Debates of Oct. 23rd, 2006

Proceeds of Crime (Money Laundering) and Terrorist Financing Act

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, there is no question that information sharing will lead to better cooperation among different agencies to improve the tracking of alleged criminal activity through the laundering of money. We also need to look at the offshore involvement in which some of these people may be involved.

However, we could be doing many things here at home, things we need to get serious about. The legislation would go a long distance in addressing the issues surrounding the laundering of money within our borders. Much of the money that is stored offshore at some point comes into this country. There are tracking measures. The legislation begins to address those issues.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I would like my colleague to go a little further in his views on Bill C-25 than just the speech that he was given to read, which I think represents his party's views.

I would appreciate his own personal views on this idea. In the last Parliament and, in fact, in the Parliament prior to that, a private member's bill was floating around dealing with the seizing of assets that were the proceeds of crime. I believe it was under the name of my colleague from the Bloc the last time, Richard Marceau, and prior to that it was a Canadian Alliance member, Paul Forseth.

Those were good ideas in that they would have allowed the government to not only seize bank accounts full of ill-gotten gains, but seize the actual proceeds of crime that may have bought all the toys, the trappings of crime that we see a lot of the high profile criminals use.

Would the member agree that Bill C-25 should be extended to allow this concept, that where it can be clearly demonstrated that the person is a member of a criminal organization, such as the Hell's Angels, Hezbollah, whatever is on that list of criminal organizations, and the person has been convicted of an offence, why should we not be able to seize their assets and put the reverse onus on them that they should need to prove that they did not get it through the purchase of ill-gotten gains, that they had a legitimate means of income? Would that not be a good idea?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, I do believe that criminals who are found to be involved in terrorist activity or in some type of activity that would define them as being in contravention of the law. We do need to investigate what we do with the property that they own.

Like many Canadians, as I am sure we would both agree, criminals should not be able to retain the proceeds of crime. I do not know if Bill C-25 is the right place to put in that measure but I would be supportive of a measure that would require criminals who could not prove that they got the assets in any other way to give up those things.

I believe this government is championing the reverse onus. We have seen it in the dangerous offenders legislation. We are thankful for the member's support on that legislation which would require criminals to prove they will not continue to involve themselves in this type of activity.

The Conservative government has been very active on the file of getting tougher on crime, putting the onus on the criminal and protecting the citizens of our country. The measures the member talks about would protect the citizens from any future types of those activities. I also agree with him that we need to ensure that crime does not pay any more.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I listened to my hon. colleague's speech with interest and he noted that the government's funding in the last budget had increased for the Department of Justice, the Border Services Agency, the RCMP, et cetera. It brought to mind that this is in an overall context when we deal with terrorism and crime.

I would like the member to comment on a couple of things from a general policy perspective because they end up dealing with terrorism. The first one deals with drug smuggling and the associated activities with it. We look at how it funds terrorism in places, particularly Colombia, and we see that the Taliban are now getting a lot of its funding through the heroin trade.

The other question I would like him to comment on is how the government's overall package on law and order in totality is helping to deal with the issue of terrorism in general, things such as more RCMP, et cetera, even if they are not directly targeted at terrorism, how they are helping the justice agenda on this file.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, there is no question that in the last number of years we have seen that many of these terrorist organizations, which have come under fire, were funded through illegal activities, whether it be arms dealing, drug trading or any number of things. What Canada needs to do, and it is something this government has committed itself to doing, is to ensure we are not part of the problem.

We have done it through this legislation but we have also done it by cracking down on the things that come into this country. We have improved our border security and the inspections at the border regarding the illegal drugs and whatever else comes across our borders and is traded for money, which is then laundered out of the country to fund these types of organizations. We have started to put in the necessary measures to stop these things from coming into the country. That is something to which we are absolutely committed.

In the finance minister's budget of this past year, a substantial amount of money was given to improve RCMP services and to put more RCMP officers on the street. We have seen a number of measures, including arming our border guards. Of course there was a financial requirement to do that. We have heard from the minister responsible for public security that the border guards are now receiving these arms.

These measures are all important as we try to move toward a safer and more secure nation within a safer and more secure world. We do have a role and a responsibility to ensure that we have a safe country here but we also need to implement some of these measures to ensure the entire world is a safer place.

I do believe we are on the right track but we have a long way to go before we crack down on all the illegal activities that are happening in our own country. We are in the process of cleaning this up and the investment that we have made into crime prevention will go a long way to begin that process.

[The Acting Speaker, Conservative, Royal Galipeau]

Questions and comments. The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup. We have one minute left for the question and the response.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I will proceed very quickly.

We support this bill overall. I believe it will improve how we manage the fight against terrorism. However, we must ensure some degree of balance.

My question is as follows. Are the government members open to having certain witnesses, for example, the privacy commissioner, testify at committee hearings to ensure that there are no more errors like the one committed by the RCMP in the Arar case, and to ensure that, despite the bill's best intentions, it will not have any loopholes that would allow for the violation of human rights?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, the hon. member talks about striking a balance. The committee will do its work to ensure this is a balanced bill. However, as Canadians we do need a balance. We need to get tough on crime to ensure that criminals do not have the same rights as law-abiding citizens in terms of being able to continue to involve themselves in many of these things.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I rise today to speak to Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act.

