Public Safety Committee on Feb. 10th, 2022

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

Chair, I have my hand up.

[The Chair, Liberal, Jim Carr]

Okay. Go ahead, Mr. MacGregor.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I disagree with this amendment. I think Mr. Lloyd is free to invite Ms. Krause if he wants to. I will just say on the record that a quick google of her name shows that a lot of what she is proposing also has been thoroughly debunked.

They're free to call her as a witness, but we specified PayPal and Stripe because the essence of the main motion is on crowdfunding, and these are companies involved in processing payments for crowdfunding sites. PayPal and Stripe process the payments for companies like GoFundMe and GiveSendGo. That's why that specificity is in there, and it's following the motion that was passed by this committee one week ago.

I'm going to vote against the amendment. Certainly, Mr. Lloyd is welcome to invite her as a witness, but I think we need to keep the main motion as is.

Thank you.

[The Chair, Liberal, Jim Carr]

Mr. Lloyd, you've heard the discussion. Do you want to keep your amendment on the table for a vote, or would you choose to withdraw it?

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

There's no need for further debate. I guess we can just vote on the amendment.

[The Chair, Liberal, Jim Carr]

Mr. Clerk, record the vote, please.

(Amendment negatived: nays 7; yeas 4 [See Minutes of Proceedings])

Thank you.

The amendment is defeated and therefore we can go back to a vote on the main motion.

Are we ready to vote on the main motion?

Go ahead, Mr. MacGregor.

[Alistair MacGregor, NDP, Cowichan—Malahat—Langford, BC]

I appreciate Mr. Noormohamed bringing this forward.

I certainly support the main motion and I'm glad that we were able to work together to make the motion a bit more specific in some areas. Given the events over the last week, this is going to be an important study. I appreciate moving towards a vote.

Thank you, Mr. Chair.

[The Chair, Liberal, Jim Carr]

Let's proceed to the vote.

(Motion agreed to: yeas 11; nays 0)

Thank you, colleagues. We will now suspend for a change of panel.

Mr. Clerk, I hope we can make this as expeditious as possible. I am very conscious of time lost for technical changes. I'm going to say we have five minutes. If we don't get it done in five minutes, I'll want to know why.

Everybody, take a short break. I'll see you in a few minutes.

[The Chair, Liberal, Jim Carr]

I call this meeting back to order.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, February 1, 2022, the committee is commencing its study of crowdfunding platforms and extremism financing.

With us today, from the Financial Transactions and Reports Analysis Centre of Canada, we have Barry MacKillop, deputy director of intelligence, and Annette Ryan, deputy director of partnership, policy and analysis.

Up to five minutes will be given for opening remarks, after which we will proceed with rounds of questions. Witnesses may choose to share their time with other witnesses if they wish.

Welcome to you.

I now invite Mr. MacKillop to make an opening statement of up to five minutes.

The floor is yours, sir.

[Barry MacKillop, Deputy Director, Intelligence, Financial Transactions and Reports Analysis Centre of Canada]

Thank you, Mr. Chair, for inviting us to address the committee today.

This afternoon, I would like to give a very brief presentation about the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), in connection with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, and about the invaluable role we perform to help protect the people of Canada and the Canadian economy.

FINTRAC’s mandate is to facilitate the detection, prevention and deterrence of money laundering and the financing of terrorist activities.

As one of 13 federal departments and agencies that play a key role in Canada's anti-money laundering and anti-terrorist financing regime, FINTRAC was established as an administrative financial intelligence unit and not a law enforcement or investigative agency. We do not have the authority to freeze or seize funds, or cancel or delay financial transactions. This was done very deliberately by the Parliament of Canada to ensure that we would have access to the information needed to support the money-laundering and terrorist-financing investigations of Canada's police, law enforcement and national security agencies, while protecting the privacy of Canadians. As Canada's anti-money laundering and anti-terrorism financing regulator, FINTRAC is responsible for ensuring the compliance of thousands of businesses with requirements under the act, including financial entities, casinos, money service businesses, real estate and others.

