Public Safety Committee on March 3rd, 2022

[The Chair, Liberal, Jim Carr]

Good morning, colleagues. I call this meeting to order.

Welcome to meeting number 12 of the House of Commons Standing Committee on Public Safety and National Security. Today's meeting is taking place in a hybrid format pursuant to the House order of November 25, 2021. Members are attending in person in the room and remotely, using the Zoom application.

Members and witnesses participating virtually may speak in the official language of their choice. You have the choice at the bottom of your screen of the floor, English or French. With regard to a speaking list, the committee clerk will advise the chair on whose hands are up, to the best of his ability, and we will do the best we can to maintain consolidated order of speaking for all members, whether they are participating virtually or in person.

Pursuant to Standing Order 108(2) and the motions adopted by the committee on Thursday, February 3, 2022, and Thursday, February 17, 2022, the committee is resuming its study of crowdfunding platforms and extremism financing, and commencing its study of the rise of ideologically motivated violent extremism in Canada.

With us today by video conference, we have Juan Benitez, president, and Kim Wilford, general counsel, from GoFundMe. From Paypal Canada, we have Kevin Pearce, chief compliance officer. From Stripe, we have Katherine M. Carroll, global head of public policy, and Gerald Tsai, head of compliance.

Up to five minutes will be given for opening remarks, after which we will proceed with rounds of questions.

Welcome to you all.

I now invite Mr. Benitez to make an opening statement of up to five minutes. The floor is yours.

[Juan Benitez, President, GoFundMe]

Good morning, Mr. Chair and members of the committee. It is our pleasure to join you all today to discuss important matters related to the “freedom convoy” fundraiser and social fundraising in Canada.

My name is Juan Benitez, and I am the president of GoFundMe. I am joined my Kim Wilford, GoFundMe's general counsel.

On behalf of everyone at GoFundMe, we want to acknowledge the impact of the “freedom convoy” on the citizens of Canada, in particular the residents of Ottawa and each of you.

GoFundMe is the world's most recognized and most trusted fundraising platform. Our mission is to help people help each other, with a goal of being the most helpful place in the world. We are humbled that GoFundMe has become a noun that is synonymous with receiving help and assisting communities. That impact is far-reaching, as we have delivered over $17 billion in assistance to communities in 19 countries since the company began over a decade ago.

In Canada, we are delivering well over $200 million in community assistance each year, including for significant events, such as the Humboldt Broncos fundraiser in 2018 that raised over $15 million, as well as the hundreds of campaigns that help friends and family members with their needs and dreams every day.

GoFundMe aspires to be the benchmark for responsible operations in the social fundraising industry. Over 80 of our 400 employees are dedicated to policy creation and enforcement, data privacy, information security, regulatory compliance, sanction screening, and prevention of payment fraud, financial crimes and money laundering. We employ industry experts and consider ourselves to be an innovator in these areas.

Our decisions and policies are guided by our terms of service, which are posted publicly and outline what is permissible and what is prohibited on our platform. Fundraising campaigns relating to misinformation, hate speech, violence and more are prohibited by our terms of service.

Before we provide a timeline of events for the “freedom convoy” fundraiser, I would like to thank Ottawa authorities, notably interim police Chief Bell, Mayor Watson, and their teams for their collaboration and transparency. Their partnership was essential for our teams to understand what was happening so we could make the best possible decisions relative to our policies.

The “freedom convoy” fundraiser was created on January 14. We began actively monitoring it the next day based on significant fundraiser activity. Our initial analysis concluded that the fundraiser was within our terms of service and could remain active. On January 27, we processed a withdrawal of $1 million to the financial institution of the “freedom convoy” fundraiser organizer.

Following this disbursement, public statements from the fundraiser organizer began to shift in tone, and on February 2, we suspended the fundraiser. This effectively meant that all future donations and withdrawals were paused.

From February 2 through February 4, we heard from local authorities that what had begun as a peaceful movement had shifted into something else. They shared reports of violence and threatening behaviour by individuals associated with this movement. We also commenced a review of where donations were coming from. Our records showed that 88% of donated funds originated in Canada and 86% of donors were from Canada.

On February 4, following concerning dialogue with the fundraiser organizer and her team, as well as continued updates of escalating violence and disruption from local authorities, it became clear that the fundraiser no longer complied with our terms of service. We removed the fundraiser from our platform and provided donors with the option to request a refund or, consistent with the fundraiser organizer's statements, have their donations delivered to credible and established charities chosen by the fundraiser organizer and verified by GoFundMe.

