House of Commons Hansard #80 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was war.

Topics

Ways And MeansGovernment Orders

10:15 a.m.

The Deputy Speaker

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Division No. 1264Government Orders

11 a.m.

The Deputy Speaker

I declare the motion carried.

The House resumed from April 5 consideration of the motion 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.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:05 a.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Mr. Speaker, I am very pleased to continue debate with respect to this very important piece of legislation, Bill C-22, which deals with money laundering.

Money laundering poses a great challenge these days to law enforcement agents in their battle against organized crime. For example, a few months ago in the United States, American officials discovered the biggest money laundering operation ever in the history of the United States. Federal investigators believe that Russian gangsters had channelled up to $10 billion through the Bank of New York, the 15th largest bank in the United States. This news sent extreme shock waves throughout the entire financial services sector and proved that money laundering can certainly affect even the big banks.

It is vital that we get more aggressive in the fight against money laundering and give law enforcement agencies better tools to do their job. For Canadians to feel a sense of security and faith, we must arm our police agencies with all the necessary resources to make sure they can take up their fight against organized crime.

Canada has continued to come under heavy criticism in recent years as a result of being identified as an easy place for criminal organizations to launder money. Criminals have found Canada as an attractive place to hide large financial transactions because of our proximity to the United States, our stable political system, the high volume of cross-border transactions and because the odds of being caught in this country are lower than in other jurisdictions.

The Liberal government has been talking about tougher reporting rules for at least three years. As far back as May 1996 federal officials said that they were considering a mandatory reporting system. This was reported in the Financial Post on May 3, 1996.

Globally, approximately $3 billion to $5 billion American in criminally diverted funds enter the international capital markets annually. The federal government estimates between $5 billion and $17 billion in criminal proceeds are laundered in Canada each year.

Bill C-22 was first introduced in May 1999 as Bill C-81 which died on the order paper when parliament prorogued. It was one of the many pieces of legislation that were victims of partisan proceedings and manoeuvres by the government. Currently Canada has money laundering legislation, the Proceeds of Crime (Money Laundering) Act which was passed in 1991 as a Progressive Conservative initiative.

As a backward glance, the G-7 Financial Action Task Force established in 1989 drafted 40 recommendations aimed at enhancing and co-ordinating the international effort against money laundering.

According to that task force, the major weakness of Canada's current legislation which was passed in 1991 is the inability to effectively and efficiently respond to requests for assistance in relation to restraint and forfeiture. The use of domestic money laundering proceedings to seize, restrain and forfeit the proceeds of offences committed in other countries is recognized as sometimes ineffective. Legislation to allow Canada to enforce its responsibilities in foreign forfeiture requests is needed.

The task force also recommended that mandatory reporting requirements be legislated. Currently the reporting transactions in Canada are voluntary. A financial intelligence unit should be established to deal with the collection, management, analysis and dissemination of suspicious reports and other relevant intelligence data.

Many of these recommendations are embodied in Bill C-22 which proposes to bolster Canada's anti-money laundering efforts by requiring mandatory reporting by financial agencies of information relating to certain types of transactions. This information would then be sent to a central data gathering and analysis body, the financial transactions reporting and analysis centre of Canada. This would be an independent government body which would be separate from the RCMP but presumably would work closely with all law enforcement agencies.

The disclosure of information by the centre would then be strictly controlled. The centre would be authorized to provide key identifying information of suspicious transactions, for example, the name, date, account number and value of transaction, to the appropriate police force as it has the reasonable grounds to suspect that the information would be relevant to investigate and prosecute if money laundering offences have occurred.

This is also subject to restrictions set out in other legislation, for example the Privacy Act and the Access to Information Act. This same information may be provided to Revenue Canada, the Canadian Security Intelligence Service, Citizenship and Immigration Canada or other relevant agencies. It would also be relevant, for example, to tax evasion offences or threats to national security. For the police to have access to additional information from the centre, they would first have to obtain a court order for disclosure and meet with the standard of reasonable and probable grounds that applies to all offences.

This mandatory reporting is a step certainly in the right direction. The new law would require individuals or entities importing, exporting or transporting currency or monetary instruments in excess of $10,000 across the border to report all activities to Canada Customs. Failure to do so would result in the seizure of the cash or monetary instruments being transported.

The bill does not however define what is and what is not a suspicious transaction, nor has the government yet published its draft regulations. These will certainly flesh out the substance of the bill.

The current system of voluntary reporting of suspicious transactions would be replaced with mandatory procedures. Reporting requirements would apply to regulated financial institutions, casinos, currency exchange businesses, as well as any individuals acting as financial intermediaries, such as lawyers or accountants. These individuals would therefore be required to file reports for certain categories of financial transactions, as well as any transaction where there is reasonable grounds to suspect that the transaction is related to the commission of a money laundering offence. Making ill-gotten gains essentially appear legitimate is what is at the root cause of money laundering and it is an attempt to wash or cleanse this dirty money.

There has been great concern in legal circles over the issue of solicitor-client privilege and confidentiality. Lawyers and accountants acting as intermediaries would have to report suspicious financial transactions carried out by their clients or face stiff fines and possible prison sentences. The Criminal Lawyers' Association in particular said that this kind of reporting violates guarantees of reasonable search and seizure under the Canadian Charter of Rights and Freedoms. Alan Gold of that association states that the bill ignores these concerns.

Certainly ethical considerations already apply for all lawyers and accountants. I would suggest that the reasonable person test would be applied and that there is a greater good at issue here. That greater good is to ensure that we do everything we can to dissuade individuals who would be trying to embark on this type of criminal activity so that we can eradicate it. Certainly there can be a common ground and a middle ground that would satisfy the constitutional requirements of freedom of expression and freedom from unreasonable search.

Penalties for failing to report suspicious transactions are quite heavy. They can be up to $2 million and imprisonment for five years. This certainly expresses the seriousness and the punitive sanctions reflect this.

The Americans have already moved in this direction with their own tough new law on money laundering. They are very concerned about Canada's approach to crime prevention, particularly since the government changed in 1993. There must be some attempt to at least have a degree of co-operation and parity with the steps the United States has taken.

The Liberal government has given the Americans much evidence to validate their concerns. In December 1999 a U.S. customs officer discovered an Algerian Canadian with Algerian terrorist connections attempting to enter the United States through Seattle with a carload of explosives. In February 2000 the American government suspended firearms and ammunition sales to Canada, which was done at the request of our government. Legal import licences were being used to import large quantities of handguns, rifles and ammunition. The firearms were then being smuggled into other countries and often back into the United States.

It is an embarrassment for our country. We cannot have the reputation of being soft on crime. It is another blow to the relationship that we have, in particular with respect to the open border relationship with the United States.

Since 1993 the Liberal government has talked about increasing penalties for money laundering as a matter of increasing public safety. Yet the RCMP still very much lacks a proper budget to deal with today's sophisticated criminal. For example, the budget this year saw $810 million spread over three years, much of it being earmarked to fight organized crime, including activities such as money laundering.

Let us put this into perspective. Some 62% of this new money will not be available until 2001-02. This will be added to the RCMP base budget of approximately $2.1 million. We suggest this is still not enough.

Mounties already have to curtail their undercover operations which target organized crime, along with a reduction in training. The inability to conduct proper fraud investigations in British Columbia has been highlighted, as has the important issue of inadequate resources.

