Public Safety Committee on Nov. 18th, 2025

[Chak Au, Conservative, Richmond Centre—Marpole, BC]

I have a question on the effectiveness of reporting.

The banks submit millions of reports to FINTRAC every year, yet only a small number lead to investigations. There's been a criticism that the industry is over-reporting on low-value transactions, yet under-reporting on high-risk areas such as foreign transfers, MSBs and trade-based laundering.

What is your comment on that?

[Hartland Elcock]

I think some of the criticisms may be the over-reporting of data overall, which can lead to a high volume and low value. It's not necessarily that there isn't a high degree of reporting. Our members submit millions of STRs to FINTRAC over a multi-year period. There's certainly a high level of investment in that aspect of the regime.

What we'd like to see here are the technical amendments that we've suggested, which will help drive predictability and transparency in application and help to prevent over-reporting. Clarity in regulatory expectations will assist organizations in meeting those expectations properly in analyzing risk, focusing their efforts on pinpointing the needles in the haystack and providing reporting to FINTRAC.

We've also seen other developments in the regime such as private-to-private information sharing and enhanced beneficial ownership transparency. All of these help to target risk and lead to a more effective and efficient AML regime.

[Chak Au, Conservative, Richmond Centre—Marpole, BC]

From your perspective—

[The Chair, Liberal, Jean-Yves Duclos]

Thank you, MP Au. I'm sorry for interrupting.

Let me turn to MP Ehsassi for five minutes.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you to the witnesses for being here and helping us through this legislation.

I'll start off by asking this.

Obviously, this legislation is significant and provides us with additional tools, but how do we compare with other Five Eyes countries? What is your assessment on that particular front?

[Hartland Elcock]

It's important always to observe the recommendations of supranational bodies like the Financial Action Task Force, as the Canadian regime does. That's how our regime is designed; it's tailoring those recommendations to the Canadian model. It's done very effectively in Canada.

As I said, our members invest heavily in their AML operations, programs, policies—

[Ali Ehsassi, Liberal, Willowdale, ON]

Overall, since you like to use the term “regime” constantly, I was just wondering how we compare.

I appreciate that we're doing our best to keep up with recommendations that are adopted by all of the Five Eyes, but how do we compare? Where are the weaknesses? What are the strengths?

[Hartland Elcock]

The Canadian regime is always evolving. It's always learning to address risk more effectively. I know it's repetitive, but I think two really significant steps forward for the regime have been an enhancement to beneficial ownership information and transparency in that with the creation of the federal registry. Private-to-private information sharing was another step forward for the regime earlier this year.

As we continue to build the regime and better target risk and create a regime that's risk-based, purpose built and has the tools it needs, like mandatory enrolment, we continue to improve. AML is not a static space. It's a space where risk is constantly evolving.

[Ali Ehsassi, Liberal, Willowdale, ON]

I appreciate that, but we're trying to improve it. As Mr. Motz was saying, we're just trying to determine where those weaknesses are and how we can improve this legislation.

You touched on the fact that, in your opinion, there weren't sufficient resources devoted to prosecutions. That seems to be a very sensible thing to say. Could you unpack that for all of us so that we have a better sense as to what more can be done?

[Hartland Elcock]

I think my statement was that it's always important for investment to exist. It's important for the regime overall to have the investment and the tools that it needs to carry out its mandate.

We've seen, for example, in the FINTRAC space, the development of a cost-recovery model that is applied to our members and other federally regulated financial institutions. That's a way to ensure the appropriate funding for FINTRAC. That continues to expand and may be expanded to other reporting sectors as well.

[Ali Ehsassi, Liberal, Willowdale, ON]

Reporting is different from prosecutions, is it not?

[Hartland Elcock]

Yes, I'm speaking to investment more generally.

[Ali Ehsassi, Liberal, Willowdale, ON]

I'm specifically asking about prosecutions since you, yourself, brought it up. I'm just wondering what more can be done to make sure that we strengthen this regime.

[Hartland Elcock]

We certainly look forward to better understanding the government's proposals around the federal financial crimes agency, as well as other investments recently outlined.

[Ali Ehsassi, Liberal, Willowdale, ON]

Mr. Donovan, is there anything you would like to add to that?

[Michael Donovan]

In terms of the private-to-private information sharing, we talked about—

[Ali Ehsassi, Liberal, Willowdale, ON]

I mean on the prosecution side.

[Michael Donovan]

On Bill C-12, we talked also about public-to-private information sharing coming in the budget implementation act. We also talked about the financial crimes agency. These are all steps the government is taking to strengthen the AML regime, which will then lead to better investigation and prosecution of money laundering in Canada.

I think that's the commitment we're seeing through the various pieces of legislation that are coming forward. We're happy to engage in providing our input from a consultative perspective into some of the changes in legislation and regulation around that.

Those are all the steps that we're seeing that can lead to better prosecution of money laundering.

[Ali Ehsassi, Liberal, Willowdale, ON]

Are you suggesting that prosecution is not a resource issue, that there are gaps in the regulatory framework and once those gaps—

[Michael Donovan]

It wouldn't be appropriate for us to speak to the resource gap or not. We're not familiar enough with that side of the justice and prosecution office. However, the focus that the government's putting on this area through these various amendments is a step in the right direction.

[Ali Ehsassi, Liberal, Willowdale, ON]

Thank you.

[The Chair, Liberal, Jean-Yves Duclos]

Thank you, MP Ehsassi.

MP Au, you have five minutes.

[Chak Au, Conservative, Richmond Centre—Marpole, BC]

Thank you.

I want to follow up on my previous questions.

From your perspective, how effective is the reporting system to FINTRAC right now in terms of trying to interrupt these kinds of criminal activities and money laundering in the country? How effective is the current reporting system, and what kinds of changes should be adopted?

[Hartland Elcock]

It's a reporting system that is constantly evolving and improving. The importance is a regime that increasingly focuses on risk and that encourages targeted reporting to ensure that FINTRAC receives the information it needs to enable prosecutions and protect Canadians, which is what we're all hoping for from the AML regime. It's why all stakeholders participate in consultations and invest in the regime.

Overall, we think that recent changes, such as private-to-private information sharing, will help bolster reporting to FINTRAC and help create observation of complex risk and complex criminal activities. Ultimately, that improves what goes to FINTRAC.

It's an evolution. It's an ongoing iterative process.

[Chak Au, Conservative, Richmond Centre—Marpole, BC]

I understand that you are representing the banks so you don't want to comment on other money services operations. However, we have to look at the bigger picture. You are representing just one sector out of many.

Again, if we're looking at the bigger picture, trying to see the continuum of money services businesses, what are the loopholes that we haven't addressed since the Vancouver money-laundering model was identified?