Public Safety Committee on Feb. 10th, 2022

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

I appreciate that. Thank you.

[The Chair, Liberal, Jim Carr]

Thank you.

Colleagues, I'm looking at the clock. We have a hard stop at the top of the hour. We have 15 minutes left. Coincidentally and happily, that means I can call on a representative from each party. They can take their full allotment of time and we should end within a minute.

Mr. Van Popta, you're first. You have five minutes. Please proceed.

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Thank you very much.

Thank you, Mr. MacKillop and Ms. Ryan, for being here and informing us about the important work that you do.

I want some clarification maybe from Mr. MacKillop.

If my understanding of your testimony is correct, a crowdfunding platform is not regulated by FINTRAC, so they would never make the report. It is the money services businesses that are feeding money to the crowdfunding platform or the banks receiving the money from a crowdfunding platform that are regulated to report suspicious transactions.

Is my understanding correct?

[Barry MacKillop]

That is correct, sir.

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Thank you.

For money services businesses such as Stripe, PayPal, Visa, Mastercard or whoever it might be, are there clear guidelines as to what they have to look for in terms of terrorism-type funding or money laundering? What do they look for?

[Barry MacKillop]

They do have clear guidelines. The guidelines are available, and on our website we provide guidelines. We identify, as well, different reasons for submitting STRs and we provide those guidelines.

We also provide a number of very specific indicators that would help them in their transaction monitoring. For example, we have five very successful public-private partnerships dealing with human trafficking, fentanyl trafficking, romance scams, underground banking and child sexual exploitation material on the Internet. We have set out these PPPs, as we call them, with our recording entities and we provide very actionable indicators that they can plug into their own systems to create the algorithms to assist them in identifying suspicious transactions that may be related to those types of predicate crimes.

We've also provided them with terrorist financing indicators and IMVE indicators, as my colleague mentioned, to assist them in identifying those types of transactions. As you know, often not simply one transaction but a pattern of transactions has to be looked at, and we assist them by providing them with as many clear indicators, guidance, outreach and training as possible in order to enhance that.

The success we've seen is demonstrated in the increase in the number of suspicious transaction reports we've received year over year, as well as the increase in the number of voluntary information records we've received from the police seeking our assistance with their investigations. As those have increased, we've been able to increase our disclosures. It clearly shows that not only are the reporting entities doing their job really well in providing us with those reports, but also that the police—our law enforcement and national security agencies both in Canada and internationally—significantly appreciate our disclosures and are coming in to get them as often as they possibly can to assist in their investigations.

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Thank you.

Ms. Ryan, is your hand up?

[Annette Ryan]

It is, sir.

I'd like to draw your attention to several international documents that our reporting entities also consult, which Canada works quite closely to produce. These include, from July 2019, “Terrorist Financing Risk Assessment Guidance”; from July 2021, “Ethnically or Racially Motivated Terrorism Financing”; as well as specific documents such as the Financial Action Task Force's “Best Practices on Combating the Abuse of Non-Profit Organisations”.

We do work quite closely on very rich and detailed guidance that is based on [Technical difficulty—Editor].

[Tako Van Popta, Conservative, Langley—Aldergrove, BC]

Thank you.

There's an increase in SARs, suspicious activity reports. Is that an indication of more suspicious transactions happening, or are reporting entities just getting better at understanding what to look for?

[Barry MacKillop]

You're right. In Canada, there are suspicious transaction reports. The SARs are in the U.S.

I believe it's a combination of both. It's not necessarily that we have an explosion of criminality. [Technical difficulty—Editor] and better at identifying predicate crimes associated with money laundering and/or terrorist financing.

It's the quality of those reports [Technical difficulty—Editor] us to do our job to meet our threshold and provide actionable intelligence to our law enforcement and national security agencies, both in Canada and internationally. As I mentioned, we do have 109 or 110 MOUs with international FIUs that we can share information with.

[The Chair, Liberal, Jim Carr]

Thank you very much.

Now I'll turn the floor over to Mr. Noormohamed.

Sir, you have five minutes for questioning. Go ahead.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

Thanks very much, Mr. Chair.

Thank you, Mr. MacKillop and Ms. Ryan, for joining us.

Mr. MacKillop, here's a question for you to start with.

We've seen over the course of the last little while a lot of interest from the United States in the funding situation related to GoFundMe and the blockade in Ottawa. You've seen some fairly unsavoury characters in the U.S., like Marjorie Taylor Greene, weighing in on this.

How concerned should Canadians be about foreign funds coming into Canada and spurring on ideologically motivated violent extremism?

