Industry Committee on June 12th, 2023

[Sasha Caldera]

I can for sure. Thank you for your question. This registry will be a game-changer for the province and for combatting the proceeds of crime.

Previously Canada didn't have an understanding of who ultimately controls a private corporation that is governed under the CBCA. We know that criminals, for instance, are able to hide and to use these corporations and abuse Canada's tax systems. We also know that remaining anonymous, for instance, allows for broader crimes to impact community safety—anything from drug trafficking to weapons trafficking and some of the incidents that have been publicly noted, in Richmond in particular.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

With regard to the protection of privacy, there have been concerns about how we strike the balance between protecting privacy and implementing the public beneficial ownership registry.

As I understand the situation, we are a fiscal federation and we do need the provinces to get on board. I think it's a ninety-ten split, if I'm not mistaken, so we do need the provinces on board on this as well. Can you speak to the privacy considerations and the balance there, please?

That's for either you, Sasha, or James.

[Sasha Caldera]

I can for sure. I'll add some comments and then I can turn it over to my colleague James from TI Canada.

Privacy is really important. It's a protected right in Canada, and having the fields that would be publicly accessible under this bill is actually quite compatible with Canada's privacy rights and the protections under our charter.

We carried out an analysis back in 2019, and our findings actually corroborate quite well which fields would be publicly accessible in this bill.

James, do you have any other comments?

[James Cohen]

Thank you for the question.

We'd be more than happy to circulate the publication on the study we conducted to any committee member who wants it.

In terms of striking the balance between having the data and achieving the mandate or the purpose of the bill, we found that there was balance there, but there was also the opt-out option, of course, for anybody who felt that their safety was genuinely in peril. Of course, minors are not included on the registry.

We also want to see in this registry a balance between protecting Canadians who are going about their perfectly legal business and making sure that the more nefarious things going on aren't able to be hidden.

[Francesco Sorbara, Liberal, Vaughan—Woodbridge, ON]

Thank you.

Thank you, Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Go ahead, Mr. Lemire. You have six minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

I'm going to start with Mr. Beaudoin, from the RCMP.

During a previous study, the committee heard from a former RCMP fraud investigator, and he said that fraud and fraud awareness were not a priority for the RCMP, and by extension, the federal government. In response to a question from my fellow member Brian Massey, he very respectfully said that, when he was in the RCMP, it frustrated him that the RCMP did not understand fraud or its impact on victims.

Mr. Beaudoin, does the RCMP have the resources it needs to do its job? Does it need more resources so you can better investigate fraud?

[Supt Denis Beaudoin]

Fraud is a very broad term that encompasses many different types of fraud. To say that fraud is not seen as a priority is not true, but the types of fraud that will lead to investigations have to be prioritized. For instance, the RCMP usually prioritizes cases where the victim of the fraudulent activity is the Government of Canada.

The Canadian Anti-fraud Centre, which is overseen by the RCMP, works with police forces in provinces and territories to ensure that ties exist with those provinces and territories, as well as with jurisdictions outside the country, in order to carry out fraud investigations all over the country.

The nature of fraud has changed over the past five to 10 years. Cybercrime and use of the Internet to obtain money fraudulently has really changed the fraud landscape. There is no doubt that we could do more if we had more resources, as is true for every other government department and agency.

The RCMP's fraud efforts are focused on investments. Four units deal with that type of crime. However, the RCMP does not have the capacity to deal with every case of fraud in the country.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Bill C-42 obviously seeks to strengthen the tools to take action. Will it also give the RCMP more powers, and if so, which ones?

[Supt Denis Beaudoin]

Bill C-42 will provide the powers required to find criminals that use corporations as a front to commit fraud. Sometimes, they are Canadian companies incorporated in other countries—usually the same ones, in fact. Bill C‑42 will give us the ability, further to an independent process, to identify those corporations involved in fraud.

In my opening remarks, I stressed the importance of paying attention to provinces and territories, to prevent criminals from choosing those where incorporation practices are not transparent.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Indeed, I think alignment between the federal, provincial and Quebec governments is key, under the circumstances.

How does the RCMP operate now, and how will it operate once Bill C-42 is passed? What additional powers does it give you, in terms of co-operation?

[Supt Denis Beaudoin]

As I said, the bill will give us the ability to obtain information on criminals that use certain companies to hide their illegal activities. We'll see how the provinces go about applying the provisions.

The biggest advantage federally is that the bill will give us the ability to access the information independently. Currently, we can ask the companies for it, but doing that alerts them to the fact that they are on the police's radar, and they will be more careful. That's something we want to avoid when conducting criminal investigations. We will see how the provinces implement the legislation and how we will be able to obtain the information we're looking for.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

On the surface, it doesn't change anything about how you interact with police services in the provinces, but were they to react, you would be able to respond accordingly.

Is that right?

[Supt Denis Beaudoin]

Sorry, but I'm not sure I understood your question. We already work with other police services. As I understand Bill C-42, it will give all police services access to the information on the criminals. We already have very smooth co-operation with most police services in Canada. The bill will strengthen that co-operation, because they will have access to the information as well.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

As far as your search efforts go, do you need to know the types of corporations on the registry? Entertainment or sports betting companies come to mind. Right now, there's no way to know that.