As of February 5, all refunds were initiated by our payment processing partner, including all transaction processing fees and tips, and those funds were returned to donors in the subsequent days.

Please note that there are multiple layers in the regulatory framework surrounding social fundraising via GoFundMe. All donations are processed, held, and paid out by our payment processing partners. GoFundMe does not directly interact with or hold any funds collected from donors, nor are we able to redirect those funds to ourselves.

I previously outlined the investments that we make at GoFundMe for trust, safety and compliance. That is the first layer. The second layer comes from similar functions implemented by our payment processors. Finally, our payment processors also rely on banks, card networks and their associated regulatory requirements.

In summary, we believe that responsible action is core to social fundraising. We proactively invest in the relevant processes, staff and tools to be the industry leader in this area. The “freedom convoy” fundraiser was unique. We support peaceful protests, provided they are within our terms of service.

While there will always be opportunities to learn and improve, we hope the committee acknowledges the responsible actions we took in close consultation with local authorities.

We look forward to continuing our assistance to Canadian communities, and we look forward to the committee's questions.

Thank you.

[The Chair, Liberal, Jim Carr]

Thank you very much, Mr. Benitez.

I now invite Mr. Pearce to give an opening statement of up to five minutes. The floor is yours, sir.

[Kevin Pearce, Chief Compliance Officer, PayPal Canada]

Good morning.

Thank you, Mr. Chair, and committee members.

My name is Kevin Pearce. I am the chief compliance officer for PayPal Canada. In my role, I'm responsible for the implementation and oversight of our various compliance programs, designed to meet our risk and regulatory obligations in Canada.

I thank you for the opportunity to appear here today.

PayPal has remained at the forefront of the digital payment revolution for more than 20 years, growing into a two-sided network that connects consumers and merchants in more than 200 markets around the world. PayPal operates an open, secure and technology-agnostic payments platform that businesses use to transact with their customers online, in stores and on mobile devices. Through a combination of technological innovation and strategic partnerships, PayPal creates better ways for our 426 million active account holders around the globe to manage and move money, and offers choice and flexibility when sending payments or getting paid.

As a trusted and responsible payment service provider, we have developed stringent internal controls, policies and procedures for the purpose of complying with laws in Canada and other jurisdictions in which we operate. PayPal Canada is a registered money services business, both federally with FINTRAC and provincially, within Quebec, with Revenu Québec. As a registered reporting entity under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, we are required to monitor transactions on our platform and to submit suspicious transaction reports to FINTRAC. In addition, we're also required to submit international electronic funds transfer reports to FINTRAC for EFTs sent or received internationally. These are all obligations that we had prior to the declaration of the public order under the Emergencies Act and that we continue to have, even after its revocation.

PayPal Canada is also subject to numerous laws of general application at both the federal and provincial levels. Further, we anticipate having to register with the Bank of Canada as a payment service provider under the newly enacted Retail Payment Activities Act.

PayPal's global compliance organization is comprised of centres of excellence located around the world, which fulfill multiple enterprise risk management functions, including our “know your customer” responsibilities, suspicious transaction monitoring, regulatory filings and privacy. These centres of excellence are managed by and staffed with compliance professionals who have expertise in their respective fields and are exposed to the regulatory regimes across the markets in which we operate.

As it relates to the committee's interest in how crowdfunding was used in the recent protests in Canada, I would like to clarify that PayPal does not process payments for GiveSendGo and we did not process payments for the GoFundMe campaign set up to support this protest.

Nevertheless, we work hard to combat the use of our platform and services to promote hate, violence and other forms of intolerance. We carefully review account activity to ensure our services are used in accordance with the strict guidelines established in our terms and conditions, including our acceptable use policy.

PayPal has a long-standing, well-defined and robust acceptable use policy, which states that “You may not use the PayPal service to violate any law, statute, ordinance or regulation” or “for activities that relate to transactions involving the promotion of hate, violence, racial or other forms of intolerance that is discriminatory”.

Over many years, we have developed sophisticated systems and a global governance, risk management and compliance framework to help detect and prevent illegal activity and payment flows on our platform. When we become aware of an individual, a website or an organization using our services in a way that violates our policies or applicable laws, we take action. Our highly trained team of experts addresses each case individually and carefully evaluates the user's website, the associated organizations and their adherence to our terms and conditions. When a customer violates our terms, we may limit access to funds or part ways with the offending customer altogether, as may be appropriate.