I will note that crowdfunding sites are not a regulated business sector under the act. However, when these sites transit with or through businesses subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its regulations, these financial transactions would be covered under the act.

As part of their obligations, businesses subject to the act are required to establish a compliance program, identify clients, keep records and report certain types of financial transactions to FINTRAC, including international electronic funds transfers totalling $10,000 or more in a 24-hour period, large virtual currency transactions totalling $10,000 or more in a 24-hour period, and suspicious transactions, which have no monetary threshold for reporting.

Compliance with the broader legislative and regulatory obligations provides important measures for deterring criminals and terrorists from operating within Canada's legitimate economy. Compliance with the legislation ensures that FINTRAC receives the information that we need to generate financial intelligence that is [Technical difficulty—Editor] enforcement and national security agencies to act upon. The reports that we receive from Canadian businesses are analyzed and assessed, and when we have reasonable grounds to suspect that financial intelligence would be relevant to investigating or prosecuting a money-laundering offence or a terrorist activity financing offence, FINTRAC generates a financial intelligence disclosure for Canada's police, law enforcement and national security agencies.

Under subsection 55(1) of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, FINTRAC is expressly prohibited from discussing any information that we receive or any financial intelligence that we disclose to Canada's police, law enforcement and national security agencies. What I can say, however, is that our financial intelligence is valued by those agencies, many of which have told us that they would not start a major project-level investigation without seeking out our financial intelligence.

Last year, we provided more than 2,000 disclosures of actionable financial intelligence in support of investigations related to money laundering, terrorist financing and threats to the security of Canada. Since becoming operational in 2001, the centre has provided more than 22,000 financial intelligence disclosures to Canada's police, law enforcement and national security agencies, as well as our international partners.

Our disclosures include financial information on an individual or a network of individuals or entities suspected to be involved in money laundering or the financing of terrorist activities. They can make links between individuals and businesses that have not been identified in an investigation and can help investigators refine the scope of their cases or shift their sights to different targets. Our financial intelligence is often used by law enforcement agencies to put together affidavits to obtain search warrants and production orders.

Our financial intelligence can also be used to identify proceeds of crime and advance the government's knowledge of the financial dimensions of certain crimes and threats, including organized crime and terrorism. Last year, our financial intelligence contributed to 376 major resource-intensive investigations and many hundreds of other individual investigations at the municipal, provincial and federal levels across the country, as well as international investigations—

[The Chair, Liberal, Jim Carr]

Thank you very much. If you have something that you think is indispensable, you have 10 seconds.

[Barry MacKillop]

No, sir.

I would now be happy to answer any questions the committee members may have.

[The Chair, Liberal, Jim Carr]

Yes, I'm sure you'll have lots of opportunities. Thank you.

Now we begin a round of questions. To lead off, I would invite Mr. Lloyd to use his six minutes.

Sir, the floor is yours.

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

Thank you, Mr. Chair, and I want to thank the witness for attending.

I wanted to ask the witness whether there is an objective threshold that they employ to determine when something is money laundering and when something is a terrorist activity. My concern is that the word “terrorism” can be thrown around somewhat carelessly, and I just want to know what your objective standard is for what constitutes those activities.

Thank you.

[Barry MacKillop]

When we arrive at our threshold to suspect that a certain transaction would be relevant for a money-laundering or a terrorist activity-financing investigation, we have a number of indicators that we have developed over the years based on our intelligence.

We've also built on indicators that are published and are in existence through the FATF, the Financial Action Task Force, as well as the Egmont Group, which is a group of financial intelligence units internationally. We also have indicators that we have developed with our domestic and international partners related to money laundering.

As most of you likely know, money laundering is the result and the use of proceeds of crime. Typically, a crime is committed and we would often see transactions that are linked to predicate crimes, similar to human trafficking, for example, or drug trafficking, or child sexual exploitation material on the Internet and the purchase of that. The commission of those predicate crimes, and then the movement of money, tends to be the lead indicator for money laundering.

We have a number of indicators, and we identify those indicators when we do disclosures to assist law enforcement in understanding why we're giving them the intelligence that we are providing them.