To correct these problems the Progressive Conservative Party is proposing that over 5,000 RCMP officers are needed. As well, there is a lack of staff at forensic laboratories needed to analyze DNA data and other data that has to be placed on the CPIC system. The police forces need to know that this quickly advancing technology will be incorporated into their services, yet the government will not commit enough money to even upgrade the new CPIC system. It gave $115 million when it was clearly indicated by the RCMP that $283 million was needed to bring it up to snuff.

The British Columbia mounties may shift away from organized crime to deal with more pressing needs such as filling police vacancies and simply paying their officers to show up for work.

In rural areas this is of extreme concern. There is a problem with RCMP detachments being closed, or losing municipal police forces in small communities. Granby, in the riding of Shefford, is facing this threat. At the same time, we know that biker gangs are terrorizing farmers, forcing them to grow marijuana in their fields, and even threatening members of the House of Commons.

This is part of a larger problem. The financial transactions and reports analysis centre is certainly a welcome relief to one aspect of the ongoing struggle that the RCMP faces in trying to protect Canadians, but the RCMP is being stretched to the limit.

We must guard against the beginning of a rivalry between agencies, such as we have seen taking place between the RCMP and CSIS. The breakdown in communications and not sharing information is certainly counterproductive.

The Department of Finance has set an approximate cost for the centre at $10 million per annum to staff and operate. I suggest this is a small price to pay for public safety, especially when compared with the over $300 million that the Liberal government has already spent on a very inefficient, ineffective and discriminatory gun regulation scheme, which is certainly not a priority when faced with the ongoing problems of simply staffing RCMP detachments.

In August 1999 the solicitor general told a meeting of police chiefs that this bill was a top priority for the federal government. However, we saw that this bill languished on the order paper for some time and it has taken a full seven months for it to be presented to the House for debate.

Reaction from various organizations concerned and affected by the legislation has been positive thus far. The RCMP calls it long overdue. Superintendent Ben Soave, head of the RCMP's combined forces and special enforcement unit, said that this legislation will make a significant difference.

Gene McLean, director of security for the Canadian Bankers Association, has also referred to this legislation as having been long awaited by the banking industry. Organized criminals will be less likely to consider bringing their money to Canada as a result.

Even as we debate this legislation today, criminals are finding more and more sophisticated ways to launder money in this country. There are many concerns that the Conservative Party of Canada has. Although we support Bill C-22, there are examples by which the legislation could be improved.

Smurfing, which is the practice of breaking down transactions into smaller amounts so that they will not be reported, is still a way that money launderers have to undermine and come in behind this legislation.

There are all kinds of new tricks, including dummy corporations or avoiding banks by using money transmitters such as Western Union and storefront businesses that cash cheques, sell money orders or travellers cheques and then exchange them for foreign currency.

The Progressive Conservative Party of Canada believes very strongly that it is time for the government to do more and to be more proactive in fighting organized crime. Instead of simply being reactive and following the lead of other countries, it is time for Canada once again to be a pioneer, to step forward and to set an example.

Why is Canada the last G-7 country in the world to implement money laundering legislation? Surely the Minister of Finance, while attending meetings around the world, must have been embarrassed that we are the last G-7 country to implement such anti-money laundering legislation.

Enforcement issues and the burden of investigation continue to be top priorities. Draft regulations are not set out in terms of the precise information which will be required with respect to disclosure.

There are all kinds of other ways to improve this legislation. What about the exemption for retailers? The bill aims at detecting large cash transactions as an indication of suspicious activity. Why are retailers not required to report purchases made with large amounts of cash?

Money laundering frequently takes place in the form of big ticket purchases, for example, real estate, boats, cars, jewellery, et cetera. Disclosure issues as well will have to be addressed and the centre is only authorized to share information with police forces, Canadian Customs, revenue agencies, CSIS and Citizenship and Immigration. There may be others with whom this information will need to be shared.

While we certainly acknowledge that this is a step in the right direction, we are going to have to try to improve this legislation at the committee, and we will endeavour to do so.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:20 a.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, I thank my colleague for his worthwhile intervention this morning on Bill C-22.

My question for him is, does the legislation and this new agency, and in fact does the government have plans to investigate some of the more advanced types of money laundering? I am speaking specifically of e-laundering, the ability to transmit large amounts of money via technology, the Internet in this case. These transactions are almost impossible to track today, and with sophisticated financial instruments such as derivatives it will become increasingly difficult for governments or regulatory agencies to oversee this type of thing.

I would be concerned if the government did not have a strategy to address this in the future because, clearly, with the increased sophistication of organized crime in this area, this will be a problem; not just for tomorrow, it is probably already a problem today.

I hope this legislation does not simply address yesterday's problem because of the hesitancy of the government to address the issue earlier. I hope that we are well on the way to addressing today's and tomorrow's problem, that is, electronic commerce being used as a vehicle to launder money.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:20 a.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Mr. Speaker, I want to thank my colleague from Kings—Hants. I know he is greatly concerned with this issue. Coming from Nova Scotia, which is bounded by a large body of water, we often face a great deal of importation, not only of money, obviously, but potentially drugs and other contraband material.

The question was very probing. The legislation itself is not crafted in such a way to address the specific question with respect to e-commerce.

The hon. member quite rightly points out that this is very much the wave of the future with respect to financial transactions and potential criminal activity on the Internet.

The new centre which is being set up, because it will be in its infancy, will be very early on faced with the task of trying to craft a response, a way to police the Internet in an attempt to prevent this.

I would suggest that establishing the centre is a step in the right direction. Having personnel will be the crucial response to the hon. member's question, ensuring that we have individuals who are trained, intelligent and up to speed on the latest technological advances. Hopefully the centre, with shared resources and with the ability to hear from agencies such as those in the United States, will be able to address this serious problem in the future.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:20 a.m.

Liberal

Lynn Myers Liberal Waterloo—Wellington, ON

Mr. Speaker, I have a long history in this kind of issue. I sat for 10 years on the Waterloo Regional Police Commission. As chairman, I can tell members that this was an area of primary concern.

We went across Canada and, in fact, went to international conferences where we looked at these issues because they were very, very important, not only to Canada, but to nations around the world.

I was quite heartened by the fact that the hon. member opposite deemed it appropriate to make his comments. I know that he has a very strong interest in this area. I congratulate him for some of the recognition that he gave to the government with respect to the kind of initiative we are taking.

This initiative will require not only physical resources but human resources to accomplish the desired result. I applaud the government and members on this side of the House for the kind of measures we are taking. It is always a question of whether we should go further or faster, more money, and those kinds of issues. It is often a question of priorities. However, I think at the end of the day Canadians will applaud what the government is doing in this very important area.

In light of the globalization that is taking place and in light of the interconnectedness of the world, does the hon. member see that this is a problem which will escalate over time? I am sure he will say yes. I would like to know his views with respect to how best to try to curtail this very severe problem in a globalized world. After all, it is a very severe problem. People, no matter where they live in the world, find themselves caught in the trap with these kinds of criminal activities.

