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.