Debates of April 5th, 2000

Motions For Papers

[The Acting Speaker (Mr. McClelland)]

No. As a minister of the crown he has the authority to transfer a motion for debate. It was not permission, it was just a matter of fact.

Proceeds Of Crime (Money Laundering) Act

[Jim Peterson, Liberal, for the Minister of Finance]

moved that Bill C-22, an act to facilitate combatting the laundering of proceeds of crime, to establish the Financial Transactions and Reports Analysis Centre of Canada and to amend and repeal certain acts in consequence, be read the second time and referred to a committee.

Mr. Speaker, I would ask before I start that instead of taking the 40 minutes of speaking time and 10 minutes for questions and comments, that I be allowed to split the time. The parliamentary secretary and I would take no more than 20 minutes of speaking time with 10 minutes for questions and comments, but I would need consent for that.

[The Acting Speaker (Mr. McClelland)]

I would remind members that the first three speakers do not have the opportunity for questions and comments. Therefore, we will just be splitting the time.

Does the hon. Secretary of State for International Financial Institutions have the consent of the House to split his time?

[Some hon. members]

Agreed.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I appreciate the co-operation of hon. members. This bill on money laundering deals with an emerging crime, and one that is getting worse. Dirty money is that money earned from criminal activities, mainly drug dealing, but also such activities as smuggling cigarettes and theft, and is often the product of organized crime. Money laundering is the process by which that dirty money is cleaned in such a way that it cannot be readily or easily traced back to its illegal activities, therefore allowing crime to profit.

The financial action task force, of which Canada is a member, consists of 26 countries. It consists of the OECD countries, plus Singapore. It estimated that the global amount of money laundering is in the area of $300 billion to $500 billion U.S. every year.

[Dale Johnston, Reform, Wetaskiwin, AB]

Mr. Speaker, I rise on a point of order. I do not think you heard, but there were members on this side of the House who said no when you asked for unanimous consent. I do not think you heard that.

[The Acting Speaker (Mr. McClelland)]

No, the Speaker did not hear that and we are not going to revisit it.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I will try to be brief so that hon. members from other parties have as much time as they would want to debate this important measure.

The financial action task force also indicated that the extent of money laundering going on in Canada—and we will never know for certain what it is—is somewhere between $5 billion and $17 billion a year.

This bill is aimed at doing one thing, and that is to help take the profit out of crime.

What do we currently have in place in terms of law? We have the Proceeds of Crime (Money Laundering) Act, 1991, which does three things. It requires that records be kept of cash transactions over $10,000. It requires that client identification procedures be followed, that is, financial institutions are required to know the client. Third, it provides for the voluntary reporting of suspicious transactions by the financial institution directly to the police.

Why do we need this new bill in light of the existing law? This new bill retains the record keeping and client identification provisions of the old law. However, it has extended beyond the current institutions which must report, such as financial institutions, casinos, intermediaries, lawyers and accountants, to other types of financial institutions.

Money laundering is not just a phenomenon which takes place through financial institutions. There are expanded means, including the Internet. This new legislation will apply to cheque cashing businesses, crown owned institutions and crown owned casinos.

The old law, as I said, provided for the voluntary reporting of these suspicious transactions. We are moving beyond this to mandatory reporting. Where there is a suspicious transaction, it must be reported.

We will have three types of reporting. First, it will be mandatory for financial institutions and others who have reasonable grounds to suspect that a transaction is linked to money laundering to report that transaction.

Second, there will be mandatory reporting of prescribed transactions. We are proposing that they be cash transactions, or the equivalent, of $10,000 or more.

Third, we want to deal with the importation and exportation in and out of Canada of large amounts of cash or negotiable instruments. We are proposing that one has to report any sum exported or brought into Canada in the order of $15,000 or more.

Those are the guts of the new law. We have struggled. It is not an easy task to balance the requirement to have an updated, modern, crime fighting legal system in Canada with protecting the privacy of individuals.

Having reviewed many international situations and examples and after extensive consultations, we have proposed that in order to safeguard individual privacy but at the same time ensure that crime is stopped we would institute a financial transactions and reports analysis centre of Canada, or the FTRACC.

The centre would be an agency reporting to the Minister of Finance, who would be responsible for it. It would be run by a director. It would have approximately 60 employees and cost approximately $10 million a year. The centre will receive reports from financial institutions or others required to report. In other words, they will not report directly to the police or to the government. They will report to the centre.

The centre will gather, collect and analyze all the information. It will then refer the information to the appropriate policing authorities, only when it is satisfied there are reasonable grounds to suspect that the information would be relevant to the crime of money laundering. The centre must satisfy itself first.

What does the centre pass on? It passes on only tombstone or bare bones information: the name of the account, the date of the transaction, the account number and the value of the transaction. If the police authorities want to get more information from the centre they would have to do so by virtue of a warrant issued by a judge.

This information can also be passed on by the centre to CSIS, to Revenue Canada and to immigration authorities. It cannot be passed on willy-nilly. It can be passed on only in the event the centre has determined there are reasonable grounds to suspect money laundering and has determined that there may be, for example, tax fraud involved as well.

Any individual who feels that privacy rights have been hampered would be entitled to go to the privacy commissioner to have the case looked at. The centre will not be exempt from examination by the privacy commissioner.

Let us look at why it is important that we pass the bill quickly. The financial action task force on money laundering has pointed out that Canada, one of its members, is the only member that does not have mandatory reporting. We have the commitment of our Prime Minister at the G-8 summit in Birmingham in 1998 to this type of law. This was reconfirmed again last year at the Cologne summit.

We have had extensive consultations starting in May 1998 when the solicitor general issued a consultation paper. We in finance issued a consultation paper in December. We have considered wide consultations with all interested parties.

In conclusion, I believe that we have found a way to expand the reporting requirements, to make them mandatory and at the same time to balance the rights of individuals to privacy and freedom from unjust or unreasonable search and seizure.

This is through using this unique concept of the centre. The centre will be able to analyze trends in money laundering. It will be able to work with international law enforcement agencies. I think it will be a great addition to our war against crime.

By enacting the bill, Canada will be a much less attractive target for money laundering. We will be sending a clear message to the world that organized crime and criminals should not try to do business in Canada. We will appreciate the support of all parties.

[Roy Cullen, Liberal, Parliamentary Secretary to Minister of Finance]

Mr. Speaker, I want to thank the members of this House for allowing me to take part in the debate on this very important bill.

There is a lot we do not know about organized crime and money laundering, but we do know, from informed sources, that it involves a constant battle always in a state of flux. It is a substantial problem.

According to independent estimates for the Department of the Solicitor General of Canada, up to $17 billion is laundered in Canada each year.

There are a number of other estimates that reveal the scope of the problem. No one knows exactly how much is involved, but everyone knows that there is a real and serious problem, in Canada and throughout the world.

According to a recent study by the financial action task force, established at the G-7 summit in Paris in 1989, the way money is laundered in Canada and in the other member countries has changed in recent years.

Money launderers no longer limit their activities to banks and other deposit institutions.

Other kinds of businesses are being used for money laundering such as securities dealers, insurance companies, casinos, currency exchange houses, money transmitters and non-financial professionals including lawyers and accountants.

We know that proceeds of crime are often laundered through legitimate businesses. Criminal Intelligence Service Canada backed this up in its annual report on organized crime just last year. The physical movement of proceeds of crime across our borders is also part of this problem.

The new system proposed in Bill C-22 will be an important step in helping to prevent cross-border money laundering through airports and other border points. More than that, Bill C-22 builds on the excellent work that we continue to do in partnership with the provinces, territories and law enforcement agencies as part of a larger global network of countries fighting this problem together.

Despite vigorous efforts the current government and its partners continue to apply in Canada and abroad, we can still do much more. Bill C-22 represents a major step forward in the fight against organized crime.

I should remind hon. members that in the budget the government devoted significant new resources to increase federal policing activities, particularly in the area of organized crime. Over the next three years the RCMP will receive $584 million in extra funding. In the next fiscal year alone the RCMP will receive $59 million extra for federal policing services. This means more resources to fight organized crime activities such as drug trafficking, smuggling of commodities and people, telemarketing and commercial fraud.

The bill is further proof of our commitment to giving our law enforcement agencies the tools they need to do the job. By implementing the bill not only will Canada be living up to its international commitments to the G-8 and its financial action task force, but we will also be making good on commitments here at home.

