Public Safety Committee on Feb. 10th, 2022

[Barry MacKillop]

To clarify, we don't actually monitor the transactions. Our reporting entities monitor the transactions.

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

Sorry, that's right.

[Barry MacKillop]

Crowdfunding platforms themselves are not covered in the U.S., for example, under FinCEN. However, anybody who's donating to a GoFundMe page, for example, would donate through a payment processor, which means they would identify themselves. They would need a credit card. They would need to fill in their personal information, so that the donation itself would be validated, that the funds exist, and then the funds would be transferred to GoFundMe.

When GoFundMe is disbursing the money to the particular cause, if they are using a Canadian bank account, that disbursement will go through the Canadian bank account. If our Canadian bank, for example, deemed that disbursement to be suspicious or relevant to money laundering, terrorist financing or IMVE activity, it would report those suspicious transactions to us.

We don't monitor what GoFundMe may have, but when the disbursement is made, it is made through a Canadian bank, in the case of Canadian donation pages that have been established. When a donation page is established, the organizers of that page must also identify themselves, the purpose for the cause, and the way in which the funding would be disbursed once it's raised.

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

Is there information sharing between the United States and Canada? Do you have information sharing with your equivalent in the United States [Technical difficulty—Editor]?

[Barry MacKillop]

We do, in fact, have 103 [Technical difficulty—Editor] MOUs with international financial intelligence units. If FinCEN were to receive a SAR, which is a suspicious activity report, the equivalent of [Technical difficulty—Editor] report—and there are always possibilities for voluntary information records or voluntary submissions of suspicion to FinCEN or to FINTRAC—FinCEN would share that intelligence with us. We would then seek permission to further share that information, if it met our threshold, with law enforcement and national security agencies, depending on the event.

In fact, FinCEN is our largest partner for the sharing of financial intelligence back and forth, either spontaneously or as a result of a request for information. It can be done both ways.

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

This is probably my last question. I'll see how much time I have.

Do you [Technical difficulty—Editor] need to be able to do meaningful compliance? I'm not trying to [Technical difficulty—Editor] the good work that you do, but I'm sure it gets busier for you and more complicated, and people get [Technical difficulty—Editor]. There are a lot of nuances in the work you do.

Do you have the resources that you need, or could you do with more?

[Barry MacKillop]

As a civil servant, I think anybody would always say, “Just give us more”, but I think the key to effective compliance is the partnerships that we have developed with our reporting entities. Our reporting entities really do take their roles seriously. They see themselves as—and they are—the front line of money laundering and terrorist financing in Canada. They are the ones we rely on, and the police rely on, in terms of investigations and the use of financial intelligence.

We continue to modernize our compliance program. We continue to look at a risk-based approach in terms of compliance and our approach to compliance so that we spend and use our resources to the most and to the best effect that we can to address the highest-risk areas and to ensure the compliance with those risk areas.

A lot of the compliance also goes to the education that's provided through our strategic intelligence, our significant outreach or our significant training, because the better the reporting entities are at understanding what the indicators are and how to report, the better reports we get.

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

Thank you.

[The Chair, Liberal, Jim Carr]

Thank you very much.

Ms. Michaud, it's your turn. You have six minutes.

The floor is yours.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you, Mr. Chair.

I thank the witnesses for being with us today. We're pleased to have you here.

Mr. MacKillop, in your opening address, you said that crowdfunding sites like GoFundMe were not among the sectors regulated under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This act came into force in the 2000's. The GoFundMe site was launched in 2010.

Is the current legislation appropriate for the new virtual reality of the Internet?

Perhaps a number of legislative changes should be made to ensure that crowdfunding platforms like GoFundMe are subject to the act. What do you think?

[Barry MacKillop]

Thank you very much for the question, Ms. Michaud.

We are still reviewing what we can do to improve our system and to identify other sectors that ought to be covered by the act.

There has to be a balance between the desire to have as much information as possible and the protection of privacy. As the Deputy Director responsible for intelligence, I would like to have as much intelligence as possible. However, a balance must always be struck between what is reported to FINTRAC and respect for people's privacy and financial information.

We are always looking for other sectors that might be covered by the act in order to improve our system. However, I don't think we can just add sectors because they are being used. What needs to be determined is whether a given sector is at risk of money-laundering or financing terrorism. It's important to know what these platforms can give us in terms of intelligence.

Don't forget that sites like GoFundMe are located in the United States, not Canada. They are therefore not subject to Canadian legislation just as any sites that operate out of Canada are not subject to U.S. legislation. Changes should not be made without first carrying out the necessary studies to determine whether there is a way of improving our system or using other sources.

The same thing happened with cryptocurrency sites. They were not subject to the act, but they are now. These sites now send us reports on cryptocurrencies. We always strive to move things forward and improve our system.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

Thank you very much.

You say that you want as much intelligence as possible. As these organizations are not subject to the act, wouldn't they need to be aboveboard to send you information that would allow you to investigate?

If you see that a large amount of money has been collected in a very short time by organizations with connections to the extreme right, will this trigger an alarm for you, no matter what the platform or business might be?

Or is it rather that unless information is sent to you, you don't look into it?

[Barry MacKillop]

We definitely do keep an eye on everything that's going on.

As I explained before, there is always a connection with the financial system. A bank account or service has to be used to distribute the money that's been collected.