PayPal engages with law enforcement proactively and reactively to help deter and prevent potential illegal activities on our platform, and aids in identifying bad actors who have used our platform for illegal purposes. Our ability to identify suspicious payments quickly is a key distinction from cash-based payment systems.

We at PayPal take our responsibilities to our customers and our regulators very seriously, and we're committed to working with governments, law enforcement, intelligence agencies and the financial industry to ensure financial platforms like ours are not used or exploited to promote or fund hate and extremist activities.

Mr. Chair, that concludes my remarks. I welcome questions.

Thank you for the time today.

[The Chair, Liberal, Jim Carr]

Thank you very much.

Now I would call upon Ms. Carroll from Stripe to give us a five-minute introduction and tell us her role, and we'll then move on to questions.

The floor is yours, Ms. Carroll.

[Katherine M. Carroll, Global Head of Public Policy, Stripe]

Thanks very much. Good morning, Chair and members of the committee.

My name is Katherine Carroll. I'm the global head of public policy at Stripe. I'm joined today by Gerald Tsai, Stripe's head of compliance.

We appreciate the important work this committee is doing and the opportunity to participate in this study.

By way of background, Stripe is a technology company that builds economic infrastructure for the Internet. Businesses of every size from small start-ups to public companies use our technology and tools to accept payments and manage their businesses online. Our products are used by businesses in more than 50 countries. We are regulated in jurisdictions around the world based on the products and services we offer in those jurisdictions. Agencies that supervise our regulated operations include the Central Bank of Ireland, the U.K. Financial Conduct Authority, FinCEN and the New York Department of Financial Services, among many others.

Stripe has a strong commitment to compliance with the laws and regulations where we operate. We have invested in building a best-in-class global program to comply with our regulatory obligations including “know your customer” and anti-money laundering regulations, sanctions rules, capital liquidity standards and data privacy rules. We also have advanced systems to analyze transaction flow, detect and prevent fraud, monitor for financial crimes, and protect our users against bad actors.

In addition to complying with our own legal obligations, we work with and operate within parameters set by our financial firms, including regulated financial institutions and card networks that have their own regulatory obligations and rules.

Stripe has operated in Canada since 2012 and opened our offices in Toronto just this week. We have served nearly 430,000 businesses in Canada. During the pandemic, we have worked to enable thousands of Canadian companies, large and small, to adapt and build online businesses.

Our Canadian operations focus on payment processing, enabling merchants to accept online payments. We also offer certain ancillary services and software to businesses, such as fraud detection and calculation of taxes. As is the case in many jurisdictions, payment processing services in Canada have not typically required registration. Payment processing is generally treated differently from, for example, providing money transmission or banking services.

Given the limited scope of our activities, we have therefore historically not been required to register with FINTRAC. Nonetheless, our payment processing activities in Canada are subject to robust global risk management and compliance policies and procedures as well as the requirements of our regulated bank partners.

Two weeks ago, pursuant to the Emergencies Act, we completed the preregistration process with FINTRAC. We have been in active communication with FINTRAC and stand ready to co-operate and comply with any permanent regulatory changes that are adopted whether through new legislation or in connection with implementation of the Retail Payments Activities Act. We've been actively engaged in the government's consultations on how payment processors such as Stripe should be regulated under that act, including as a member of the Bank of Canada's Retail Payments Advisory Committee.

Stripe provides payment processing services to a number of crowdfunding platforms, enabling them to accept payments through the major card networks. As with any activity on Stripe, fundraising campaigns are subject to information collection requirements with respect to the campaign organizer, screening for sanctioned parties, and other risk management and fraud controls. We take seriously our role as payments infrastructure and work alongside bank partners, card networks and platforms to ensure that users have proper controls in place.

Over the last few weeks as events unfolded in Ottawa and elsewhere in Canada, hundreds of our employees have worked closely with our financial institution partners and regulators to monitor activity, share information and comply promptly with court orders and other emergency measures. We continue to adhere to the government's and Canadian courts' determinations of which activities are lawful and when activities or assets should be restricted. We've been careful in this process to uphold our responsibilities and adhere to the law while also minimizing errors that would have cut off Canadians from the financial system.

Thank you again for the opportunity to be a part of this important discussion. We look forward to your questions.

[The Chair, Liberal, Jim Carr]

Thank you very much, Ms. Carroll.

That completes our round of opening statements. Now we move to members' questions.

To lead us off in the first round, I would like to call on Mr. Lloyd.