When I was chairman of the Waterloo Region Police Commission, with 700 police officers and civilians, we went to great lengths to look at this issue. We had symposia and went to places across Canada and internationally to see what could be done. I would be very interested in his views because of his background and his very strong interest in this area.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:25 a.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Mr. Speaker, I thank the hon. member opposite for his question and his intervention. I certainly acknowledge his similar interest in matters of justice and policing around the country. As a former police officer I am sure he appreciates the incredible pressures that frontline police officers and those who specialize in areas such as organized crime are faced with on a daily basis.

I also want to acknowledge his commentary with respect to the usefulness of the bill. We in the Progressive Conservative Party applaud this government initiative. In fact, it is a continuation of a bill that we put in place when we were in government in 1991. I do not want to get into a partisan rant, but we have seen similar instances where the current government was not so complimentary of the Progressive Conservative government of the day and absolutely castigated the government for things such as free trade and the GST, but then, similarly, when in office, enhanced, expanded, embraced and took credit for bills and legislation put in place by the Progressive Conservative government. We will not follow that path. We will acknowledge that the Liberal government has done the right thing by continuing to move in the right direction, which was started by a Progressive Conservative government.

To address his specific question, this legislation and the setting up of this centre will very much put in place a process that will allow us to embark on the further information sharing that the hon. member referred to, the ability to see what other countries are doing, in particular the United States, and to draw on the best minds, the best personnel and the best intelligence that is available to see that we address this very serious global problem to which he referred quite correctly.

That and recruiting individuals from the country, keeping our very best and brightest here, and offering them opportunities in this area is another suggestion that I have as to how we can continue to fight this problem and enhance our ability to guard against this type of criminal activity that is becoming very much a global problem.

I would suggest, and he alluded to it in his question, that it has a great deal to do with the personnel and the intellectual property that we have to preserve and enhance in the country in our attempt to address what is a wonderful opportunity when it comes to technology and the Internet and the use of global communication, but it is also something that can leave us very vulnerable if we are not prepared to put in place the safeguards.

The centre can be a centre of excellence. It can be a great opportunity for those trained in this capacity, and hopefully we will, and I have every confidence that we will, continue to produce very bright, intelligent people who will be able to help us in this task.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:25 a.m.

Reform

Roy H. Bailey Reform Souris—Moose Mountain, SK

Mr. Speaker, I want to congratulate the hon. member for the message that he gave us this morning. It is a given that in order to attack the problems in organized crime or any crime we need the manpower.

Speaking from a personal basis, in my constituency I believe I have more ports of entry than any other constituency in Canada. Every detachment along the border with Montana in the United States has been cut in half. When I attended a banquet of a rural municipality government, the sergeant in control of that area reported that because of cutbacks they were not able to investigate all reported crimes.

Knowing that the staff is not available, people are failing to report crimes such as break and enter. The statistics show that the crime rate is going down, simply because they are not being reported. I would like the member to comment.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:30 a.m.

Progressive Conservative

Peter MacKay Progressive Conservative Pictou—Antigonish—Guysborough, NS

Mr. Speaker, I could not agree more with the hon. member. He has made a very useful and very straightforward commentary on the task before our law enforcement agents, not only police and RCMP but very much with respect to our ports and our border police.

This country, if I can make the analogy, is like a big, beautiful racehorse and these criminals are like horseflies buzzing around it. We are very much in danger of the parasites taking over the host if we do not allow our police agents the ability and give them the necessary resources to do something about it.

We must be prepared to take the necessary steps, put the money into resources, and when we are made aware of situations like the Sidewinder file outside the country we better be ready to lay the money down and give police the backup they need.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:30 a.m.

Reform

Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, we are debating today Bill C-22, an act to facilitate combatting the laundering of proceeds of crime, to establish the financial transactions and report analysis centre of Canada and to amend and repeal certain acts in consequence.

On December 3, 1998, the solicitor general said that early in the new year of 1999 the government would introduce legislation to curb money laundering. It did not happen in early 1999. In fact it happened in May 1999, but due to the agenda of the government the legislation ended up dying on the order paper. This vital legislation, which was supposed to have been introduced according to the words of the solicitor general in early 1999, was finally reintroduced for passage by the House on December 15, 1999, not exactly early 1999.

Yesterday the solicitor general came to the standing committee on justice and told us that when he had last appeared before the committee he said they would do it and now they have done it. Yesterday was the first day, one full year after he had been there in the first place, that he could sit there and boast about the fact that they had done it. What is involved? It strikes me that if the Liberals were given a hamburger franchise they would do away with the term fast food. I do not understand.

Let us take a look at an article from the Globe and Mail of April 4. It is important that the government get on with it. The article reads:

“The effect of organized crime can be traced in the smallest, most remote communities and in areas as diverse as insurance premiums and ice cream retailing”, law enforcement officers told a conference that ended yesterday in Montreal. “For the first time, organized crime, serious criminal organizations, are actually threatening the democratic institutions of this country and the values that we hold dear. It is a real threat to the way of life we have in this country. It is that serious”.

That was a quote by an RCMP deputy commissioner. The article continues:

—said former Crown prosecutor Louis Dionne, now head of the organized crime directorate for the Surete du Quebec, “You can't see it. You can't smell it. But if you have the misfortune of putting your wet fingers in the socket, it'll hurt you”.

That is where we are. I have actually been questioned by reporters on its significance, on what money laundering is all about. Although Canada is a member of the Paris based international task force against money laundering, it does not get good grades from world experts on this problem. They also say that it would be a good idea, perhaps, to set up money laundering in Canada because the charges are less and the risks are lower.

Why has the government delayed and delayed the introduction of the bill? We will be supporting the bill, but the point is that we would have supported similar legislation if it had been brought in, in a timely manner, two years ago. The bill will leave the House after second reading, go through the committee process, come back to the House, go through report and third reading stages, and then to the other place for senators to do their thing. Why has there been this delay on legislation which I dare say all members of the House would support?

There are members of the House of Commons who are threatened by organized crime directly and personally. They and their families are directly and personally threatened by organized crime. How close can we get to the bone when even members of the House are threatened? I say shame on government members for taking so long to bring in the legislation.

Bill C-22 received first reading in the House of Commons on the December 15, 1999. The purpose of the bill is to remedy the shortcomings in Canada's anti-money laundering legislation as defined in the G-7's financial action task force on money laundering in its 1997-98 report which said:

The only major weakness is the inability to effectively and efficiently respond to requests for assistance in relation to restraint and forfeiture. The use of domestic money laundering proceedings to seize, restrain, and forfeit the proceeds of offences committed in other countries is recognized as sometimes ineffective, and legislation to allow Canada to enforce foreign forfeiture requests directly should be introduced.

In addition, the FATF recommended that reporting requirements in Canada be made mandatory rather than voluntary, as is currently the case, and 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.

Organized criminals, particularly in the drug trade, generate and launder billions of dollars annually. They launder money in order to continue their illegal operations. They move to jurisdictions with strong controls to jurisdictions with weak or no controls, and I have just unfortunately described where the government has allowed Canada to fall. Financial transactions conceal criminal profits to make them appear legitimate.

Yesterday my colleague from Surrey Central gave some examples of the criminal use of money laundering, but it is more than just the criminal use of money laundering. There is also the whole issue of terrorist organizations being involved.

On January 5, 1999, a television report reported on criminal organizations that want to launder money through Canadian business. A multinational company trading in the stock market was found to have ties to the Russian mob. While investigating the company, YBM Magnex, this market investigator traced the company's corporate history back to one of the world's top criminals and head of the eastern European Mafia. The company, now delisted, had stocks valued at $600 million and its principal business was laundering money for organized crime.