The RCMP and police forces across the country will benefit from the system proposed in the bill as information from the new agency will go directly to the police to support investigations. Other federal agencies will also receive information from the agency to help investigate certain national security, revenue and immigration offences, but only when they are also related to suspicions of money laundering.

Allowing the new agency with suitable protections to share information with similar agencies in other countries will allow us to play our full role against money laundering on an international scale. It will also allow us to benefit from information that foreign agencies may have about money laundering going on in our country.

When dealing with global organized crime sharing information is vital, but we are also aware of the need to respect privacy in the process of investigating these crimes. We take these concerns very seriously.

We must bring our investigative methods up to date to fight against today's money laundering techniques. We need centralized and automated systems to discover the links between dubious financial operations and the movement of illicit funds, and to ensure their follow-up. This is exactly what Bill C-22 does.

Our consultations have shown strong support for a new and tighter anti-money laundering system. Officials continue to work closely with financial institutions and other stakeholders to make sure that the new requirements are clear and reasonable. We are also consulting provincial governments, the police and others to ensure that the new arrangements will address the needs that have been identified.

Bill C-22 strikes a sound and effective balance between the legitimate needs of law enforcement and respect for individual privacy. It will also make Canada a less attractive target for money laundering and send a clear message around the world that this is a country where organized criminals should not try to do business.

[Gurmant Grewal, Reform, Surrey Central, BC]

Mr. Speaker, I rise on behalf of the people of Surrey Central to participate in the debate on Bill C-22, an act to facilitate combatting the laundering of proceeds of crime, to establish the financial transactions and reports analysis centre of Canada and to amend and repeal certain acts in consequence.

Canada is a party to international agreements asking us to report transactions that may involve money laundering. The official opposition believes that the vast majority of law-abiding Canadians want legislation that will fight crime and that will prevent crime.

The weak Liberal government introduced this bill as Bill C-81 on May 31, 1999, and let it die on the order paper. Now we are only at second reading of the bill and still it will have to be sent to the committee for much study and amendment.

I listened very carefully to the comments of the Secretary of State for International Financial Institutions. I am convinced that the government did not evaluate, did not look into the pros and cons of the bill in depth. I would like to give an overview whereby we will look into the gravity of the situation first and then look into the problems and concerns. I would also like to provide some suggestions and amendments.

Organized criminals, particularly in the drug trade, generate and launder billions of dollars annually. They have to do that to continue their illegal operations. They move from jurisdictions with strong controls to jurisdictions with weak or no controls. This criminal activity undermines Canada's financial and social systems and increases the power and influence of illegal businesses.

Experts estimate that from $300 billion to $500 billion of criminally driven funds enter the international market annually. In Canada alone the ballpark estimate is around $20 billion.

The Financial Action Task Force estimates that about 70% of the money laundered through Canada is derived from drug trafficking.

There are many ways to launder money, including through financial institutions, foreign exchange dealers, significant cash purchases, brokerage houses, foreign tax havens, real estate, the operation of shell companies, travel agencies, insurance agencies or companies, and dealing in gold and other precious metals. Even some professionals such as lawyers and accountants help in money laundering. Criminals launder money through gambling and cross-border transfers. It is a wide open area.

Some other methods are more sophisticated, for example smurfing, human mules, over-invoicing for import-export purposes. I will not mention the details for security reasons.

Canadian banks are reportedly favoured for the transfer of funds because of their wide international presence, stability, efficiency, strong tradition of banker-client confidentiality and facilities of transfer such as wire transfers, currency exchange, denomination exchange, savings deposit boxes, and please do not laugh, even government savings bonds.

The foreign currency exchange houses being less regulated than the chartered banks provide the second most common vehicle for money laundering, at least in Canada. There is a potential for concealing the identity of the launderers because the negotiable instruments or the wire transfers are deposited in the banks and the client is perceived as the currency exchange house, not those people who are laundering the money. The perception is created that the financial negotiable instrument comes from the currency exchange house and is then deposited in the bank and the laundering of the money continues.

Other illicit funds are also laundered through the purchase of stocks and bonds in the securities market through a shell company located in a tax haven somewhere where the laws protect the anonymity of the owners. Therefore money is laundered through the stock exchange.

Investing in a private company also is a way of laundering. The private company will go public and then the earnings from the sale of shares create an illusion that the profits generated are legitimate.

These side issues of money laundering or its byproducts have serious consequences. Street gangs channel criminal profits to fund terrorism or military operations abroad. Money laundering feeds armed conflicts and illegal activities that threaten everything from our families to our society to our national and international security and economy and perhaps even world peace.

A staggering variety of activities such as extortion, home invasion, murder, theft, drugs and arms trafficking, counterfeit currency and passports, migrant smuggling, prostitution, mafia, casino and lottery frauds are additional costs to society at the expense of the taxpayer and at the expense of our future. These activities make our streets unsafe. It is not only money laundering which affects our economy and undermines society, but other criminal activities piggyback on it and affect our children, our future and undermine our security.

These activities are escalating. It will likely become more difficult for police to deal with them if the weak Liberal government does not wake up. The Liberals can have a deep sleep if they want to, if they are tired and cannot remain awake. Someone else can sit in the driver's seat. We now have a licence to do that and we could do that for them.

The House will remember that in 1997 one of the six key platforms of the former Reform Party was to make our streets safer. A Canadian Alliance government would do that.

Canadians are fed up and have had enough. We do not want Canada to be a haven for money laundering. I urge the government to look at this bill very diligently and look through lens of the importance of the issue and not through the lens of politics, selfishness or arrogance as it usually does.

The broad purpose of Bill C-22 is to remedy shortcomings in Canada's anti-money laundering legislation. It was identified by the G-7 Financial Action Task Force on Money Laundering in its 1997-98 report.

The financial task force recommended that reporting requirements in Canada be made mandatory rather than voluntary as is currently the case. Why has the reporting been voluntary in the first place? That means every honest person was supposed to report whereas the criminals escaped reporting. This does not make sense. The other recommendation made by the task force was that a financial intelligence unit be established to deal with the collection, management, analysis and dissemination of suspicious transaction reports and other relevant intelligence data.

Bill C-22 proposes to bolster Canada's anti-laundering efforts by making it mandatory for financial agencies to report information relating to certain types of transactions. The information is to be sent to a central data gathering and analysis body called the financial transactions and reports analysis centre of Canada. This analysis centre would authorize the release of information to domestic and foreign law enforcement agencies.

Bill C-22 will also establish in association with Canada Customs and Revenue Agency a system of reporting large cross-border transactions.

The Liberal government not only lacks vision but it is also very weak. It does not have the political will nor is it capable of fixing the ailing departments. It thinks that the status quo is the only option.

Even when international organizations tell it to fix something serious it does it half-heartedly. It has a mentality and culture of only doing a patchwork job. The patchwork does not work, particularly when dealing with organized crime. The criminals are light years ahead of our government. We need to overhaul the whole system. Corruption and abuse in the system is enormous.

Canadians suffer as a consequence of abuse and fraud in many areas. These include the GST refund, welfare, employment insurance, social insurance numbers, insurance, workers compensation board, immigration, and so on.

Criminals are buying mansions, boats and luxury cars with the proceeds from organized crime. They have hefty bank accounts. What is the reason? The loopholes in the system and the law are not plugged. There are so many loopholes and the criminals are exploiting them. Tax evasion and the underground economy are putting pressure on small businesses and legitimate taxpayers who cannot bear the huge Canadian tax burden.

The tax burden is responsible for a poor quality of life, the brain drain and so many other things. Due to the illegal activities of some individuals, the legitimate taxpayers suffer. The whole nation suffers.

There are criminals who do not pay taxes but they pay bribes or political donations, and they continue to enjoy the government's most favoured status. Many organizations enjoy charitable tax free status only to rake in money to finance organized crime or even wars in other countries.

A Canadian multinational trading company, which I will not name, whose stock was valued at about $600 million, was found to have very close ties to the eastern European mafia. It was laundering the money through the stock exchange and sending the money to its counterparts in other countries.

Canada is a candy store for these criminals. It is a shame that the government cannot come up with legislation that would be effective and would do the job.

The blurred vision of the Liberal government has caused the dismantling of the Vancouver port police. This makes the port a gateway for the importation of drugs and narcotics. It opens up the way for the criminals and makes their jobs easier rather than tougher. It is a shame the Liberal government gives international organized criminals VIP treatment while those same criminals according to the Immigration Act are supposed to be inadmissible into Canada.