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

What about terrorism, Mr. MacKillop?

[Barry MacKillop]

For terrorist financing, as well, we have a number of indicators that we have developed. We have shared those indicators with our reporting entities, as well. The indicators assist our reporting entities—both on the money laundering and the terrorist activity financing side—in identifying the transactions that may be associated with those. They are specific, actionable intelligence indicators that can be used to identify suspicious transactions.

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

I'm sure there's a role for legislators in creating a framework, as you said, based on the criteria that you use, but do you think it's appropriate for politicians to call on FINTRAC to investigate groups as they come up? Is that something that you have a mandate to do and that you think would be appropriate to do, or do you think that following your own mandates and guidelines is the best way to conduct your activities?

[Barry MacKillop]

Our mandate is, and we were set up very specifically, not to be an investigative unit. It's very important to understand that the reports we receive from our reporting entity under the PCMLTFA are warrant list reports.

For example, of the threshold reports of $10,000 in or out of Canada, or anything above $10,000, the vast majority that we receive are on legitimate Canadians doing legitimate business, or legitimate organizations sending money for business purposes. We have a role in protecting the privacy of that.

We are not an investigative agency; otherwise, we would not be able to receive the reports that we receive, because we provide the intelligence to law enforcement. Law enforcement will then use that as part of their investigation to develop and obtain the evidence that they need to go forward in court.

We are also set up as an independent, arm's-length agency from the government. It is part of the Financial Action Task Force requirements for an FIU to be independent of government and not to take direction, as you suggested, to investigate specific individuals or specific groups.

We have our mandate and we know what we need to do. Our reporting entities are very strong partners. The due diligence that they provide on a daily basis to monitor these transactions and to work with us to monitor the right transactions has proven to be extremely successful. The regime is set up with 13 different departments and agencies, each of which has a specific mandate, and they work together in order to enhance and to strengthen the regime in Canada, and to ensure that we have what we need to have in order to combat money laundering and terrorist activity financing.

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

Thank you, Mr. MacKillop. I only have a minute left.

If, at some future date, our government attempted to change your mandate so that government could utilize the information that you gather, would that, in your opinion, make your organization ineffective at being able to do its job? It seems that this is what your testimony is saying. Would you consider that to be an ethical change, if it were to be proposed?

[Barry MacKillop]

It would be not my personal view, per se, but I think there would be.... When we were set up, we were set up looking at the Constitution and what would be constitutionally acceptable in terms of transactions being provided to FINTRAC. The reason that we can get those transactions is that we do not blindly provide those transactions to law enforcement; we have to meet our own threshold in terms of suspecting that it may be relevant to money laundering or terrorist activity financing in order to pass that along as an intelligence disclosure to our partners.

I believe that—

[The Chair, Liberal, Jim Carr]

Thank you very much. I appreciate everybody's respect for the clock.

I now invite Ms. Damoff, for six minutes, for questions and conversation.

The floor is yours, Ms. Damoff.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

Thank you so much, Chair.

Mr. MacKillop and Ms. Ryan, I want to thank you for coming on such short notice, and for the good work that you do at FINTRAC.

How is crowdfunding captured under your regime at FINTRAC?

[Barry MacKillop]

Crowdfunding itself and the crowdfunding platforms themselves are not, in fact, reporting entities to FINTRAC. They are not captured within the regime.

There was mention earlier about the payment processors, which process the payments, so something like Stripe or PayPal. When they are doing MSB-type activities—and some of these payment processors do have MSB activities, money services business activities they participate in—they are subject to our legislation and they're subject to being registered as a money services business, and therefore subject to the compliance program within the PCMLTFA. Crowdfunding, however, is not.

[Pam Damoff, Liberal, Oakville North—Burlington, ON]

When you're dealing with entities like GoFundMe, GiveSendGo, or anyone who is accepting money in another country, whether it's the United States or other countries, do you have information sharing? How does that work with other countries? Obviously, you're only monitoring financial transactions in Canada. Is that right?