The story went on to say there are an estimated $400 billion in profits from the sale of state assets that are now looking to be laundered. It is more than just ordinary criminal activity that we associate with drugs. Now we are talking about the use of money laundering to move state assets from Russia.

As one investigator puts it, Canada and the U.S. are like candy stores for criminals. The unanswered question is how many investors were hurt with the evaporation of the $600 million equity in YBM Magnex.

We have just seen in the last couple of days billions of dollars removed from the stock exchange. Probably hundreds of thousands of retail investors in Canada have been seriously hurt with their speculation in the stock market, but this was a situation where $600 million evaporated in value from the stock market. What about those investors?

Even the former premier of the province of Ontario and very high profile Canadians in the public eye were sucked into the YBM Magnex vortex. The Ontario Stock Exchange and Securities Commission got a deserved black eye for not adequately protecting investors. This followed on the heels of the $6 billion Bre-X debacle. It is little wonder Canada has a less than stellar reputation in the global investment market.

Capital investment is what builds an economy. It is well past time for the federal government to take its responsibilities more seriously and to do things in a more timely manner.

As I mentioned, the member for Surrey Central yesterday gave some good examples of how money is laundered, but what about the issue I have raised of terrorism? According to an RCMP report, Toronto and Montreal groups support the Tamils and Hamas. According to the Ottawa Citizen of Monday, March 27, 2000:

Violent street gangs in Toronto and Montreal are channelling criminal profits to Tamil terrorists waging a bloody fight for an independent homeland in Sri Lanka, says an RCMP intelligence report. An extensive probe by the Mounties found “strong connections” between the outlaw gangs and the Liberation Tigers of Tamil Eelam, one of the world's most dangerous guerrilla groups. “There is clear evidence to support the relationship and that the money involved is being funnelled to the LTTE for extremist purposes in Sri Lanka,” says the newly declassified report, obtained through the Access to Information Act. The RCMP implicate the Tamil criminal groups in a staggering variety of activities, including extortion, home invasion, attempted murder, theft, importation and sale of brown heroin, arms trafficking, production and sale of counterfeit passports, migrant smuggling, bank and casino fraud, and money laundering. The activity is escalating and likely will become more difficult for police, adds the report.

This is an exceptionally serious issue. I say one last time, shame on the government for the unnecessary delay in bringing the legislation to the House.

Some concerns have been raised about the legislation. Criminal defence lawyers and the federal privacy commissioner warned the reporting scheme could turn Canada into a nation of snitches. The Canadian Security Intelligence Service said the transaction reporting regime could become “a bureaucratic monster”. CSIS proposed more selective measures that would target parties known to engage in dubious activities. A writer in the Financial Post , Terence Corcoran, indicated:

If passed, Bill C-22 would give Ottawa fresh authority to trap the innocent, infringe on privacy, collect mountains of information on citizens and put routine money transactions under suspicion. It would also conscript lawyers, banks, accountants and others into a national subculture of informants and snitches.

In a letter to the justice minister last December, the Canadian Bar Association listed some of the threats posed by Ottawa's plan to increase its surveillance over money transactions greater than $10,000. It said routine legitimate business transactions could be disrupted and solicitor-client relationships undermined. “The mandatory reporting of information which may be confidential is a drastic measure and a gross intrusion into a previously protected sphere”. The bill, it said, amounted to “restructuring the relationship of trust between lawyers and clients”.

There are protections under criminal law. I have read that:

At common law, securing a conviction for money laundering requires the Crown to prove four elements of the offence beyond a reasonable doubt. Specifically, it must be proven that the accused (i) dealt with the laundered property (ii) with intent to convert or conceal it. Moreover, the property must have been (iii) derived from the commission of a predicate offence, and (iv) the accused must have had knowledge of that fact. As a result of legislative enactments, however, the Crown is now required to prove only the accused's subjective belief that the proceeds were derived from the commission of the predicate offence, even if this is not the case. This allows the police to arrange “sting” operations.

This is another tool in the ability of the police to be able to go after that.

In addition, all the money laundering offences include a companion offence relating to possession of proceeds, which may result in a conviction even where the Crown is unable to prove the laundering offence. The “possession of proceeds of crime” provision is broader in the Criminal Code than in other statutes; it applies to the possession of proceeds of any indictable offence, not only to predicate offences. While these are not money-laundering provisions themselves, they have proven useful to police in securing convictions in the absence of sufficient evidence to secure a conviction for a laundering offence.

I suggest that this is exactly the fine tuning the committee will have to get into.

There will always be exceptions in criminal law, but on balance the criminal law, as it is presently constituted, works as far as it has gone. Late though the government may be, it is now adding another tool to the tool kit so the police will be able to enact enforcement. This gives us an idea of the balance between entrapment of the innocent and effective tools of law to help our enforcement agencies do their job.

In another article from the Montreal Gazette on December 4 1999, Tom Naylor, an economics professor at McGill University in Montreal, wrote:

Yet money laundering is a contrived offence that has no business in the Criminal Code. And perfectly satisfactory instruments for stripping criminals of their ill-gotten gains already exist.

That is not the point. The point is not to strip the criminals of their ill-gotten gains. It is a byproduct of this and other legislation. The point is to interdict the flow of ill-gotten gains and determine its source. By determining its source, the police can then proceed with proper criminal investigations and proper criminal prosecutions against people who are involved in these illegal activities, which are not only dangerous to our families and our society in the broader context but perhaps even dangerous to the very sovereignty of our nation as we understand it.

Therefore, inflammatory comments about the effect of this legislation are not helpful in this dialogue. Sincere concerns about ensuring that our individual rights and freedoms are protected and sincere concerns about drawing out what the trade-off will be are valuable contributions to this. However, with every law there is a degree of trade-off for the person who is involved in the illegal activity against the freedoms that we as law-abiding citizens have a right to enjoy in our society.

Let us deal with the funding issues of this legislation. Previous attempts to curb money laundering have been hampered at every step by budget problems. Curbing money laundering is a very effective weapon against the drug trade and frontline RCMP officers risk their lives every day in the fight against organized crime. I am not only thinking of frontline RCMP officers who risk their lives, but I am also thinking of the people who co-operate with the RCMP and funnel information to them. Those people also put their lives on the line. We have read and are aware of many situations where people have put their lives on the line and then, due to lack of adequate legislation, the perpetrators of the offence have been able to either walk away or get off with a reduced charge.

The benefits of crime control far outweigh the cost of implementing the programs to curb money laundering. We must ensure resources are available to get the job done.

I have been advised that a separate agency is required to create protection for our freedoms. With the agency standing alone and enforcement regimes like the police and CSIS having to substantiate further requests through courts of law, it is expected there will be sufficient protection for law-abiding citizens. Again, this is something that all members of parliament will be examining very closely when the legislation is before a committee.

We have to make sure that we have proper laws for Canada so that we are not a haven for the proceeds of crime. However, at the end of the day, what we also have to be very clear about is that when we give these tools to the enforcement officers in our community, we also have to be sure that there are proper safeguards built in so that law-abiding citizens are not drawn in.