The human smugglers and criminals who live on organized crime should be given the toughest penalties. That is what Canadians are telling us. That is the only way to discourage them. Otherwise unfortunately, they have the motivation to come to Canada and commit crimes because they consider Canada to be a crime haven.

How about stopping the federal government when it launders the money?

It appears that CIDA contracts and EDC loans have been given to businesses which donated huge sums of money to the Liberal campaign before the elections. We all know those figures. When we ask a question, the government does not reply.

I am sure that everyone in Canada knows about the billion dollar boondoggle. Do we need a bill to fix all that is wrong with the government? No, I do not think so. Rather, we need to replace the federal Liberal government, which we can and which we are prepared to do with the Canadian Alliance.

Let us look at some other aspect of the bill. When Bill C-22 comes into force, it will replace the existing Proceeds of Crime Act. However, the existing proceeds of crime regulations would remain in effect until the mandate regulations are promulgated.

There are four key principles of the bill.

The first would provide tools for law enforcement agencies, giving them the information to identify charges to be laid.

The second would strike a balance between privacy rights and law enforcement needs. We need to place strict controls on the collection, use and disclosure of personal financial information.

The third would minimize compliance costs for financial institutions and other stakeholders. We have to minimize compliance costs. We need to establish a workable regime with the full co-operation of all stakeholders, without unnecessary red tape.

The fourth would provide for contributions toward international efforts to combat money laundering.

We need to see the government's definition for these efforts. These definitions are not given in this bill. We do not know what they mean. They are too vague. I will come to that later.

The principles are ones that any law abiding citizen would support, but as always, we know we cannot trust the government because it does not keep its promises.

Let me dwell on the concern we in the official opposition have about the cautions we should take. One of the problems with Bill C-22, other than what I have mentioned, is that while the policy objective is laudable and Canada should not be a haven for laundering the proceeds of crime, the bill raises many concerns. The bill is too vague in many areas.

The official opposition is concerned that the bill is too vague concerning who is affected by the act. The Liberals have to show us clarity in this bill.

There is a lack of precision in this bill. There are no definitions of many terms, for example, the definition of “suspicious transaction”. What is a suspicious transaction? There is no definition.

The United States of America opposed this legislation because it presented problems of probable invasions of privacy. We in Canada are also concerned that the privacy of Canadian citizens could be unreasonably invaded inadvertently through overly restrictive regulations defining transactions that must be reported. There should be sufficient protection and freedom of law abiding citizens should be preserved.

Another issue is that customs officers are being given broad powers to search anyone they want when they have reasonable grounds to suspect that the person has hidden currency or monetary instruments which are of greater value than the amount prescribed or declared.

Also, we are concerned that the powers to search should have safeguards to ensure that customs officers do not hassle persons lawfully crossing the border. They should not be hassled. It may grant customs officers the power to strip travellers of undeclared cash. The financial transactions and reports analysis centre of Canada could end up with a licence to harass innocent and legitimate people.

If passed, Bill C-22 would give bureaucrats fresh authority to trap the innocent, infringe on privacy, gather information on citizens and put routine money transactions under suspicion.

There are broad delegations of authority to the cabinet, including making regulations to define what transactions must be reported and who must report them. The government has overall authority to make those regulations.

Also, it will conscript lawyers, banks, accountants and others into a national subculture of informants and snitches. Routine legitimate business transactions could be disrupted as a result of the bill. The bill will restructure the relationship of trust between lawyers and clients.

There has to be a reasonable balance between entrapment of innocent citizens and effective tools of law to help our law enforcement agencies to do their jobs effectively and efficiently.

Let us talk about securing a conviction of money laundering. Securing a conviction of money laundering requires the crown to prove four elements of the offence beyond a reasonable doubt. It must be proven that the accused dealt with the laundered property with intent to convert or conceal it. The property must have been derived from the commission of a predicated offence. The accused must have had knowledge of this fact.

The enactment could now allow the police to arrange sting operations even though the above may not be proven by the crown. It could also help the police to get someone convicted of a companion crime, the crime which is attached to the money laundering crime, even if the laundering cannot be proved. That is dangerous. The legislation should be driven by need and not by police hype, political or international pressure. It should be needs based.

The Department of Finance issued a consultation paper on January 17. The paper promises that after Bill C-22 becomes law, proposed regulations will be published in the Canada Gazette for 90 days to allow further public input. This addresses some of the concerns about the broad discretion. But the proposed regulations include cheque cashers, money order vendors, crown owned or controlled deposit-taking institutions, which are banks, credit unions, trust companies and so on, and even Canada Post money order businesses.

Generally, transactions involving $10,000 would have to be reported, as would any transaction involving five or more $1,000 bills. Cheque cashers, money vendors and money transmitters would be required to retain a record of every transaction of $1,000 or more.

Everything is hidden in these regulations. Nothing has been clearly defined in the bill.

Let us talk about regulations. As the House knows, I am co-chair of the Joint Standing Committee on Scrutiny of Regulations, so I can talk about regulations. I can say that this government governs by regulations only. The House will recognize that 10% to 15% of the laws are made in this Chamber and 80% to 90% of the laws are brought in through the back door. Only 20% come through the front door and 90% are hidden in the regulations. The regulations will hold the real story which no one will know because they will be buried under tonnes of paperwork.

My committee is responsible for examining and scrutinizing regulations that accompany a bill which is passed by both houses, this House and the other house, the Senate. This weak Liberal government that lacks vision, like the Tories before it, crippled our committee's work by not giving it the resources it needs to scrutinize hundreds and thousands of regulations. The bill will have so many regulations attached that only the courts will be able to tell us about the mayhem and the damage done to our economy by this bill's regulations. Every small business will sue the government.

In the Joint Standing Committee on Scrutiny of Regulations, there are about 800 regulations in the pipeline. Those 800 regulations are on questionable files that have been backlogged for years and years.

The House will be surprised to know that some of the regulations have been operating for as long as 25 years against the wishes of the committee which is supposed to be scrutinizing those regulations. For 25 years those regulations have clogged the pipeline and thus the work of the committee. Successive ministers have kept the stonewalling going. The regulations that the committee objects to are kept in place and are fully operable. That is shameful.

I have criticized this bill enough. Let me now discuss some of the suggestions for the government if it is listening. There are only three members here in the House who are listening.

I will call them proposed amendments. Broad delegation to cabinet to make regulations to define what transactions must be reported or who must report should be restricted. There should be precision in the legislation. The term, for example, “suspicious transaction” should be clearly defined, otherwise properties will be seized, like in the case of the flawed gun control legislation under Bill C-68. Broad powers of customs officers to search anyone or open mail should be limited and carefully crafted so that legitimate citizens do not suffer. Privacy and freedom of citizens should be respected. There should be safeguards in place to curtail hassling of persons by customs officers while lawfully crossing the border.

Witnesses before the committees must be representative of a cross-section. Regional and provincial police authorities, businessmen, federal and provincial government officials, all should be invited so that the committee can hear their concerns and ensure that the bill is crafted very carefully.

Law enforcement agencies should be prepared and equipped to deal with sophisticated activities of organized crime. The government does not put its money where its mouth is. We need to invest in the facilities and the tools given to law enforcement agencies so that they can effectively control crime in this country.

Hard positions, intransigence and thoughtlessness have no place in our deliberations when talking about this bill.

We must arrive at the best possible solution to this complex problem. Therefore, all parties must co-operate in the committee work. The committee work should not be like other committee work, which is a sham and so partisan that everyone looks through the lens of politics rather than the lens of issues. Sometimes the actual issue is lost.

I remember once, when I was on the immigration and citizenship committee, we introduced a motion to study fraud and criminal activities under the Immigration Act for illegitimate immigrants coming to this country, but the Liberal members refused the motion. Even when we want to discuss the future business of the committee, the discussion is based on partisan lines. In committees, when we need a minister to appear to answer some of the opposition members' questions, the motions are often declined.

I urge government members and all members of the House to work seriously at the committee on this serious legislation and come up with a constructive solution that will be the best solution to deal with this issue.

Another suggestion I have is to keep regulations to a minimum because businesses and financial institutions have to deal with so many regulations that they can cause serious problems.

In conclusion, we want to support the bill in principle but the contents and details need to be worked out at committee. We agree with the spirit of the bill but it should be workable. It should offer effective tools to our law enforcement agencies.