[Barry MacKillop]

What's happening in Ottawa has not been, to my knowledge, identified as ideologically motivated violent extremism. [Technical difficulty—Editor] might come into Canada to support ideologically motivated violent extremism, and the United States would be extremely concerned about money leaving the United States or funding such extremist actions.

Our partners in FinCEN are quite alive to this. We share a lot of intelligence back and forth with respect to IMVEs, with respect to travelling, people who want to leave the country to participate in terrorist activities, for example. We work with Egmont and our Five Eyes partners very closely with respect to that. Any funding that would be linked to IMVE is of extreme concern and importance to us, and we would disclose that intelligence to our law enforcement and national security partners.

For any action that's taken by those actors or by sanctioned groups—for example, a listed terrorist organization or people who are known to be members of those organizations—both our financial institutions and those in the United States, I'm sure, know who these people are. They do monitor their transactions, and they do report [Technical difficulty—Editor] or completed with respect to them.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

I have one very brief question, then.

Do you have any concerns or have there been any flags raised thus far around potential sources of funding for what has been happening in Ottawa?

[Barry MacKillop]

No. In terms of the sources of funding that we've seen to date, as you know I can't speak to specific reporting or reporting on any individuals or organizations, but we have not seen a spike in suspicious transaction reporting, for example, related to this.

[Taleeb Noormohamed, Liberal, Vancouver Granville, BC]

That's great. Thank you.

I'm going to give whatever time I have left to Mr. Zuberi.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you, Mr. Noormohamed, and thank you to the witnesses for being here.

I want to zoom out a bit and ask a question related to individuals who might find that their international transactions are frozen. These are law-abiding citizens, Canadians who have no problems at all with the law and are upright citizens.

Do they have any recourse when, let's say, they're sending money to a family member? Is there any recourse for them to untangle themselves when they believe it's a false positive and that's why their money has been intercepted? Can you inform us about that?

[Barry MacKillop]

That would not be, certainly, a role that FINTRAC plays. As I mentioned, we can neither investigate nor seize or freeze funds, nor do we ask any financial institution to delay a financial transaction.

The recourse would be with their own financial institution, if in fact their funds were put on hold or were frozen. We have seen that happen. It has happened in instances where we [Technical difficulty—Editor] through some of the suspicious transaction reporting where the narrative is that the bank might tell us that the funds were put on hold until such time as their request for further information was completed and fulfilled by the individual. Then it's really up to the banks and the other financial institutions. They determine their own level of risk that they're willing to manage with respect to the accounts of their clients.

This would really be something that the individual would have to take up with their own bank to determine what the risk was that was identified by the bank and how that might be mitigated.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you.

We have about 40 seconds.

Related to that, do you provide guidelines on those questions, clarity for banks and other institutions around that?

[Barry MacKillop]

No. Our guidelines are more along the lines of what they need to report to us and how to report, not how to manage their own risk and risk determination, nor how they manage the accounts of their clients.

[The Chair, Liberal, Jim Carr]

Thank you very much.

[Sameer Zuberi, Liberal, Pierrefonds—Dollard, QC]

Thank you.

[The Chair, Liberal, Jim Carr]

Now I'll turn to Ms. Michaud for two and a half minutes.

The floor is yours.

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

Thank you, Mr. Chair.

Mr. MacKillop, as you said several times, your mandate is to combat money laundering and the financing of terrorist activities.

Some crowdfunding platforms and some companies are not subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Do you think this has an impact on Canada's capacity to detect and prevent not only money-laundering and the financing of terrorist activities, but also foreign interference, given that some platforms may be located abroad and money can be coming from abroad?

[Barry MacKillop]

Thank you for the question.

As I was saying earlier, the situation we are currently experiencing is truly unique. We do not consider crowdfunding platforms to be tools that could be used to launder money or finance terrorist activities. There is always a risk that someone can use these platforms for that purpose, but that's not necessarily the tool they would choose. There are in fact many other ways that are probably easier to use to launder money or collect funds to finance terrorist activities . That's why it's a unique situation.

We're going to learn from this event and we will definitely continue to hold discussions with our international partners.

Current Internet platforms are accessible to everyone around the world. They can be used to donate funds to a cause, whether the one we are talking about today or some other cause.

I presume that platforms like GoFundMe may have been used to help people who wanted to get out of Afghanistan, for example. People from anywhere can support a cause like that by making donations. I couldn't give you a percentage, but I believe that crowdfunding platforms have been very useful in collecting funds to help people in need around the world.

The important thing is to strive for a balance between the burden that might result and the intelligence we might obtain.