I will reflect back for a second on the YBM Magnex International Inc. example. We also need this legislation to ensure that law-abiding citizens are not also drawn into the vortex of the money laundering that is currently going on within the boundaries of our sovereign nation.

We will be supporting this legislation but not blindly. We will be ensuring that the rights of all Canadians are protected as this comes back to this legislature.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:50 a.m.

Liberal

Lynn Myers Liberal Waterloo—Wellington, ON

Mr. Speaker, I was somewhat heartened to hear the member opposite talk in terms of the benefits of the bill. Of course, we on the government side take these kinds of issues very seriously, as well we should, because Canadians, no matter where they live in our great country, take it seriously.

As we have done historically and specifically with regard to this bill, we have proceeded in a timely fashion, unlike the member opposite who thinks we should have taken more time. We have taken the required time to review the circumstances and talk with partners around the world, not only in terms of policing agencies but to get the kind of bilateral and multilateral arrangements in place that are part and parcel of the Canadian way of doing business.

I am heartened to hear that some members opposite are indicating that this is a good bill. It certainly underscores the commitment of the Government of Canada to do the kinds of things that are appropriate when it comes to this all important issue of money laundering and the exchanges of cash that take place, et cetera, and in trying to secure our banking and monetary systems in a way consistent with the values of Canadians and the international community.

As we move into more globalization in the future, would the hon. member agree that we should bring in more partners to be a part of this process? Should other countries in the world be assisting in this area?

Could he also outline not only his position but especially the Canadian Alliance's position vis-à-vis this criminal activity? Could he perhaps, in point form fashion, outline his party's position on the steps that would be appropriate to curtail, in a globalized economy, these kinds of things, especially as it relates to bringing in other partners from around the world? I will be interested in his response.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:50 a.m.

Reform

Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, I appreciate the question from the member. From time to time he has been quite vocal in his criticism of the Canadian Alliance, and I do not take his intervention today as being that. I take it as being a very responsible intervention. I cannot resist the temptation to say, for a change.

I would suggest very gently that his statement that the government takes these issues seriously is a catch-all phrase for the government. I will be answering his question, but I do want to make this statement. My criticism is that the government has not acted in a timely fashion.

The government had a clear understanding in 1997-98, fully two years ago, about what the expectations were of the G-7. I seriously question the member's intervention when he says that the government has acted in a timely fashion taken the time required. How much time is required? The legislation in its basic form, as it presently sits, was brought before the House and due to the legislative calendar set up by the House leader on behalf of the Prime Minister, who is the leader of this government, it ended up falling off the legislative agenda for a full 12 months. I do not think that is taking the issue seriously and I do not think it is working in a timely fashion.

To answer the member's question, I am stating this as the solicitor general critic for Her Majesty's Official Opposition, the Canadian Alliance. I believe that the government, if it is going to do the things necessary in terms of, as he puts it, bringing on more partners and working in co-operation with other international agencies, the government will have to step up with more resources, more resources in legislation and more resources in dollars and cents.

The government has squeezed the heck out of the RCMP to the point where it did not even have wheels to be able to turn to go down the highway. The RCMP has reached a point of rust-out. The RCMP is a very dispirited organization at this point in terms of its manpower because of the constant squeeze on the salaries of the RCMP.

If the government is going to do what is necessary there has to be full global co-operation between the Canadian government, the other governments of the G-7, the OECD and indeed all governments. The government cannot be seen to be what it is presently, which is kind of treating this whole issue almost like a poor orphan son.

The government needs to step up the resources required in order to get the job done. I do note that the government did come forward with some $500 million plus for the RCMP. It is a start but it is late. The point I am trying to make is that the RCMP requires more resources in terms of dollars and cents and CSIS requires more resources in terms of dollars and cents, but they also require a heavier attention by the government to this very important issue because it permeates every part of our society.

The government is on the right track. I prod it once again though because I do not think it is working nearly quickly enough on this and other very important issues that relate to organized crime and terrorism and the sharing of criminal intelligence around the world.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

11:55 a.m.

Bloc

Michel Bellehumeur Bloc Berthier—Montcalm, QC

Mr. Speaker, it is a rare thing for me to agree with the Canadian Alliance, but I agree 100% with the comments by the hon. member on the job the Liberals are doing.

We have always had to force the government to act, whether in connection with crime, with legislative amendments, or other things that had to be done.

Take, for example, the $1,000 bill. A while ago, they announced their intention of taking it out of circulation. The Bloc Quebecois has been calling for this famous $1000 bill to be withdrawn ever since 1994, because this was one of only a few countries with such a high denomination.

We are well aware that these notes were used by organized crime. I realize that the member opposite does not like to hear the truth, that he is running away to avoid hearing it, but the Bloc Quebecois had to introduce private members' bills in this House to convince the government to take the $1,000 notes out of circulation.

The issue of money laundering and the introduction of a measure similar to Bill C-22 were discussed as early as during the Bloc Quebecois' first mandate. The issue was also part of our platform in 1997. Everyone knew that there was a major money laundering problem in Canada. It was only after the Americans ridiculed it that the government opposite finally decided to do something about this problem.

The Liberals had better not tell us that they have been diligent in this area. I fully agree with the Canadian Alliance member about the government's negligence. Since the Liberals took office, and while they were not taking any action, between $80 billion and $100 billion were laundered in the Canadian economy. This is unacceptable.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

Noon

Reform

Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, of course we are in agreement. It is unusual for the Canadian Alliance to agree with the Bloc on many things. Clearly, when one of the members of the Bloc Quebecois has been threatened by organized crime in his constituency, we must pull together. This brings the importance of this to the attention of the House.

On another up note, as a result of a Bloc Quebecois motion which I believe was supported 100% by the House, a subcommittee has been struck to examine the whole issue of organized crime in Canada. I commend the Bloc Quebecois for that. The subcommittee was struck just two days ago. The committee chair has been named and we will start to work on this issue.

Again, I agree with the Bloc it is unfortunate that the opposition has had to push the Liberal government so hard to get it to do the things necessary to get on with the very important job of protecting Canadian society.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

Noon

Bloc

Michel Bellehumeur Bloc Berthier—Montcalm, QC

Mr. Speaker, I am pleased to rise to speak to Bill C-22.

We should make it clear right off that the bill was introduced by the Minister of Finance. It is surprising from its title, because it could have been introduced by the Minister of Justice or even the Solicitor General of Canada. This bill is entitled 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.

From the contents of the bill, we can see that the Minister of National Revenue is the minister primarily concerned, since the bill concerns a number of matters relating to income.

The fact that this bill could have been introduced by a variety of ministers is not insignificant. It means that Bill C-22 involves of matter of some scope affecting various facets of our society.

Bill C-22 is in fact a tool to help us fight a scourge, whose impact can be felt on the streets, in the schools, in the vaults of our financial institutions and in our penitentiaries. It is even felt by our farmers, as we saw last fall, and in a number of economic, social and even cultural sectors of our community.

This scourge has a name. It is called organized crime. It comprises many aspects: the bikers, the Italian mafia, the Russian mafia, the Asian triads, street gangs and so on. Each aspect operates in its own way and has its own varied and effective methods of intimidation.

Thus, members will understand that organized crime is an evil poisoning our lives in many ways. And it is precisely because it is organized that this type of crime is so hard to fight.