The Liberals should take fair warning that we want to see specifics during the committee hearings. The official opposition wants to know exactly what is being done with the bill and what the specifics are in the bill. As it is written, it is very vague. The terms are unclear and will not help to contain the serious money laundering situation. They will also not help the undermining of our economy. The black market, which is another byproduct of money laundering, affects our economy very seriously and puts extra onus on law-abiding citizens who pay taxes.

If we do not define the bill very clearly, we will have the same old story, the catch-22. If we look at the courts, lawsuits will follow, businesses will be hurt and small businesses, which create jobs in the country, will suffer. Jobs are not created by contributions and grants. Jobs are created by small businesses and we should support them by making sure we have clear legislation that will work.

The Liberals have not done that so far with this bill and they should have done that. Hopefully they will listen to the witnesses who came before the committee and accept the amendments that I just put forward which Canadians want us to make in the bill.

In a nutshell, I ask the government and all members of the House to support the intent of the bill. However, we need to look at the substance of the bill, which is not clear at the moment. I am sure at committee, with the hard work and diligence of all party members, we will be able to produce effective legislation.

[The Acting Speaker (Mr. McClelland)]

It is my duty, pursuant to Standing Order 38, to inform the House that the questions to be raised tonight at the time of adjournment are as follows: the hon. member for York North, The Environment; the hon. member for Dauphin—Swan River, Human Resources Development; the hon. member for Lévis-et-Chutes-de-la-Chaudière, Shipbuilding.

[Yvan Loubier, Bloc, Saint-Hyacinthe—Bagot, QC]

Mr. Speaker, I am pleased to have the opportunity to speak at second reading of Bill C-22, which is, as hon. members are aware, intended to remedy the flaws in the present legislation as far as money laundering is concerned, which is the common term for laundering the proceeds of crime.

It is estimated that, every year, up to $17 billion from the proceeds of crime are laundered in Canada alone, most of that amount coming from the drug trade, heroin, cocaine, cannabis and hashish in particular.

It is estimated that, out of that $17 billion from the proceeds of crime that are laundered in Canada alone, the bulk of it, some $10 billion, is connected to the traffic in illegal drugs.

This is a major problem. Internationally, according to federal government figures, the total proceeds of crime that are laundered are in the order of $500 billion U.S., a considerable sum.

Since our arrival in the House of Commons, we in the Bloc Quebecois have been calling for money laundering to be considered a violent crime and to be treated as such by judges hearing money laundering cases.

I must say that the government listened to us—a first really for the Bloc Quebecois since we got here—because, when the Criminal Code was recently amended, the government paid heed and decided that money laundering would now be considered a violent crime.

The word “violent” is not used lightly. As I mentioned, in Canada, the laundering of proceeds of crime is a $17 billion business, including $10 billion from drug trafficking. There are human tragedies behind these figures.

For example, every year, thousands of children in Canada become addicted to so-called hard drugs. Perhaps we should stop making a distinction between hard and soft drugs. For example, while, 100 years ago, cannabis was considered a soft drug, it now has an hallucinogenic content 7 to 30 times greater than the cannabis that was being sold in the 1970s. Therefore, we can no longer talk about a soft drug. All drugs are becoming hard drugs.

Associated with the laundering of proceeds of crime are human tragedies, particularly in the case of illicit drugs. Thousands of children become addicted to these hard drugs, with all the social costs that this situation might generate.

Every week there are tragedies, such as killings between biker gangs for control over criminal activities, including the drug market. In the end, the laundered money is the product of these tragedies, these wars between biker gangs, which often claim innocent lives.

We must never forget or lose sight of the fact that, in addition to the thousands of children who become addicted to hard drugs every year, there was also an 11-year old boy who died in Montreal in 1995 because a bomb exploded right beside him as a result of this war between biker gangs to control the drug trade.

Associated with money laundering are also murders. In 1994 alone, no fewer than 79 murders were committed in Quebec alone to gain control over the drug trade. Ultimately, the proceeds of such crime turn up as laundered money.

There were 89 attempted murders, 129 cases of arson, and 82 attempted bombings. In 1998, there were 450 acts of violence related to control of the drug trade. Such are the social and economic ramifications of this laundered money. Just to help children who have turned to hard drugs because of criminals get off them is costing Canada a minimum of between $4 billion and $7 billion annually. This is quite a sum of money.

Considering money laundering a violent crime and improving the existing legislation concerning the laundering of proceeds of crime is a step in the right direction.

As I mentioned earlier, without blushing, the fact that money laundering is now considered a violent crime is the product of the work of several members of the various political parties in the House, but particularly those of the Bloc Quebecois, who worked relentlessly to have this included in the Criminal Code, with everything that resulted from that in terms of toughening our laws.

Before getting into the provisions of this bill, I would like to make an important comment. Justice in this country has always been one of the Bloc Quebecois' main concerns. Our party has always wanted to see justice done. It has always wanted justice to be effective and to stop the real criminals.

Apart from money laundering, we have devoted our attention to at least six other issues. That has allowed us to progress in this parliament, with the measures that were announced both recently and earlier. They are the product of the work members of the Bloc Quebecois have done in the area of justice.

Take for example the removal of the $1,000 bill from circulation. Our colleague from Charlesbourg went on a crusade to have those Canadian bills taken out of circulation. Why was that so important?

First of all, Canada is the only country to have such high denominations. When one looks at the United States or Europe—and it has been demonstrated around the world—that having $1,000 bills in Canada facilitates criminal transactions. It also facilitates money laundering.

In order to better illustrate the crucial need for the elimination of the $1,000 bill, something the Bloc Quebecois has worked to convince the government on, let me give the following example.

A street sale of 20 kilos of cocaine generates profits of between $2 million and $4 million, depending on its purity. How much does a mix of bills of $10, $20, $50 or $100 denominations weigh? The small denominations weigh 120 kilos. Imagine the handling involved for the criminals doing the laundering, who collect the proceeds of crime, of the sale of the 20 kilos of cocaine, how much easier it would be for them to carry higher denominations such as $1,000 bills and to launder them. It would be a lot easier.

If they just use $1,000 bills, if they have them to convert $5, $10 or $100 bills, they have to handle only two kilos worth of bills. They start off with 120 kilos of bills of small denominations and, with $1,000 bills, they cut the weight of the proceeds of crime to two kilos. It is a lot easier to go around with a two kilo bag of money from the sale of cocaine, heroin or some other illicit drug than to have to handle $5, $10, $20 or $100 bills.

We worked very hard with law enforcement authorities to convince this government that the $1,000 denomination needed to be withdrawn. The Secretary of State for International Financial Institutions recently announced that he would soon be withdrawing the $1,000 bill from circulation. That is good news, and I would again like to congratulate my colleague from Charlesbourg for his considerable efforts in this connection, along with my leader, the hon. member for Laurier—Sainte-Marie, and all of the Bloc Quebecois. They have fought long and hard to get this measure implemented, in order to have the $1,000 bill taken out of circulation.

Any measure—and we can never say this too often—that can hinder organized crime is a welcome one. Any improvement to the Criminal Code, like the other measures created to make the police forces' work easier, is a welcome one, if the objective is to fight more effectively against organized crime and to make it harder and harder for them to operate in Canada and internationally.

We in the Bloc Quebecois have addressed one other important matter, on which we have also taken action: pawnbroking. My colleague from Hochelaga—Maisonneuve has done an admirable job in this connection to ensure compliance with municipal bylaws concerning record keeping by pawnshops. Such compliance prevents these businesses from becoming a means of laundering money, the proceeds of crime, or other crime related property. This represents a considerable victory for the Bloc Quebecois, and this action again arose out of a concern for greater justice and for making it easier for law enforcement officers to collar real criminals.

The efforts by the Bloc Quebecois member for Hochelaga—Maisonneuve have led to tighter controls on pawnbroking establishments. Following these efforts, 70 pawnshops closed in Montreal. These businesses did not comply with municipal bylaws and they bordered on being illegal. These 70 pawnshops were probably used to launder money.

The fourth issue that we in the Bloc Quebecois tackled because we care about justice, which is also reflected in Bill C-22—and we will get back to this a little later—is the fight against organized crime. A few months ago, the hon. member for Berthier—Montcalm, who is here today, tabled a motion in the House to establish a justice subcommittee to find ways to fight organized crime more effectively.

I was very pleased to see that, through the work of the hon. member for Berthier—Montcalm and all members of the Bloc Quebecois, we were able to convince not only the government but all the parties in this House of the need to set up such a committee. Incidentally, the subcommittee will begin its work next week to report back in the fall, with a series of recommendations on how to increase the effectiveness of our fight against organized crime. These measures will not only allow us to catch petty criminals, but also the leaders, for crimes that they commit or that they ask others to commit.