The entities that submit reports to us do research and monitor the media every day. They know what's involved, who the organizers are, and what's going on in the world. They always check to see if people are dishonest. If that's the case, they send us information through a suspicious transactions report.

We receive a report if there are any ties to money laundering or terrorism financing.

[Kristina Michaud, Bloc, Avignon—La Mitis—Matane—Matapédia, QC]

At the moment, we all know about the money that was collected for the “Freedom Convoy” protest, which turned into a siege here in Ottawa right in front of the Parliament buildings.

To your knowledge, and based on other matters on which you have worked, does the anonymous nature of donations open the door to criminal activities or money-laundering?

[Barry MacKillop]

Thank you very much for the question.

The anonymity issue is a little bit blurred, because donations are not anonymous. To make a donation, people have to use a credit card and go through an Internet payment system like Stripe to fund a cause. Because donor names do not always appear publicly, donations can seem to be anonymous, but they really are not.

It's as if I was making a donation during our fundraising campaign and was asked whether I would allow my name to appear as a principal owner. If I said no, my donation would be listed as anonymous, but that's not really the case.

Companies that process donations, like Stripe and GoFundMe, know who has made a donation. When GoFundMe decided to shut down the page for the “Freedom Convoy” and pay everyone back, it was an indication that it had all the information they needed on people's credit cards and identities. So the donations are not really anonymous.

[The Chair, Liberal, Jim Carr]

Thank you, sir.

It's a fascinating point and may be a good one to end this particular exchange.

Now we will go to Mr. MacGregor, who will have six minutes in questions.

The floor is yours, Mr. MacGregor. Take it away.

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

Thank you so much, Chair.

The special bulletin that FINTRAC produced on IMVE stated that “IMVE threat actors have raised funds through...crowdfunding...and accepting donations.” Our Canadian Security Intelligence Service has divided it into roughly four categories: xenophobic violence, anti-authoritarian violence, gender-driven violence and other grievance-driven violence.

Of course, our Criminal Code has a definition of terrorism, which is “an act...committed...in whole or in part for a political, religious or ideological purpose, objective or cause...with the intention of intimidating the public”. The activities recognized as criminal within this context can include significant “property damage” and “interference...or disruption of an essential service, facility or system”, to which I think any casual observer looking at Ottawa right now could probably make a link.

What I'm trying to dig into here is the relationship between the payment service providers—for example, Stripe and PayPal—the crowdfunding organization, and then the financial entity to which the funds are eventually distributed. For example, for the payment service providers, do they have information when they're receiving donations? Do they understand why the donations are coming in? Do they understand for what purpose they're coming in? Does the crowdfunding site have that link with the service provider?

[Barry MacKillop]

It's a little outside of my lane, but thank you very much for the question.

I'm not an expert on the service providers or GoFundMe, but my understanding is that the page is set up for a particular cause. When people want to donate, a behind-the-scenes service is provided. Stripe, for example, would have the identity of the person making the donation. They would have their credit card and all their identification in order to validate that the funds exist and transfer them to the particular page. They would know that it's going to a particular page.

My understanding is that Stripe, PayPal, GoFundMe and GiveSendGo all have terms of service where they clearly identify that they will not support anything that is related to money laundering, criminal activity or terrorist financing.

I would assume that many of these—given that they exist, as in the example of Stripe, in a million different companies and hundreds of countries—do have their own internal compliance program and their own internal media watch program. I would assume they are very socially responsible when it comes to identifying where that money may be going. I would think they would not want to process money that was going to a cause that was identified as illegal, for example.

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

That was sort of my question. A financial service company like PayPal is required to report to you, but would they understand or be able to generate their own intelligence saying that they know this money was going to a particular crowdfunding site for this cause? Would they be able to generate that intelligence if they thought it was suspicious?

[Barry MacKillop]

They would. PayPal and Stripe, as registered MSBs, could and would submit reports to us with respect to that.

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

Ms. Ryan, did you have something to add?

[Annette Ryan, Deputy Director, Partnership, Policy and Analysis, Financial Transactions and Reports Analysis Centre of Canada]

Yes. I'd like to just point out that the special bulletin you refer to was produced explicitly by FINTRAC to inform the reporting entities about what to look for. As my colleague Barry said, we work closely with international partners to keep track of emerging trends. We can feed that back to our private sector partners so they know what to look for.

The fact that we are able to follow those trends and then feed them back to partners that you see in the report shows that there is essentially a line of sight to the crowdfunding sector through the PSBs and MSBs that do report to us, based on their ability to follow the transactions back to individuals. We can then look at the relevant patterns and have a sense of what's suspicious and what rises to the level that our colleagues on the operational side can share with competent authorities.

That's how the system remains fresh as to what is suspicious as illicit activity evolves through time.

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

I only have 45 seconds left.

When you are producing actionable intelligence for law enforcement.... I know you're not an investigative agency, but you do formulate a lot of your opinions based on the reports you receive. Do you also passively receive information from other sources?

You see the news every day. You're aware of what's going on. How much does that figure into your reporting to intelligence agencies?

[The Chair, Liberal, Jim Carr]

You have 10 seconds, I'm afraid.

[Barry MacKillop]

Yes, we do open-source intelligence in support of the disclosures that we produce. We will provide that with the disclosures if it's relevant.