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.