I hope the work of that committee will be successful, because it is in everyone's interest. I do hope that the consensus achieved by the hon. member for Berthier—Montcalm and the Bloc Quebecois is a guarantee that we will get recommendations that will take us one step further in the fight against crime.

The fifth issue concerns the increase in the RCMP budgets, particularly as regards the fight against drug traffickers.

It is something that we have often talked about here. Recently, under special circumstances which you know, I had the opportunity to express to you the terror experienced by farm families not only in my riding, but throughout Quebec and Canada, particularly in southeastern Ontario.

That feeling of terror sets in every year as criminals confiscate certain plots of farmland in May, at the beginning of the farming season, to prick out cannabis seedlings and let them grow until late fall. During that period, not only thousands of farm families throughout Canada live in terror, but they can no longer enjoy their property. These farmers receive death threats. They are told their children could be harmed. They are told they themselves could be physically harmed should they venture too close to the cannabis planted by these criminals.

We had the opportunity to discuss that. From the example we saw in the Montérégie region, particularly in Saint-Hyacinthe, we, in the Bloc Quebecois, had the opportunity to demand that the government increase the budgets of police forces and give them the tools they need to do their job.

It was ridiculous. Since 1994, the Minister of Finance, who prides himself on being a good manager, had reduced the RCMP budget to fight money laundering and drug trafficking by 12% or 15%, depending on the item.

While we were witnessing exponential growth in organized crime activity, the Minister of Finance, with his usual wisdom—when something does not concern him or his shipping companies and his profits, I think he is less interested in the common good—had cut budgets to fight criminals.

I want to make the point again that Bloc Quebecois members, who are concerned about justice and brought pressure to bear, have managed to get the RCMP budget increased this year and additional resources allocated to the various RCMP detachments in order to wage a more effective battle against drug traffickers.

In addition, Bloc Quebecois representations resulted in the maintenance of all RCMP detachments in Quebec threatened with closure, in many cases because of bureaucratic decisions that ignored the fact that an effective fight against organized crime must be like a chess game. If there are gangs of organized criminals in one location, there must be a strong police presence nearby.

There has been such a presence for several years now. Trust must be established between these police forces, which include the RCMP, the Sûreté du Québec and municipal forces, and the public, particularly in a case where the law of silence reigns, where there is a regime of terror surrounding the activities of drug traffickers. It take time to build up this trust.

And yet the federal government threatened to close down many detachments in Quebec when what should be done is to increase the resources in order to wage a more effective anti-crime campaign. It should not be forgotten that it is Ottawa that has the means to increase budgets to wage a more effective battle against organized crime.

Once again, because of the Bloc Quebecois' efforts, budgets were increased and RCMP detachments kept open in order to wage the battle against organized crime more effectively.

One more step remains—increasing resources in the short term—and I will have an opportunity to get into this a little later on. If there is to be another year this year of “agricultural” activity by drug pushers in the fields of Quebec and Ontario, and it takes two or three years before any action occurs, this means two or three years more of a reign of terror threatening whole families, with the billions these criminals pocket from their illicit activities.

Another productive effort by the Bloc Quebecois in its concern for improving justice and the means available to the government and to justice to fight organized crime involved the requirement to disclose any dubious transaction involving $10,000 or more and increasing the number of institutions obliged to report such transactions or any other dubious transaction.

In its 1997 election platform, the Bloc Quebecois expressed its concern at identifying all dubious transactions and ensuring that all institutions and individuals suspected of handling dirty money be obliged, in case of doubt about the amount of a transaction, to report such a transaction.

The law was distinctly lacking in this regard. Under it, an impressive number of financial institutions were and still are not obliged to report dubious transactions of $10,000 or more or any other transaction. They do so on a voluntary basis.

As far back as 1997, we were calling for this declaration to be made mandatory, for there to be a ceiling above which all dubious transactions of sizeable amounts, say $10,000, would have to be reported, along with any other suspicious transactions or transactions by suspicious individuals. We called for the scope of this legislation to be expanded to other institutions, bodies or individuals liable to be dealing with such suspicious amounts or transactions.

We are pleased to see that, with Bill C-22, the government has finally grasped what the Bloc Quebecois has been calling for since 1997, out of concern for justice and effectiveness of police and customs operations to nab criminals. The government has finally understood that it was in the common interest, the national interest and the interest of Quebecers and Canadians, to implement these recommendations by the Bloc Quebecois.

Essentially, Bill C-22 does what the Bloc Quebecois had proposed. This was essentially what had to be done, for the present at least. There are some questions, but we are only at second reading. Other steps are yet to come, including consideration by a committee and report stage. We will have some questions to ask, but overall what we find in this bill is satisfactory to us in principle. It is also satisfactory in its application, with a few minor reservations I shall go into later.

First of all, the bill makes it mandatory to report suspicious transactions, at a level that has been set at $10,000 or more, but also any other transaction where there are grounds for suspicion about the origin of the funds, in other words transactions which might involve the proceeds of crime, whether drug trafficking or any other criminal activity.

The bill also broadens the scope of existing legal provisions. Again, this responds to our repeated representations, since 1997, regarding certain flaws in the provisions dealing with money laundering. The bill specifies that this reporting, which is now compulsory in the case of suspicious transactions, has been broadened to include all regulated financial institutions, casinos, businesses involved in foreign exchange dealings, persons engaged in the business of dealing in securities, insurance companies and persons acting as financial intermediaries, such as lawyers and accountants.

We feel this is an improvement. As I said, we will have questions for the government, officials and numerous witnesses who will soon appear before the Standing Committee on Finance, but, on the face of it, the Bloc Quebecois is pleased with this measure.

The bill also increases the penalties for illicit or criminal activities, namely the laundering of proceeds of crime.

As I mentioned earlier, since money laundering is now recognized as a violent crime, these penalties are harsher than they used to be.

A second improvement found in Bill C-22 is the series of provisions dealing with transborder operations, such as imports or exports of currencies or instruments, such as travellers cheques, and any illegal trafficking of these currencies or instruments. The provisions have been strengthened precisely to catch the real criminals who engage in this type of illicit trafficking.

First of all, the bill increases the powers of customs officers to search people and vehicles. In this regard, we have certain reservations but, overall, we agree with the principle that when there is serious and reasonable suspicion—and customs officers are well trained—with respect to the trafficking of such currency or the failure to report such currency or monetary instruments—it would be normal—let us be honest—to check whether or not such instruments should be seized, the traffickers pursued and the real criminals required to pay.

There are also provisions for co-operation with foreign countries. Too often, discussions about globalization ignore the fact that it is not just about trade and legal matters in the noblest sense. One example given is international tribunals trying war criminals. Globalization also has to do with very close co-operation between governments to catch criminals. We must never forget this.

Recently, there was a conference in Russia on the evolution of organized crime. We must remember that organized crime is becoming increasingly international. I repeat what I said earlier: every year, world wide, approximately $500 billion U.S. is laundered—and money launderers do not file tax returns. This is the amount laundered internationally. Part of this money falls into the hands of organized crime in Quebec and in Canada.

This is a lot of money and it leads to some tragedies, as I mentioned earlier. Co-operation between governments is essential. Such co-operation, which was also called for in a recent international conference on the subject, is made possible by Bill C-22.

Finally, Bill C-22 provides another innovation. Following consideration in committee and questioning of officials and witnesses appearing before the committee, we will be more certain of our final analysis. At first glance, though, the third major clause of this bill, which provides for the creation of a financial transactions and reports analysis centre of Canada, is a step in the right direction in that, at the moment, information on criminals, money laundering and interprovincial transactions is spread here and there.

All efforts to centralize this information or to obtain the co-operation of other police forces or between the investigators of the financial transactions and reports analysis centre of Canada, the various police forces and even Revenue Canada are welcome.

In the future, with this centre, all information on suspicious transactions and those that may lend themselves to money laundering will be centralized. There will also be information on individuals or institutions found guilty of failing to make the mandatory disclosure in the case of a suspicious transaction or of having been accused of money laundering themselves.

I am pleased to note the bill provides that information disclosed by the centre—very confidential information will pass through it—will be carefully controlled and governed by the Privacy Act. This is good news, but we would like to question the government and the officials who worked on the bill, and hear them as witnesses before the Standing Committee on Finance to be sure this information will not be used and cast to the four winds or, more importantly, sold for financial gain.