There is only one way this can be done: we must get organized ourselves. This means that, like crime, justice must be organized. We must also provide adequate funding—I am happy to hear members of other parties in the House say so—to the police to help it organize its efforts. Stiff measures are needed and they must be organized. In a nutshell, it would be better if we started calling the shots or others will keep calling them for us.

But all this is not easy—far from it. Organized crime is not just the occupation of a few influential masterminds. It is no longer the playground of people like Al Capone and the mobsters of the early 1900s.

Organized crime involves many kinds of individuals, some of whom may often bear a strong resemblance to you or me. Most of them are anonymous members of the public who appear to lead their lives in an entirely above-board and ordinary manner. All the players in organized crime do not bear some easily identifiable mark. On the contrary, the people involved in organized crime are often anonymous.

Obviously, there is a more visible type of crime that often makes the news and appears in the headlines. There was the biker war that was splashed all over the media a while back, and which makes a return appearance from time to time. But the whole biker war phenomenon is only the tip of the iceberg.

Members will therefore understand that the phenomenon we are now seeing is extremely complex. It was time that the government suggested some effective responses to one of the most harmful aspects of organized crime, money laundering.

On more than one occasion, the Bloc Quebecois has been critical of the failure of Canadian legislation to prevent money laundering. Even so, the government waited until Canada found itself in the unenviable position of money laundering centre of the world before it decided to take action. It was high time that Canada did something because it has become, in the opinion of many international experts, a real sieve.

What exactly is “money laundering”? It is the process by which revenue from criminal activities is converted into assets that are difficult to trace to their criminal origins. What is involved here is the concealment of the proceeds of crime by making them appear legitimate. The bulk of these assets are related to drug trafficking, and most of the rest to criminal activities such as robbery or cigarette smuggling.

Since, by their very nature, money laundering and the criminal activities it attempts to camouflage are clandestine activities, it is hard to have any clear idea of the scope of money laundering activities. According to experts, however, the annual figure for the laundering of the proceeds of organized crime is about $17 billion.

What weapons did we have, then, against such a huge problem? Far from enough. A brief overview of Canadian legislation would be appropriate here. Hon. members will recall that the federal government passed legislation in 1988 amending the Criminal Code, the Food and Drugs Act, and the Narcotics Act, creating a distinct criminal offence of money laundering and providing for the seizure and forfeiture of the proceeds and property derived from various criminal and drug offences.

Section 462.31(1) of the Criminal Code provides that everyone is guilty of an offence who deals in any way with property or proceeds of property with the intent of concealing or converting them, while knowing or believing that all or part are derived, directly or indirectly, from the commission of either an enterprise crime offence or a designated substance offence.

The Criminal Code includes a list of 35 crimes coming under the definition of enterprise crime offence. We can see that something has been around since 1988, but we have to look at the decisions, the jurisprudence directly concerned with this section to realize it is inadequate, that it is insufficient to effectively fight crime. There is no need to be a great expert in criminal law to recognize this. It is enough to visit the courts to see how easy it is for a defence lawyer to get around these sections.

In 1991, there were other amendments to the Proceeds of Crime (Money Laundering) Act. Legislation was enacted in an extremely important area—financial institutions, real estate brokers, portfolio managers, and so on. It provided that, for any transaction of over $10,000 of a suspicious nature, information was to be taken and kept for five years. However, this was left to the discretion of the institution.

When a client of a financial institution has several million thousand dollars, and his portfolio is managed there, members will understand the reticence of the financial institution to report these sums. There is a problem.

In the last election campaign, the Bloc Quebecois included an approach in its platform to tighten things up, to provide major legislation to fight money laundering. Finally, the government seems to have understood with Bill C-22.

In introducing this bill, the government significantly remedies the situation by establishing three mechanisms to control suspicious transactions. The first is the mechanism of mandatory reporting of suspicious operations, as provided in clauses 5 to 11 of the bill. The second is a mechanism for the reporting of major cross border movements of currency, as provided in clauses 12 to 39. The third is the establishment of the financial transactions and report analysis centre of Canada, as defined in clauses 40 to 72.

Let us examine these mechanisms and the centre. With Bill C-22, the reporting of suspicious operations relating to money laundering, currently voluntary under existing provisions of the law, would become mandatory.

In addition, the obligation to report would extend to non banking financial institutions and certain other companies. Therefore, the reporting requirements would apply to regulated financial institutions, casinos, foreign exchange traders, stock brokers, insurance companies and persons acting as financial intermediaries, such as lawyers and accountants.

These people and institutions would be required to report certain categories of financial transactions and any other transaction regarding which there are reasonable grounds to believe that they are connected with the laundering of money.

Second, when it comes to transborder operations, people who import or export considerable amounts of currency or instruments, such as travellers cheques, will be required to report these sums of money to Canadian customs officers.

If a Canadian travels to the United States and takes $35,000 in travellers cheques for a three day trip or, conversely, if an American comes to Canada with $35,000 in travellers cheques or in cash, we are justified in asking questioning that person if he is only going to be in Canada for two or three days, or even just a few hours.

Failure to comply with this requirement could lead to the seizure of the currency or instruments carried by the individual, unless he gives up the idea of importing or exporting these sums of money. He can decide to go back to his country of origin.

Third, the financial transactions and reports analysis centre of Canada is an independent government agency that will collect and analyse the information provided on financial transactions and transborder movements involving currency.

The centre will also be a central repository for information on money laundering activities. It will analyse and assess the reports submitted and, if necessary, give leads to law enforcement agencies.

As I said earlier, the government opposite should have acted sooner. It should not have waited until Canada had a reputation as a major centre of organized crime before taking action. The government should have been much more proactive. It should have listened to the Bloc Quebecois.

It is odd that Bill C-22 has finally made it to the House a few weeks before a parliamentary committee begins looking at the issue of organized crime. Members will recall that I introduced a motion in the House a while back calling for the creation of a committee to examine this issue and to propose amendments to the legislation, if necessary, or other approaches. The parliamentary committee will study the issue and report to the House on the whole question of organized crime.

A few weeks before they start their deliberations, the government introduces Bill C-22 on money laundering. The government probably did not want to be criticized for having taken no action in this regard, but the usual drill is that every time the government opposite takes action, it is because the Bloc Quebecois has pushed it right to the wall.

It was the Bloc Quebecois that initiated the anti-gang legislation passed just before the last federal election. The Bloc Quebecois had questioned the government, which decided to do something about the problem just before heading into a general election.

It was the Bloc Quebecois that took the initiative with respect to getting the $1,000 bill withdrawn from circulation, and the government listened to us. With respect to Bill C-22 now before us, again it was the Bloc Quebecois, in its first term of office, specifically in its 1997 election platform, which said that the federal parliament should bring in legislation to do something about money laundering.

Finally, the government over there had no other choice, since the Americans have even told it Canada was an all-round champion as far as money laundering is concerned, but to decide to comply with the Bloc Quebecois' demands by introducing the bill we now have before us.

I have already mentioned the $1,000 note. It is extremely important for the government to heed us on this, and withdraw it from circulation as soon as possible. It is used mainly by organized crime, and must therefore be pulled, so that only denominations of $10, $20, $50 and $100 are available. It takes a whole lot fewer $1,000 notes to make $1 million, and is far less unwieldy, than $1 million in $10s, $20s or $50s.