Sir, you have six minutes. The floor is yours.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Mr. Chair.

My first question is going to be for Mr. Benitez from GoFundMe.

The Minister of Public Safety stated in question period on February 8 the following:Any funds that would go toward undermining public safety, national security or indeed our democracy will be taken with the utmost seriousness by our law enforcement as well as our intelligence community.

He also stated:We all need to be seized with the landscape as it exists around foreign interference, and any funds that may be used to undermine public safety.

Mr. Benitez, when did the Government of Canada reach out to GoFundMe to ask about the funding that was going to the convoy?

[Juan Benitez]

Mr. Chair, I'd like to begin by reiterating that we were very fortunate and very happy to be engaged with local law enforcement and local authorities as we were understanding the facts and circumstance of what was happening on the ground in Ottawa.

This was very influential in our decision-making in assessing how to assess the “freedom convoy” campaign relative to our terms of service. Our communication and engagement was with those local authorities and local law enforcement.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

My question was, when did the Government of Canada reach out to you?

[Juan Benitez]

We were not specifically reached out to by the Government of Canada.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

The minister is stating here that this is an issue of the utmost seriousness and that he was seized by this issue, yet the Government of Canada never reached out to your organization.

Is that correct?

[Juan Benitez]

Our interaction was with the local law enforcement and local authorities. We did not receive outreach from the federal government.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Did those local authorities reach out to you or did you proactively reach out to them?

[Juan Benitez]

We saw the statements on public media and social media from the local law enforcement and local authorities. Based on that, we began direct outreach to them to ensure that we were fully apprised of the facts and circumstances on the ground and the real-time information that was developing around the “freedom convoy”.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

To summarize what you're saying, no law enforcement, nor the Government of Canada, proactively reached out to you. The Government of Canada never reached out to you with concerns about the “freedom convoy” funding. It was you who reached out proactively to local law enforcement after you identified that there could be some issues.

Is that correct?

[Juan Benitez]

Across all of our campaigns and activities on our platform, yes, we have frequent engagements with local and federal law authorities. In this case, what you just summarized was correct for this campaign.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Can you clarify whether GoFundMe actually handles any of the money or is that handled through your payment processors, like Stripe?

[Juan Benitez]

Mr. Chair, as I mentioned in my opening statement, the funds are not held by GoFundMe. Donations to campaigns are processed by our payment processing partners. They are stored in accounts related to our campaigns that are managed by those payment processing partners. They are the ones who are disbursing funds in consultation with us to the recipients of the campaigns.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you.

Did you ever identify if anyone who donated through GoFundMe was on a terrorist watch list in the United States, Canada or anywhere around the world or if there were any sort of organized crime elements? Have you identified any of those people who raised money for the convoy? Did that happen, as far as you know?

[Juan Benitez]

Mr. Chair, we do extensive analysis on the activities that are happening on our platform. In fact, as it is our goal to be the most trusted platform in social fundraising, we actually believe that we operate in such screenings above and beyond what the regulatory climate requires of us. We do extensive screening, including KYC, or know your customer, for recipients who are going to receive funds from GoFundMe via our payment processing partner.

We also do screening of donors on our platform, based on the donation information they provide to us and also information that we can gather about them from our third party tools and consultation with our payment processing partners.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

You didn't identify any problematic people donating to the convoy. If you had identified those people, you would have stopped it.

Is that correct?

[Juan Benitez]

That's correct. If we were aware that there was something like that occurring, those folks are not welcome to participate on our platform and those activities would have been prohibited and we would have filtered that out. Any content that we believe is in violation of our terms of service is removed from our platform, whether that's a fundraiser or whether we believe it is an inappropriate donation.

In this campaign, as part of our normal filtration activity, our tools did flag some behaviour that we deemed unacceptable and we did remove some donations.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

We've heard a lot of rhetoric in Parliament about foreign financing, that this was a foreign-funded campaign to undermine Canada's national security. But we've seen numbers from you guys that say 88% of the donors were Canadians. Can you give us a little more colour on that information?

[Juan Benitez]

Yes. Thank you for the question.

Mr. Chair, as I mentioned in my opening comments, our records here at GoFundMe show that 88% of donated funds to the “freedom convoy” campaign originated in Canada, and 86% of the donors were from Canada. That information is based on the best information we have available to ourselves based on hard data, and also in consultation with the information we're able to gather in partnership with our payment processing partners. In fact, a large amount of that determination is based on credit card information—