Very sensitive information will pass through the centre. We want to make sure the requirements of the Privacy Act are met.

As I have said, we do have certain reservations about the bill nevertheless. The first of these relates to increasing the powers of customs officers. This may be beneficial. Often, customs officers may have their hands tied by various constraints that make it impossible, even if they are suspicious, to carry out the necessary search in order to collar real criminals.

We are concerned, at the same time, about people's rights and freedoms. This will be one of our concerns during the next stages of examination of this bill. We would like tight controls over the work of the customs officers, with strict regulations, so that there will not be any abuse relating to searches of individuals or their vehicles. Customs officers must have a framework of operation.

Second, a question arises, particularly in the light of clause 73 of Bill C-22: the extraordinary power assigned to the Governor in Council, and the minister responsible, for making any regulations relating to the legal provisions of Bill C-22.

We have misgivings about this. To give so much power to a group of individuals, to the Governor in Council or the minister responsible, on matters that might become criminal in nature, without involving parliament, has always meant to us that the powers of the departmental employees and the minister are extraordinary. This has also come up in other bills.

We want to know if it would be possible to ensure that the House has a say in the process, to make sure that the powers are not concentrated in the hands of a few individuals when it comes to such important issues, particularly as regards the regulations that have yet to be drafted to implement Bill C-22.

This is another concern we will raise when a more in-depth review of the bill is conducted by the Standing Committee on Finance and at the various legislative stages.

We have a third concern regarding this bill, but also the whole issue of organized crime. Next week, the justice subcommittee will be meeting. It enjoys the unanimous support of the House of Commons, with regard to what still needs to be done to give adequate tools to police forces and what changes must be made to the Criminal Code to fight organized crime more effectively.

Last year, I went through a harrowing experience, not just me, but several other people too. Some people have been going through that experience for years. I am referring to the reign of terror, the law of silence imposed by organized crime on people whose lands they invade. These people cannot say anything, otherwise they are beaten or receive death threats.

I would like to send a message to the government. Will this subcommittee get the government's co-operation so that, by early fall, we can have measures that will truly help us fight organized crime effectively?

Second, was the government's support for the establishment of that subcommittee just a smoke and mirrors operation, or will it truly help the subcommittee to propose a series of recommendations with, of course, the input of opposition members, including Bloc Quebecois members, to fight organized crime more effectively? The hopes of several thousand people rest on that subcommittee.

I do not say that as a figure of speech. I have met people who have been living in terror for the last three, four or five years because of threats from organized crime. They place a lot of hope on the work of the justice subcommittee, on measures to fight organized crime more effectively and to protect them.

They also place a lot of hope on short term measures. I will put particular emphasis on the illegal production of cannabis on Quebec and Ontario farms, for obvious reasons.

I remind the government that, in the short term, before the justice subcommittee can make its recommendations in the fall, it is imperative that we take a series of measures immediately, this year, to fight the illegal production of cannabis, with the farming season that will start at the beginning of May and with the pricking out of cannabis seedlings in our farmers' fields.

If we do not take action this year, we are giving one more farming season, one more year of illegal profits to criminal organizations in Quebec, Ontario, British Columbia and throughout Canada, but particularly in eastern Canada and in the westernmost part of Canada. It is one more year of extraordinary profits, or proceeds of crime, that we are giving them.

It is also one more year to convince even more school children—and the Standing Committee on Finance will have an opportunity to hear from people involved in the schools who see what is happening—to sell them not just cannabis or hashish, but also heroin and cocaine. They will have another year in which to damage the future of thousands of children in Quebec and in Canada.

If action is not taken immediately in April or May to let organized crime know that things will no longer be the same and that, this year, measures will be implemented on the strength of increased budgets, for the RCMP among others, I think that a good opportunity will have been missed to show that we are really serious about fighting organized crime.

As I said, starting with my riding of Saint-Hyacinthe—Bagot, there are thousands of farm families and owners of woodlots who are waiting for short term action from the government and who are probably glad that money laundering provisions are being tightened.

The more we cut the ground out from under organized crime and money laundering, which is the key to the long term profitability of criminal activity, the less it will tend to increase its annual production or squatting on land in order to grow cannabis, exchange it for cocaine or heroin on the American market and so forth, and profit from the proceeds.

People are also happy that the continued pressure brought to bear by the Bloc Quebecois has meant an increase in budgets to fight organized crime. That is undeniable. But they are waiting for short term action.

I bring this message to the government. We must see improvements before the start of the next criminal cannabis production season. We must see improvements. After breaking the law of silence, and I am not the only one to have done so, there were others after me in my riding and throughout Canada, we have to improve the situation. Organized terrorism in the fields of Quebec and Canada must stop this year or at least there must be a marked improvement, because it cannot continue. I have met farm families who are victims of organized crime, and this has to stop.

If the government hears us as members, and I think that opposition members are very aware of this issue, it must announce, this year, in the coming weeks, that it is taking steps to reduce criminal activities, beginning with those of the drug dealers.

We will continue to analyze this bill considering it a step in the right direction but recognizing that there are many things yet to be done so that the freedom we were proud of in Quebec and in Canada is not a false freedom, but rather true freedom because we will deprive organized crime of the power to threaten the freedom of the majority of the people.

[Jim Peterson, Liberal, Willowdale, ON]

Mr. Speaker, I rise on a point of order. I neglected to acknowledge the great battle against criminals and crime that has been waged by the hon. member who has just spoken, and I must congratulate him on behalf of the Liberal Party and all members of this House.

[The Acting Speaker (Mr. McClelland)]

That is not a point of order, but never mind.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Mr. Speaker, on behalf of the New Democratic Party caucus I am pleased to stand in this assembly and join with all of my colleagues to trash money laundering and to say to Canadians that we unanimously support eliminating criminal activity in this country. Otherwise, it would be a very different debate, if some of us defended the criminal activity that exists in our economy.

Bill C-22, which deals with the proceeds of crime from money laundering, is a very important piece of legislation in many ways, but it could be better. We have heard some of the speeches from the minister and others who talked about the wonderful and positive things it might do, and I believe that it will have a positive effect on our economy. However, I am concerned about a number of issues with respect to the bill.

The NDP supports this bill in principle. It is obviously important to support the introduction of legislation that curbs illegal activity.

However, there is a problem because of the wariness concerning the lack of certainty and clarity in some parts of the bill. Before I address that, Mr. Speaker, I would like to share with you some of the concerns I have with this bill.

First, I am concerned that this is going to be a piece of feel good legislation. The Liberals in the past have introduced legislation which I classify as feel good legislation. I hope this bill will not fall under same definition. What I mean by that is that the Liberal government tends to address very serious criminal activity in this country with a piece of legislation that makes Canadians feel good that something is happening to protect them, but in fact nothing ever happens to protect them. There is a law on the books, but there are never any resources to back up the legislation.

I would use two examples. There was cigarette smuggling in Quebec and Ontario a few years ago when the Liberals were cutting everything, including customs agents, police and security forces. A certain group of individuals started smuggling cigarettes into Canada, selling them in Quebec and Ontario. Rather than pass legislation which supported the customs and duty officers and our police forces in nabbing the people who were smuggling, they introduced a piece of feel good legislation. They made people feel good because they were doing something by passing a law which took federal tax off cigarettes in Quebec and Ontario, but that cost taxpayers $2 billion a year. Guess what. The smugglers went from smuggling tobacco to smuggling guns.

Rather than dealing with legislation like the Firearms Act, they should have committed resources to nab the gun smugglers. What did the government do? It passed a gun registration law, which has nothing to do with protecting Canadians, but it made them feel good that the Liberal government was actually doing something to protect Canadians. In fact, it was not doing a darned thing. It was encouraging smugglers to continue to smuggle.

We have these two pieces of feel good legislation which the Liberals passed. One was on tobacco taxes, which cost us $2 billion a year, and which will probably add tens of thousands to the debt because more people will be smoking in Ontario and Quebec because of the low price of tobacco. Then they passed the Firearms Act, which forces criminals to register their guns. As we know, criminals do not register their guns. Nothing has changed.

We now have Bill C-22, which is supposed to stop money laundering in Canada. If anybody believes this is going to be the epitome of legislation, they are dreaming in technicolour. I hope it has some effect, but if the bill is not backed up with some cash and resources to provide our country with more security, more police officers and more customs agents to look into these issues, then the law will be useless. It is a feel good piece of legislation. The government is trying to make Canadians feel good about it, but nothing will ever happen. The same old story continues, the money laundering, smuggling and all the criminal activities committed by people who want to use handguns and other kinds of illegal weapons.