Care must be taken, however, not to see Bill C-22 as a solution to all our problems. We must point out that this bill does give the government considerable regulatory power. Clause 73 of the bill in fact authorizes the Governor in Council, on the recommendation of the Minister, to “make any regulations that the Governor in Council considers necessary for carrying out the purposes and provisions of this Act”.

At first glance, the regulatory power assigned to the minister may seem extremely broad, even too broad, one might say. Although such power could eventually bring about changes in the law without the need to amend it, still, a number of important issues, which should be debated by parliamentarians, will be handed over to officials. That is a bit risky.

Here is an example. The government will set, by regulation, the amount requiring reporting. Under subclause 12(2) as well, regulatory conditions will determine whether individuals may be exempt from the requirement of producing such a report.

Knowing that the required report is the backbone of the mechanisms put in place by Bill C-22, we can see that the government is giving itself vast regulatory powers. With its history, I fear that the government is not too eager to tighten the screw, to require reports, which are difficult to prepare, from offenders, and to be too demanding about the reports people or groups are to do. The public may rest assured, however, that we on this side of the House will be very demanding.

I would be derelict in my duties if I did not mention that Bill C-22 raises significant questions about the protection of certain basic rights covered by the charter.

In a free and democratic society, the legislator may limit certain individual rights, as dictated by the larger interests of the community. However, this limitation must not be exercised outside certain rules. Bill C-22 must comply with certain basic procedural rules. In fact, in the case of seizures and searches, great care must be exercised in the drafting of the bill to prevent effective contest before the courts.

Work in committee will ensure us that these standards are met, before the bill is passed. If parliamentarians fail to examine in minute detail the impact of this bill, lawyers who are well paid by organized crime will review it and arrange to have this law declared illegal and unconstitutional. It is up to us to work properly and effectively on this bill.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:20 p.m.

Progressive Conservative

Scott Brison Progressive Conservative Kings—Hants, NS

Mr. Speaker, it is with pleasure that I rise to speak to Bill C-22, which will create a new agency to oversee and try to prevent money laundering in Canada, the financial transactions and reports analysis centre of Canada.

Bill C-22 would bring Canada up to date with the standards of our G-7 trading partners. It does not take us beyond the minimum standard, but it takes us up to that standard. It covers professionals, lawyers and chartered accountants, and even stock brokers and investment bankers would have responsibility to report under this legislation. It does not include, as in some other countries, a “know your client” rule, which would go much further in policing money laundering.

The responsibility to report suspicious transactions is described in this legislation, but it is not really spelled out in terms of what would define a suspicious transaction. I have some concerns about that. I would hope that as the legislation progresses we would define in a more comprehensive way what criteria would be required for an agency, an individual or a professional to define a transaction as being suspicious.

It would also expand the reporting by financial agencies of any transactions over $10,000 beyond banks. Currently banks report voluntarily. This would expand to include money marts and casinos. It does not delve into the retail side of commerce, which perhaps should be considered.

I have some concerns about that. Earlier I heard some members refer to the potential of the legislation being expanded at some point to include retail operations, for instance, jewellers or car dealers, where allegedly this type of money laundering exists quite a bit in terms of large sum purchases.

I would caution against expanding the scope too much, thereby creating a regulatory nightmare that would be extremely difficult to administer and could potentially have a negative impact in terms of the abilities of Canada's retailers to actually keep up with the paperwork and other requirements.

The legislation addresses cash transactions but does not address what is really the greater current and future issue of e-commerce or e-laundering.

It is very difficult to track financial transactions today that occur over the Internet or electronic financial transactions, particularly with sophisticated financial vehicles or instruments, for instance, derivatives. It is possible to hide transactions through derivatives and other financial instruments. In fact, cross-border electronic transactions, from a tax perspective, are becoming increasingly difficult to tax.

I would suggest to the government that the legislation is definitely long overdue, but that it addresses a problem which is really yesterday's problem, as opposed to addressing a problem which is clearly a problem of today and the future, that of electronically based money laundering.

The whole issue of smurfing, breaking large transactions into smaller units to get them below the $10,000 threshold which would trigger some level of activity by the new agency, is a real issue. For instance, in terms of deposits, several people could use various bank machines to deposit cash into the same account. Something as simple as a bank machine could play a role in money laundering, simply by breaking down transactions into smaller amounts to bring the transactions below the threshold that would trigger some level of investigation.

I am also concerned about the budget of the agency. I understand that the budget would be anywhere between $7.5 million and $10 million. Some suggestion has been made that there would be about a hundred people doing this.

I would suggest that it may be a very, very difficult job to police this type of activity with that size of budget. It sounds to some as a large budget, but I would suggest it is not really a very large budget at all.

I would also suggest to the government, as this agency and the government investigates ways to police the electronic money laundering side of it, that the government look toward some of the private sector solutions.

What I am speaking of are some of the companies that have developed technologies to deal with these issues—security issues on the Internet, et cetera—which may in fact be outpacing the technological advances capable of being developed by government. I think there will have to be some private-public sector engagement on some of these issues, particularly as we delve into the new world of electronic commerce.

I have some concerns about Bill C-22. The legislation would create a new agency that is at arm's length from the government. That is positive from the perspective of preventing political interference in an investigation, but it is negative from the perspective that this new, all powerful agency could conceivably overstep its boundaries on an investigation of an individual case.

A Canadian citizen being persecuted by this agency on a given case would not have the protection offered by ministerial intervention to potentially defend that citizen. Only if systemic abuse is suspected would the minister be able to intervene. Whenever I see these new agencies, whether it is the new Revenue Canada agency or this new agency to police money laundering, I have some concerns about the lack of direct ministerial accountability and potential intervention on behalf of an individual Canadian who may be treated unfairly by one of these agencies.

Another concern I have is that this new agency would have the power to release information to Revenue Canada in accordance with the act. If reasonable grounds existed for the agency to believe that money laundering had occurred, there would be potential for abuse.

We have to be very clear that if the agency has some reasonable grounds to pursue an individual case of money laundering, that is one thing. However, if the agency does not have enough evidence to pursue a case of money laundering and determines that while the evidence does not exist it may be able to get the person on tax evasion, conceivably the agency could release the information to Revenue Canada. This would help Revenue Canada or the new Revenue Canada agency pursue the individual. Therefore, while there may not be a case against an individual for money laundering, this agency could potentially help the new Revenue Canada agency in pursuing someone on a tax evasion charge.

That is absolutely, fundamentally wrong. The two agencies have to be separate. Unless there are very clear grounds for a case of money laundering, it would be wrong for this agency to work with Revenue Canada on individual cases or to share information. We have to ensure on behalf of Canadian taxpayers that this does not become some souped up Revenue Canada annex or addendum.

If the new agency had reasonable grounds to suspect money laundering, that is one thing. However, if it was simply a case where it did not have enough grounds to pursue someone on that basis and determined that there was some level of evidence for tax evasion, it would be clearly wrong for the sharing of information to exist.

It is still nebulous as to whether or not this agency would have the ability to do spot or random audits on banks, money marts or casinos. I would assume that would be the case but it has to be spelled out. Again, we have to ensure in our pursuit of doing something that is valuable and important, which is policing and reducing the incidents of money laundering, that we do not create some new godzilla agency that would have an immense amount of power to hurt legitimate Canadian enterprise, impede legitimate Canadian transactions, and effectively pursue some of the negative and oppressive activities we have seen from Revenue Canada in the past.

