Industry Committee on June 12th, 2023

[The Chair, Liberal, Joël Lightbound]

Thank you, Mr. Gaheer.

Over to you, Mr. Lemire.

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

Thank you, Mr. Chair.

Mr. Brown, when Minister Champagne was here last week, I asked him how much money was being laundered in Canada, and I wasn't able to get an answer.

Are you able to shed any light on that?

[Brian Masse, NDP, Windsor West, ON]

I have a point of order. We don't have translation.

[The Chair, Liberal, Joël Lightbound]

All right.

Just a moment, Mr. Lemire. There's an issue with the interpretation. We're going to check on that.

I'm being told that the interpretation is working now. Wonderful.

You can start over, Mr. Lemire.

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

Thank you, Mr. Chair.

Mr. Brown, last week I asked Minister Champagne how much money was being laundered in the country, and he wasn't able to give me an answer.

Are you able to give us that information?

[Justin Brown]

I can give you a few figures and some explanation.

According to the UN, money laundering represents between 2% and 5% of GDP. In Canada, that would be $40 billion to $100 billion.

I can give you another figure. It comes from the Canadian Security Intelligence Service's 2020 report, which pegs money laundering in Canada at between $45 billion and $113 billion Canadian. I should mention, though, that there is no agreed upon method for calculating how much money is being laundered in Canada or globally. Some say that the estimates aren't high enough, because what criminals try to do is hide the money their activities generate. Others think the estimates are too high because the same amounts can be recorded two or three times. It's really tough to say exactly how much is being laundered.

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

That really leaves leaves an impression. It would be easy to find the money to fight money laundering if we could catch it at the source, when the fraud is being committed.

Do you think Bill C-42 gives the Department of Finance enough tools to recover that money? Does it give you additional tools to address the problem? How would you like to see the bill improved?

[Justin Brown]

The bill is very important. It addresses a gaping hole in the country's legislative framework. It's a very important step, but there is no silver bullet for this problem. As already mentioned, working with the provinces and territories will be very important to come up with a truly pan-Canadian solution.

The recovery of assets linked to crime, and investigations and prosecutions also represent significant gaps. More effort is needed on that front. The government actually announced that it plans to establish a dedicated financial crimes agency. More information will be provided in the fall. The goal is to bring together expertise, prioritize financial crimes, and leverage highly trained experts to conduct investigations and prosecutions and recover assets.

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

That's good news. Thank you.

[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'll continue with Mr. Brown.

For this change in the legislation, are there enough staffing resources? Is the government planning on contracting, or is some of the work already being contracted out to McKinsey and other third parties? Are we relying, right now, on our public servants for that, who are permanent employees?

[Justin Brown]

I can say that, last year, almost $40 million was provided to ISED to support work with them, and to Corporations Canada to develop and implement this work. That includes the next steps in terms of working with the provinces.

[Brian Masse, NDP, Windsor West, ON]

In that funding, what were the percentages or contracts going to third parties to provide that, or is it public servants—who are permanent employees—doing that work?

[Justin Brown]

I do not have those figures. Perhaps ISED would have numbers on where they spent those funds. I don't have them.

[Brian Masse, NDP, Windsor West, ON]

Okay, that's fair enough.

Mr. Chair, I'd like to propose that we get that answer. I'd like that from ISED.

One of the things I'm concerned about here is consistency. Also, with some of the third-party groups and their activities, you could potentially have a poisoning of the well in investigations on this.

Thank you very much for your testimony here today.

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Go ahead, Mr. Williams.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you very much, Mr. Chair.

Thank you to our witnesses.

Mr. Beaudoin, I think one of the changes to this bill—we've heard the stats of potentially $113 billion that's laundered in Canada—is supposed to provide whistle-blower protection as one of the bill's aspects. Do you think the proposals made in this bill go far enough for whistle-blower protection?

[Supt Denis Beaudoin]

Like I said, whistle-blower protection is an important piece of legislation that enables people to come forward to the RCMP or to other departments, to ensure that the law is put in place and is applied properly. We welcome anything regarding the whistle-blower protection that's in the bill right now.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Do you think it goes far enough at this point?

[Supt Denis Beaudoin]

I would have to get back to you and would have to really study that piece of legislation.

[Ryan Williams, Conservative, Bay of Quinte, ON]

If you could just have a look and give your opinion. I think one of the aspects we're looking for is to ensure that we do go far enough. We don't want to just catch up but to make sure that those who can come forward do so, especially to the RCMP, and that they're protected. Otherwise, in some aspects, this may not go far enough to protect those individuals.

I also want to talk about the future of fraud. We study a lot of different bills. We're talking about not only the benefits but also the drawbacks of blockchain and of cryptocurrencies. We're certainly talking about privacy protection and then AI. For all of these, does this bill go far enough to look to the future of fraud?

I'll start with Ms. Ryan with FINTRAC.

Currently, do we track Interac payments when it comes to Interac? Canada is one of the only nations to use Interac from bank account to bank account. Is that something covered in this legislation? Do you think we go far enough right now?

[Annette Ryan]

Thank you for the question.

I would say that, specifically for this legislation, the focus is not Interac or the payment system. It's focused more on the identification of corporate entities that transact on either end of a financial transaction.

To that end, I think it has a different focus—this bill. The aspect of understanding how we can follow payments across networks, and so on, is something that we see as a future piece of work as we continue to work with entities that are already regulated under our system, which include financial entities that use Interac to transact between them and then the newly incorporated members of the regime through the payment service provider in the community, but that does not extend to Interac, which is providing more of an infrastructure than that service element.

[Ryan Williams, Conservative, Bay of Quinte, ON]

I understand, with this bill, that we're taking step one, which allows us to see everyone who is incorporated. We do see, though, as much as cryptocurrencies are great, that they can also be used to skirt the system. Do you see that as also being another bill we need to look at for protection, but not necessarily in this piece of legislation?

[Annette Ryan]

That's another great question, and I appreciate it.

I would say there has been legislation that's been brought forward to bring cryptocurrency dealers into the anti-money laundering regime. Starting in June of 2020, those money service businesses and the virtual currency dealers had to register with FINTRAC. The following year, they had to begin reporting to us about dealings in the cryptocurrency space. Those separate amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act have brought those entities into the regime already.

I'd be happy to expand on that, but that's kind of the punchline of it: They are already included in the regime.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you.

Mr. Brown, you did say this legislation is great, but it's not perfect—not to use your words against you.

What would you add to make it a little more perfect? What can we do to this bill, one or two things, to make it just a little better?