The potential in this bill is very great, but I want to raise a couple of issues which I feel have to be addressed.

First, I am hoping the Liberals will put some money where their mouths are for a change when it comes to a piece of legislation which is in principle very good, but will not work unless there are some resources put behind it.

Another problem we see with the legislation is the potential for charter violations. The guarantees of reasonable search and seizure in the charter are at risk in our view with this bill.

The Criminal Lawyers' Association argues that the standard of suspicion outlined “fails to meet even the first and fundamental requirements of reasonable grounds”.

The legislation may create an irreconcilable conflict for professionals, such as lawyers, who remain subject to certain codes of conduct that prohibit them from disclosing information. It must also provide a mechanism to absolve an individual from the potential liability that may result from disclosing this particular confidential information.

The third issue in terms of our concerns is a possible pressure on consumers. As the consumer affairs critic, I am very concerned about every piece of legislation that comes before the House which would cost consumers more money than it would benefit them. We feel that the reporting regime set up to track and communicate suspicious transactions from criminal activity have at least two financial repercussions for consumers.

First, there is a cost to be borne by the taxpayers for the establishment and maintenance of the financial tracking system that will be set up. Second, in having to establish compliance mechanisms, there is a concern that the cost for setting up reporting mechanisms for financial institutions will be borne by these institutions' customers. That means that the consumer stands to pay the fare one more time.

The fourth issue of concern for us is the question about the system's effectiveness. There remains a series of concerns about the planned reporting scheme's effectiveness. There is a warning that the new regime has the potential to create a bureaucratic behemoth and the chance that organized crime could short-circuit such a system through a series of shadowy sophisticated transactions. Money might be better spent by granting law enforcement investigative bodies additional resources to detect and prosecute money laundering offences.

The fifth concern we have is that the bill does not address technology based crimes. Technology based crimes include credit card and debit card fraud, telephone fraud, stock market manipulation, computer break-ins and so on. These are very important because they are on the rise. More and more people are using the Internet. There is a huge growth in the debit card business. More and more consumers are using cards for instant transactions. A lot of personal information is on the Internet and is in the hands of tens of thousands of businesses in the country.

Increasingly organized crime syndicates are using technological and digital means of communication, such as encryption and scanning devices, potentially circumventing the provisions of the bill. People can buy a scanner for $200. Things can be scanned quickly, and then that information is put into a computer, which puts it all at risk.

What is more important is that money laundering is taking place in many cash businesses, not just with card transactions. I will not mention any particulars, but take for example a cash business such as a fast food franchise.

I happen to know someone from New Jersey who owns a fast food franchise. I asked him why he had it, because he was a very wealthy person. He said he had a couple of other businesses, but when his five year old daughter was asked what her father did he did not want her to have to answer something that was really not important or perhaps on the verge of not being legal. So he bought a fast food franchise and his daughter can now say that her dad owns a fast food franchise that sells ice cream. It is actually quite nice.

Of course, a cash business like that opens all kinds of opportunities for people to launder money. I am not suggesting that person is doing that, but it is one way to do it.

Another way to launder money would be for a family to buy five or six business class airline tickets to Europe, decide not to use them, cash them in and the money goes to the money launderer who gave them the money to buy the tickets in the first place, and then they split. I am not sure if that situation would be covered by the bill, but there are thousands of ways to launder money, more ways than I could recall.

We feel that we have to toughen up the bill and put some resources behind it to assist the lawkeepers and the peacekeepers in ensuring that the laundering issue is addressed in a tighter way.

A clearer and more precise definition of what constitutes a suspicious transaction is needed. The subjective nature of the definition could provide an excuse for compliance failure and, as a result, many suspicious transactions may not be reported.

In addition, the use of a vague definition could result in institutions over-reporting for fear of involuntary non-compliance, thus creating unnecessary and unwarranted scrutiny of innocent individuals.

The proposed legislation must clearly address the issue of the threat to the privacy of Canadians, specifically the possible disclosure of information to Revenue Canada, should it involve a taxation matter. Strict guidelines must be established.

It must also address the possible violation of the guarantees of reasonable search and seizure under the charter or rights and freedoms.

In addition, the issue of tax related offences should be addressed. Tax offences occur when money is transferred to offshore tax havens through offshore companies, trusts and bank accounts when the purpose is to conceal assets from Revenue Canada.

Money laundering, on the other hand, involves the intent to conceal criminal profits to make them appear legitimate. We have seen the Royal Bank, the Bank of Montreal, the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce account for 80% of local banking in the Bahamas. Both the Royal Bank and the Bank of Nova Scotia have been implicated in money laundering cases in the Caribbean on more than one occasion. In one case the court ordered the Bank of Nova Scotia to pay $2,500,000 in fines, noting that laws should not be used as a blanket device to encourage or foster criminal activity.

What I am really worried about is that small aircraft and boats can land in our country and in the U.S. at tiny airports or marinas and they rely on the honour system when it comes to customs declarations.

The federal government also has plans to implement signing accords with major shippers that will allow them to cross into the U.S. without stopping. Companies would provide computerized updates to Revenue Canada of their shipments and custom agents would make spot checks at company locations rather than at the border.

The Liberal government has cut in half the customs enforcement budget, and it is still cutting. I am concerned that if this is not stopped and reversed, then this feel good legislation will be just that; it will not solve the problem, but through the public relations offices of the Liberal Party of Canada and the federal government they will try to persuade people that they should feel good because the legislation is there.

We heard that money laundering is the world's third largest industry by value. Between $5 billion U.S. and $17 billion U.S. is laundered in Canada each year. Money laundering extends far beyond hiding profits from narcotics. It includes trade fraud, tax evasion, organized crime in arms smuggling, and bank and medical insurance fraud. I would hope the government would provide the appropriate resources to address and look into these issues further.

American tax collectors estimate that they lose about $9 billion yearly to tax evasion. This comes from a book by Diane Francis entitled Contrepreneurs . At a rate of 1:10, because Canada's population is about 10% of the population of the United States, we stand to lose at least $1 billion. That sounds like a lot of money over a period of a year. When we look at it in terms of how the Liberals have helped their friends evade taxes, it is a drop in the bucket. Some members may be wondering what I mean by that.

If members will recall, the Liberals allowed the Bronfmans to transfer billions of dollars in trust accounts to the U.S. without paying taxes on the accounts. This created a loss to the Canadian taxpayers of almost a billion dollars. I think it was $750 million but we would not know because we were not told the value of the tax evasion, which was supported by the Liberals and the member for Wascana who also supported it front and centre. The Liberals allowed the Bronfmans to take this trust fund, which was set up in trust for the Bronfman family to use in Canada, and move it outside the country, thereby avoiding taxes.

I think Canadians view this kind of legal money laundering or legal tax evasion, which the Liberals support, as something that is a very big concern.

If the hon. member for Wascana has some suggestions we would appreciate his participation in the debate. I am sure he would be able to provide more information on that than I can.

The other concern I and the NDP have is that we have a money laundering bill that will be tough and that will addresses the issue of criminal activity and proceeds from criminal activity. Obviously if the government had the wherewithal it would try to shut down all the criminal activity in this country. That would be an honourable objective but I am not sure how the government views that. It has not really undertaken, in my view, a comprehensive attempt to do that.

In particular, the RCMP, which has really been choked for funds, has been strangled in terms of trying to hire and train enough officers in the country to handle just the bare, basic bones of police provisioning. The Liberals have choked back funding to the RCMP over the years to the point where in Saskatchewan alone we are 200 RCMP officers short. Over the last three years the Liberals have not provided enough funding to the Regina RCMP training depot.

I am happy to say that in this budget the Liberals did provide more money to the RCMP training academy, and I thank the member for Wascana for that effort. I think it is a very important initiative but it is too little too late. We are still waiting for the weather station that the Liberals promised in the last election.

[Ralph Goodale, Liberal, Wascana, SK]

It is there. It is up and running in Bethune.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

It is up and running in Bethune?

[Ralph Goodale, Liberal, Wascana, SK]

It has been there for two years now.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

It was in my riding and he never invited me. He should have invited me to the opening. He has to be more co-operative.

I am glad to see that is happening. One of his promises has been completed.