Those are my cautions. We are supporting this legislation with some concerns. We hope as this evolves, the government's policies on some of these issues will become more proactive in terms of addressing the real issues of today and in the future, and in particular embrace the notion of the electronic issues facing Canadians and law enforcement agencies.

Again these border on questions of resources. I have significant concerns with the extent to which the government has starved Canada's law enforcement agencies. It has prevented the RCMP from having the ability to enforce some of Canada's laws. As we expand these types of oversight agencies we have to ensure they are properly funded and that we give them the tools to do the job.

In that regard it may be very important for the government to consider some level of private participation. At least it should dialogue with the private sector on the electronic commerce side to ensure that the government is using the most up to date technologies to address these issues. A lot of these technologies exist in the private sector. The government should be more responsive to those forces and more amenable to work with private sector entities within Canada and elsewhere to develop solutions to these very real problems.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:35 p.m.

Reform

John Williams Reform St. Albert, AB

Mr. Speaker, I appreciate the opportunity to speak to Bill C-22 which deals with money laundering. As my colleagues on this side of the House have pointed out, this has been a long time coming from the government. We are the last of the G-7 countries to get around to doing something about money laundering.

One of the great scourges of our modern society is the illegal movement of products such as drugs. That has an effect on our society. It affects the minds of our young kids. They get themselves bent out of shape by using drugs. It ruins their careers. It ruins their futures, ruins their minds and ruins their potential. It also leads them into crime to generate the cash required to pay for the drugs and to keep the cartels supplied with billions of dollars in profits.

The proceeds of these drugs move through many countries in many ways in order to get into this country. People stand there with their hands out. They know it is illegal and illicit and therefore they are capable of demanding some kind of payment, a form of bribery, for them to turn their eyes in another direction as the drugs pass by. We in the House have talked about crime and how young kids feel the need to commit crimes such as shoplifting and a lot worse than that in many cases, in order to feed and pay for their habit.

I am glad the government is doing something about money laundering. Most of us have no real concept of how big the movement of drugs is and the amount of money, the billions of dollars that are moving around because of it. I understand that the largest cash based industry in British Columbia today is the growth of marijuana. The export of marijuana across the country and to other parts of the world is perhaps one of the largest industries in British Columbia today. That is shocking.

I have met with parliamentarians in other parts of the world. I am thinking of parliamentarians in South America. I recently attended a speech by our ambassador for Colombia who was here in Ottawa telling us about the situation there. We were told of the insurrection, the track that the government is losing control of its own country. In essence there is a civil war going on, not between two factions over who should rule the country, but the drug cartels do not want government anywhere near the growth of the drugs or the plants that produce the drugs. The cartels have their own air forces. They are able to fly the drugs out of South America through the Caribbean and up to the United States and Canada. This is a scourge on our society.

Money laundering is only one part of it. I want to broaden the debate. Money laundering deals with the movement of cash by illicit and illegal means but it is not just drugs we are talking about. We see bribery and corruption in all parts of the world. Believe it or not, Canada is not exempt; it happens here too. There are horrendous problems in South America. A year ago the commissioners of the European Union had to resign because of corruption. Members may have read about it in the paper. In Canada in the Prime Minister's riding, police investigations are going on because of potential misappropriation of government funds. If this is proven to be so, this would also be corruption. It is everywhere.

We read about it in the papers in the United States. Numerous elected officials in senior positions have been bought. I read one article just the other day regarding a governor who insisted on a $400,000 payment before he would vote in a certain way. It goes on. China has acknowledged that corruption is a major problem.

I would hope that we would start to do something about it. Transparency and openness is how to deal with bribery and corruption. It has to be brought out into the open so everybody can see what is going on. If a transaction cannot stand up to the light of day, it is likely illegal. If it is automatically going to be exposed in the light of day, it likely will not happen in the first place.

Look at what has happened with the HRDC scandal. Numerous audits were done and none of them were brought out into the open. On January 20 the last HRDC audit became part of the public debate. What has happened since then? The minister has told us that there has been a major review of all processes that go on in the department to ensure that the administration of the programs will now be done properly. Why were they not done properly before? Because there was no openness, no accountability and no transparency. We were not privy to the fact that previous audits had slammed that department and the administration of the files. It gets sloppy.

People with power and influence start using their influence and now numerous police investigations are going on. If these result in convictions, then that will show there has been corruption right here.

I am glad the world is finally waking up to the fact that bribery and corruption are perhaps the greatest scourge to economic development around the world. People with power and influence skim 10% and 20% right off the top and the money is going straight into Swiss bank accounts. There are also the people at the bottom end of the economic scale who, because they do not get paid enough money, have no choice but to insist on bribes for the work that they do or do not do.

In some cases we have people in positions of influence and power, such as policemen writing tickets or others granting permits, insisting on bribes to feed a large group of people or an extended family that depends on them for support because there is no cash in the economy.

We need economic development. We want to help the poor not only in this country but around the world. We can help the poor by attacking this cancer on society, the scourge of bribery and corruption. The OECD passed a protocol that was endorsed by a number of countries including Canada which says that bribery in a foreign country is no longer a tax deduction but a crime to be prosecuted in the home state. These are small beginnings.

I compare the current attitude on bribery and corruption to the position of society on the environment and human rights back in the 1960s. When we talked about the environment and our concern for the degradation of the environment in those days, people said that it was awful and asked why somebody did not do something about it. Then they would continue their daily routines.

It is 30 years later and the environment is now a core issue not only of this government and this country but of every developed country around the world. It is a core part of policy making. When they make policy the environment is a major consideration.

Human rights is the same. Back in the 1960s when people's human rights were being violated around the world, they would say it was awful and that somebody should do something about it, and they would continue their daily routines. Today we have war crimes tribunals. We have agreements and protocols. We insist on human rights when we enter into other agreements. Human rights is now a core principle of democracy.

I hope in a number of years, and hopefully not too many years from now, that the battle against bribery and corruption will also be at the core of civilized society in order for us to ensure that economic benefits accrue to all in society and that the cream or the profit is not ripped off illegally by those who happen to have power and influence.

It is everywhere. I have heard numerous examples, small and large. I will not bore the House with the details, but I would like to see the government and Canadians recognizing that bribery and corruption can and should be fought at every turn.

Bill C-22 on money laundering is a small start. I hope we will continue on from here and join forces with parliamentarians in other parts of the world to ensure that we carry the momentum forward so that in a number of years from now not only will we say that the environment and human rights are at the core of our policy making but that the fight against bribery and corruption is also at the core of our policy making.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

The Deputy Speaker

Is the House ready for the question?

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

Some hon. members

Question.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

The Deputy Speaker

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

Some hon. members

Agreed.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

An hon. member

On division.

Proceeds Of Crime (Money Laundering) ActGovernment Orders

12:45 p.m.

The Deputy Speaker

I declare the motion carried. Accordingly the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)

Income Tax Amendments Act, 1999Government Orders

12:50 p.m.

Beaches—East York Ontario

Liberal

Maria Minna Liberalfor the Minister of Finance

moved that Bill C-25, an act to amend the Income Tax Act, the Excise Tax Act and the Budget Implementation Act, 1999, be read the second time and referred to a committee.