Would that information help you refine your search? Would it give you the ability to respond faster and in a more targeted way?

[Supt Denis Beaudoin]

That might not be helpful. In my experience, criminals lie or give very general information. We wouldn't rely on that information to investigate the activities of a corporation on the registry. Other facts have to corroborate the information. We will probably save some time. We'll have to see how criminals adapt their behaviour. Whenever legislative changes are made in Canada, criminals change how they operate. That's the dilemma. We will have to see how their tactics change.

As I said, the more information that's available, the better it is for us. If Parliament wants to make that information available through this bill, we won't say no.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you for the work you're doing. It's tremendously important.

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Lemire.

Over to you, Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I'm going to quote a couple of things from a February 28, 2017, Toronto Star article entitled “New law won't stop Canada being used for money laundering, tax evasion, critics say”. What hasn't been discussed a lot here is that this is actually our second attempt in recent years to deal with this. Bill C-25 was the first one. At that time, Minister Bains said it “would provide the foundation for a 21st-century marketplace. They will align Canada’s framework laws with best practices in jurisdictions around the world.” In my comments in that article, I said, “It’s a missed opportunity.... The message to the financial community is: ‘We’re taking a pass.’” I also said, “I think we’re going to get called out by the international community for this.... There are glaring holes in corporate accountability and transparency.”

My first question for you, Mr. Caldera, is this. Will we have the same reaction in passing this piece of legislation as it's currently written? Again, that was my problem with the previous one, Bill C-25. What is your opinion on this? Is it going to be a missed opportunity again, or do we have it right this time? Ironically, most of these amendments are things that actually got voted against when I tabled them for Bill C-25.

I'd like to hear from you on where we're going to be when this is done.

[Sasha Caldera]

Absolutely. Thank you for your question.

Largely, I think a lot of the elements are correct in this bill. From our perspective, we've worked on this topic for about six and a half years—Transparency International seven years—and we don't want perfect to be the enemy of the good. What's in this bill is quite good. It will move Canada forward and it will be celebrated worldwide. More specifically, it will have utility, because it will apply to every single corporation that is governed under the CBCA.

Where the gap does exist is foreign corporations, for instance, which are incorporated in other jurisdictions outside Canada. Those are not covered under the CBCA. We are recommending as a next step for the federal government working with provinces and territories to try to see if there is an agreement that could be reached where those foreign companies, upon registering provincially to carry on business, can also disclose beneficial owners. That will just make this entire effort a lot stronger. The United States, in their Corporate Transparency Act, has included disclosure of beneficial owners for foreign entities.

[Brian Masse, NDP, Windsor West, ON]

I want to thank my colleague and friend from the Bloc, Monsieur Lemire, for mentioning fraud, because I thought Bill C-25 was complete fraud. It made us look like we had legislation on the issue when, basically, we really didn't have anything effective.

What you're saying about the bill is don't let the opportunity pass, but at the same time, you would like to see other areas strengthened in the bill. We could do a little better. As we go through our clause-by-clause, we could keep that in mind.

Would you agree that there is probably room, internationally, to allow us to do that? We often hear as members of Parliament that we can't do this because of a trade agreement with whomever, or we can't do that because of other legal systems. We get that all the time. If we improve this bill, what's the context internationally for us ?

[Sasha Caldera]

It just depends on the will on behalf of political parties. If there's political will, you could certainly include provisions requiring disclosure of foreign corporations. The way this is set up is that at the provincial level, when a foreign company is registering to carry on business, it's done with the provinces. Our perspective is that this should be step two on behalf of the federal government. Canada can start work with the provinces and territories in requiring this.

It's important to remember that this work on beneficial ownership transparency is going to be iterative, and it needs to happen step by step. Canada has already taken the first step with phase one of beneficial ownership requirements, where corporations hold an internal register. This step we consider to be step two, but there are still several steps that need to be taken.

I think, with this bill, Canada is well on its way.

[Brian Masse, NDP, Windsor West, ON]

That's good to hear.

I have one quick question to the RCMP with regard to resources for this. I know it's been referenced.

Are there any other added components in this that you'd prefer to see happen, or where internationally, somebody has a better practice than us, or is there something you've noticed? Even if we don't have them in this time around, we might want to think about them in the future.

I think this bill should probably be an evolution past what we do here today, as we start to work with the provinces more comprehensively, as well as other international communities. Is there something out there that you don't have that would be helpful in the tool box?

[Supt Denis Beaudoin]

There is not specifically for this bill. Sometimes we tend to compare things with other countries. I think we're going to have to see how this bill, if it's adopted, fits in the Canadian legislative system. Something may work internationally, but then it doesn't fit with our charter and case law, as an example.

I think it would certainly be prudent to see its implementation and then assess how criminals, as I said, adapt their methodology and see if it can be better suited.

[Brian Masse, NDP, Windsor West, ON]

We're obviously cognizant that we're asking you to do more with the same budget.

If we want to take this seriously.... I don't think, in North American society, we take corporate crime very seriously. I really don't. Sometimes there are these odd cases here and there, but there's not enough of that. We're more concerned with petty stuff, in my opinion, than some of the white-collar stuff that's been going on.

I'm out of time. Thank you, Mr. Chair.