I want to get back to the RCMP because it is a very important institution in my riding. I know the RCMP were very concerned about the lack of funding and the lack of money involved in recruiting and training new officers. Hopefully the government opposite will provide sufficient funding for these individuals.

While I am at it, I want to say that I am very concerned about the privatization of the RCMP depot. Many of the workers there have worked hard to support the RCMP and to make sure that it is one of the best policing institutions in the world, but they are not treated as fairly as we think they should be treated.

My final point is that if the bill can provide some sort of controls on laundering money from criminal activity, why can the government not introduce a bill that will provide a Tobin tax on financial transactions that are legal?

By unanimous consent, the House of Commons passed a motion, which was introduced by my colleague, the NDP member of parliament for Regina—Qu'Appelle, that would undertake to institute a Tobin tax for Canada and the rest of the world but I have not seen any kind of initiative by the government.

The member for Wascana is here today and he has done a couple of good things in the last while. He has not done as much as we would have liked but he is progressing. We are training him well and we are happy he is finally taking some of our ideas to heart. I was wondering why he will not undertake with his colleagues, the Minister of Finance and the Secretary of State for International Financial Institutions, to initiate the promise in the motion that was passed in the House to support a Tobin tax which is a financial transaction tax on all the stock market transactions. There are no taxes on those particular transactions. Most members of parliament in Canada believe there should be a tax. Most elected officials in the world believe there should be a tax. The people who do not believe there should be a tax are the people in wealthy corporations and in very wealthy families.

The Liberals continue to support that kind of approach, that of the very wealthy corporations and very wealthy families in this country.

I am very concerned whether they will allow more tax evasion by wealthy families like the Bronfmans, whether they will allow more tax evasion by wealthy individuals and companies on the stock market or whether they will undertake to do what Canadians want them to do, which is to institute a Tobin tax, a fair tax on financial transactions on the stock market and throughout exchanges in the world so we can have a very controlled, steady and stable system that would not encourage people who get money through illegal means, such as money laundering, to use the stock market for their particular advantage.

In summary, we support the bill in principle. It has many more positive things to address. The government needs to put in some resources to support the bill to make sure that the law it is passing can actually be carried out by our law enforcement agencies.

[Lorne Nystrom, NDP, Qu'Appelle, SK]

Madam Speaker, I want to ask the member a question because, unknown to the House, he is an expert on laws around the world concerning money laundering and has a great deal of background in this area.

In the member's opinion, why did the government leave out the whole question of tax evasion? I see the member from Saskatchewan across the way. The minister is in the cabinet and I would ask him this question but I cannot because this is not question period. Tax evasion is not addressed in this bill.

The Internal Revenue Service in the United States estimated that the tax collector loses about $9 billion a year in the U.S. because of tax evasion. Nine billion dollars a year is a lot of cash. If one were to extrapolate that into Canadian dollars, where we have one-tenth the population, it would mean, if we were similar to the United States in terms of our loss of money through tax evasion, that we would lose about $1 billion a year. That is a lot of cash. It could pay for a lot of health care and a lot of educational systems that we all need. It could also address some of the farm crisis. It could address all kinds of major problems that we have in the country.

In his very studied and learned opinion, why does the member for Regina—Lumsden—Lake Centre think this is not part of the bill. Is it too complicated or just not a high enough priority? Why would this not be part of the bill?

I also appreciated his comments on the Tobin tax. If we can follow the flow of money in terms of criminal activity—and I remind the House again that the third largest industry in the world is criminal activity in terms of the flow of illegal money, dirty money—by setting up rules and regulations in the OECD and the G-8, then it puzzles me as to why we cannot do the same thing on currency speculation in terms of what is called the Tobin tax. I maintain that if there is a will, there is a way as well.

Anyway, I will go back to the tax evasion issue and ask why it is not included in the bill.

[John Solomon, NDP, Regina—Lumsden—Lake Centre, SK]

Madam Speaker, I thank my colleague, the member for Regina—Qu'Appelle, for that very important question because I actually never addressed that in my remarks. I ran out of time but I had many more things to say.

Tax evasion is not addressed in this legislation because it is a possibility that many Canadians have a lot of flexibility in terms of accessing sophisticated offshore companies. Trusts and bank accounts can be set up in places like the Bahamas, which I mentioned earlier. Canada's chartered banks all offer banking services and tax savings, with most services offered in the Caribbean and Switzerland. Money that is in an offshore tax haven is not only out of reach of Revenue Canada, it is also safe from creditors.

In my remarks earlier I said that the reason it is not in the bill, I suspect, is because the government's very wealthy friends do not want it to be in the legislation. One example of why I say that is the Bronfmans. They had a trust account in this country which was set up under legislation created by the Liberals in the 1970s on a 20 year term. It was extended by the Conservative government for a number of extra years. When the term was coming to an end and they had to actually pay taxes on the trust account, the Liberals encouraged and gave permission for the Bronfmans to transfer this multibillion dollar trust account outside of the country, thereby avoiding taxes in Canada.

It is estimated that we lose about $1 billion a year on tax evasion. That one transaction that the Liberals undertook, encouraged and allowed the Bronfmans to undertake, cost us about $750 million in lost taxes on one transaction. I think the estimate of $1 billion is really out to lunch.

The bottom line is that the reason tax evasion is not in the bill is because the wealthy friends of the Liberals, the wealthy powerful corporations who support the Liberals, do not want it in here. Guess who pays the piper?

[Peter MacKay, Progressive Conservative, Pictou—Antigonish—Guysborough, NS]

Madam Speaker, I congratulate the previous speaker on his recent designation as world expert in the area of money laundering.

Bill C-22 is of course a very important bill before us today and it is long overdue. In the final analysis it will bring about some very necessary and important changes in the country.

Put quite simply, Bill C-22 will make it mandatory for financial institutions to report suspicious transactions and will create a new federal centre to receive and manage reported information with respect to potential criminal activity, both inside and outside our borders.

It is quite obvious that this should and is a priority for many in the country. Sadly, the government has waited a significant period of time before introducing the legislation, although there was an outcry from around the country, particularly within the policing sector, asking that something be done to assist them and to give them the tools to address this growing problem.

We all know that this is but part of a larger problem. That larger problem obviously being organized crime, again here in Canada.

To reflect upon the government's addressing of that, it took a motion from the Bloc Quebecois to bring this matter to the forefront, based on the fact that one of their own members was under threat of violence as a result of his addressing the issue.

This particular legislation focuses the efforts of the law enforcement community and the entire system on addressing the problem. The money that is often shifted between countries and financial institutions, investments of that sort without a paper trace, is something that opens the door to a significant ability to launder money, which is highly criminal and obviously highly attractive to criminal organizations.

We have to be more aggressive and more vigilant in addressing this problem. I commend the solicitor general for the legislation at this time because it does empower law enforcement agents to address this. This centre I do hope will become a focal point and will receive the funding necessary to do that good work.

Giving law enforcement agents the tools is the belief of the Progressive Conservative Party. I know the member for St. John's East, as do all members of our party, do support the idea that law enforcement agencies throughout the country, sadly, have not been given the resources and the support from the government to achieve the very important task that they have before them. This legislation does move in the right direction in that regard.

Canada has been under heavy criticism in recent years with respect to the fact that the United States is feeling more vulnerable as a result of our lax internal security measures.

When I am talking about trafficking, it is not only in money that we see this occurring. It is often very much the illicit drug trade, firearms, pornography and all those things which Canadians want to feel a significant degree of protection from and where we should be focusing our efforts to close down our borders with respect to that type of material.

Money laundering, in and of itself, poses to law enforcement personnel one of the greatest challenges in the ongoing battle of organized crime. To fight organized crime effectively, law enforcement agencies and we as legislators must address those challenges posed specifically by current trends in money laundering, and adapt strategies to respond to those challenges.

[The Acting Speaker (Ms. Thibeault)]

We must stop at this time, but the hon. member will have approximately 15 minutes left when the bill is again brought back before the House.

It being 5.30 p.m., the House will now proceed to the consideration of Private Members' Business as listed on today's order paper.

The House proceeded to the consideration of Bill C-276, an act to amend the Competition Act, 1998 (negative option marketing), as reported (with amendments) from the Committee.

Competition Act

[The Acting Speaker (Ms. Thibeault)]

There is a motion in amendment standing on the notice paper for the report stage of Bill C-276, an Act to amend the Competition Act, 1998 (negative option marketing).

Motion No. 1 will be debated and voted on. I shall now put Motion No. 1 to the House.