupting you, but I don't have a lot of time.
5:40 p.m.
Liberal
Sophie Chatel Liberal Pontiac, QC
Would it be possible for Dr. Charron, Ms. Marineau and Mr. Martin to send us a written response? I am very interested in their ideas on this.
5:40 p.m.
Liberal
The Chair Liberal Ali Ehsassi
Mr. Chong has proposed that we have one more round. The reason is that all of your testimony has been very helpful. Should all three of the witnesses agree, we'd just like to take another 10 minutes of questions.
Is that okay? It is. Excellent.
We will go to Mr. Chong first. You have four minutes.
5:40 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Thank you, Mr. Chair.
I would like to ask one question about an issue that has popped up from time to time over the last eight years that relates to sanctions enforcement. More specifically, it relates to anti-terrorist financing and anti-money laundering.
As you know, last year new rules came into effect from law societies across Canada, which many people have said still give the self-regulatory system too many ways to avoid AML and ATF—anti-terrorist financing—rules. Critics have said that this self-regulatory system of law societies with respect to ATF and AML rules is just a smokescreen to avoid federal oversight.
Recently there have been a number of reports that have highlighted this self-regulatory system as a problem. The Financial Action Task Force has said that exempting lawyers from federal oversight with respect to AML and ATF constitutes a significant loophole, especially with respect to money laundering and real estate. The Cullen commission reached a similar conclusion in British Columbia. As well, a separate B.C. government-commissioned report written by the former deputy commissioner of the RCMP concluded that “Lawyers are the 'black hole' of real estate and of money [laundering] generally.”
In the United Kingdom, lawyers are ultimately overseen by the Financial Conduct Authority, which is an agency of the U.K. government, with respect to anti-money-laundering and anti-terrorist financing rules.
My question is this: Do you think it's time to enact federal legislation consistent with the 2015 Supreme Court of Canada ruling in Canada v. Federation of Law Societies of Canada so that we can return to the pre-2015 system by which federal authorities oversee lawyers with respect to anti-money-laundering and anti-terrorist financing rules?
5:45 p.m.
Professor, University of Manitoba, As an Individual
I'm hoping that Dr. Martin can answer that question, because that is very specific.
5:45 p.m.
Professor, Law, As an Individual
I think that's really outside of my wheelhouse. I haven't done a lot of research in that area.
As a Canadian lawyer, I have to say that my intuitive reaction is to resist federal oversight, but I don't really have an expert opinion on that. I'm sorry.
5:45 p.m.
Professor, University of Manitoba, As an Individual
I would just add that we're talking about provincial regulations and jurisdiction as well. That's the wonderfulness that is the Canadian federated system. There are going to be several layers of jurisdiction to navigate.
5:45 p.m.
Conservative
Michael Chong Conservative Wellington—Halton Hills, ON
Just to clarify and maybe to help give you some more context, up until 2015, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act that was enacted in 2000 guided lawyers with respect to anti-money-laundering and anti-terrorist financing rules. The Supreme Court struck a portion of the law down because it constituted an unreasonable search and seizure of lawyers.
It also provided in its ruling a path for the federal government to enact new legislation that would allow for continued federal oversight. In the last eight years, no legislation has been forthcoming, so law societies have undertaken to enact self-regulatory rules themselves.
Many critics have said that you could drive a Mack truck through these rules. It's a big part of why we have significant sanctions evasion taking place here in Canada.
5:45 p.m.
Liberal
5:45 p.m.
Liberal
Rob Oliphant Liberal Don Valley West, ON
Thank you.
I'm glad to get back to Professor Martin. I found your testimony quite fascinating.
My first half—like, two minutes—will be on this issue of legality. I'm not going to get into the seizure and repurposing issue, because that's going to be a huge legal battle at some point. Just generally on pushing into sanctions and their legality, it seems to be that it's legal until someone says it's not.
Who would test that? Would that be in a domestic court, or is that at the international courts? When you say that they are illegal, which laws is that under? Is that under international law or under domestic law? Has it been tested?
Just help me, because the way you were talking about it was kind of news to me.
5:50 p.m.
Professor, Law, As an Individual
Thank you.
I have to say that it would be very difficult to answer that robustly within two minutes, and I do recommend the report that I wrote.
You're quite right, however. Whether it would be unlawful under international law or under domestic law would depend on which sanction and which context.
I will tell you that in the European Union, a very famous case named Kadi, at the European Court of Justice, held that UN sanctions, when implemented by the European Union, were in violation of the European Convention on Human Rights and were struck down, which was extraordinary, given that UN sanctions have the imprimatur of law under article 25 and under article 103 of the UN Charter. Those tend to trump treaty obligations. Nonetheless, those sanctions were held to be in violation of human rights law precisely because the individual was not given notice, was not given evidence upon which the sanctions were based, and was not given an opportunity to be heard, to make submissions, to test the finding and to get removed from the list.
If it was an individual who made the claim—
5:50 p.m.
Liberal
Rob Oliphant Liberal Don Valley West, ON
I will read more that you've written. Thank you, and I'm going to commend it to our analysts as well.
I get confused in our testimony between what I would call “enforcement” and “compliance”. It seems to me that we keep mixing them up. Compliance has to do with companies, financial institutions, bodies, organizations complying with not dealing with sanctioned individuals and entities. Enforcement has to do with our government and its ability through CBSA and others to effectively do it. It would seem to me that differences are required for each. Information that is public isn't as necessary for enforcement as it is for compliance, because these are companies that need to have information.
I just wanted to give you a chance to comment on that because I think our committee is getting it quite murky between the two. Maybe Prof. Charron can answer first, and anybody else.
5:50 p.m.
Professor, University of Manitoba, As an Individual
I think you're right. I think I was trying to respond to the fact that.... I don't want to give the impression that sanctions are in place, and then everybody takes a big step back and just waits for the RCMP and CBSA to swoop in and do something. No, we all have obligations, and you're right, so probably compliance is a much better term for that.
5:50 p.m.
Professor, Law, As an Individual
I would agree with that. I think it's an incredibly important distinction, because I think there often is far too much emphasis on enforcement and looking at prosecution metrics when compliance is actually what you ought to be looking at. Indeed, sometimes there's over-compliance. When we were testifying in the Senate, a number of lawyers for people who were subject to sanctions were commenting on the fact that there tends to be over-compliance, and there's this sort of chilling effect. That's another aspect that has to be considered.