As I speak today, I am thinking about the reality we have faced for the past several years, that is, the increase in terrorist activities and the tools we have tried to put in place to fight against terrorism. As we all know, the Bloc Québécois took up a major challenge in the past regarding the fight against organized crime.

I would remind the House of the battle waged here, led by the Bloc, to enact anti-gang legislation. Many individuals have continued that battle, including the leader of the Bloc Québécois and hon. member for Laurier—Sainte-Marie and the hon. member for Hochelaga—a young child in his riding was unfortunately a victim of organized crime warfare. My former colleague, Michel Bellehumeur—who is now a judge, but who was the justice critic at that time—successfully led one offensive after another, as did Richard Marceau, regarding the elimination of the $1,000 bill. The Bloc Québécois' credibility is well established here, as it is in many other areas.

We have led battles and we have helped to develop the best laws possible. Today, we are discussing legislation that the Bloc Québécois will support because it will enable Canada to comply with the recommendations of the financial action task force on money laundering. This is a group that was created by the G-7 to examine in depth the issue of the financing of organized crime world wide. The group can make recommendations to all countries on ways of countering criminal use of money. It has been said that money is the sinews of war, and it is the same in the fight against terrorism.

There is a real battle that can be fought on the ground in terms of propaganda, but there is also the whole issue of financing. Let us hope that we can do our share in a meaningful and concrete way.

However, at the same time—this will be a continuing concern for the Bloc—during the committee stage, we must ensure that in the application of the law we are not faced with the excesses we have already seen, such as in the case of the treatment of Maher Arar by the RCMP. We know that the RCMP slipped through the cracks in existing mechanisms to end up accusing Mr. Arar and that he suffered unacceptable treatment. In the final analysis, Mr. Arar suffered harm that will be very difficult to repair.

In the previous instance, it was the case of an individual. Today, we are dealing with the financing of terrorism. We must ensure that in the application of this law that there is no similar hole in the legislation.

I am referring, for example, to the fact that under the law an official of the Department of National Revenue would have the power to forward information that was sent by another official under the provisions of the charities registration act. That information could be forwarded to the Financial Transactions and Reports Analysis Centre of Canada.

This could be done in good faith and be completely legal. It could involve the forwarding of relevant information; however, we must ensure that there are safeguards to prevent excesses.

After they have debated the actual principle of this bill and its general appropriateness, the committee members should pay particular attention to the issue of protection of personal information. I would like the privacy commissioner to appear before the committee so that she could say how the act for which she is responsible applies to the reality of Bill C-25 and to the regulatory framework defining how to track the financing of terrorist groups so that such financing is clearly opposed and minimized, and how at the same time the rights of individuals will be respected.

We should recall that Bill C-22 was the forerunner of Bill C-25, which we have before us. It was tabled on behalf of the Minister of Finance in 1999 and intended to counter money laundering. That was Bill C-22. It was very similar to Bill C-80, presented in May 1999, but died on the order paper when the House was prorogued.

The general objective of the bill was to correct the shortcomings of Canadian legislation respecting money laundering, as they were identified in the 1997-98 report by the FATF, the financial action task force on money laundering, created by the G-7.

In addition, the FATF recommended in its report that any provisions respecting reports in Canada—which at present are voluntary—be made public and that a financial information unit be created with the responsibility of gathering, managing, analyzing and distributing reports of suspicious operations and other relevant information. So it was an international committee that made the recommendations and the 1999 bill was designed to put them into force.

That bill was passed. Since then it has been mandatory for regulated financial institutions, exchange offices, casinos and other financial intermediaries to report suspicious financial transactions. Another of the bill’s objectives was to put in place, together with the Canada Customs and Revenue Agency, a system for reporting large cross-border movements of currency. A lot of money changes hands. We will see a little later that the quantities of money are very significant.

Furthermore, the bill provided for the creation of a new independent agency, namely the Financial Transactions and Reports Analysis Centre of Canada. This centre receives and administers the information reported. Bill C-22 was enacted on June 21, 2000, and replaced the Proceeds of Crime (Money Laundering) Act then in effect.

The Conservative government is proposing to amend Bill C-22 with Bill C-25, which we are debating today. This new bill is designed to increase financial institutions' duties to keep records and report suspicious transactions, with a view to eliminating funding for terrorist organizations. The idea is to achieve greater transparency in the circulation of money. Banks are institutions that are responsible for the quality of their work. In my opinion, in the fight against terrorism, they need much clearer and more specific guidelines and instructions. Let us hope that this bill will clarify the situation.

First of all, the bill extends the application of the act to all organizations that, in addition to dealing in securities, deal in other financial instruments. Targeting securities alone does not go far enough, in light of terrorists' investment methods. The act also applies to persons and entities engaged in the business of remitting or transmitting funds by any means or through an intermediary to electronic funds transfer companies or of issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments. In other words, the framers of the bill became aware of all the actions and the financial and monetary transactions that the bill needed to cover to try and control the circulation of money used to finance terrorist activities. The people who sell prescribed precious metals will be subject to Bill C-25.

The new bill prohibits any entity from opening an account if the bank cannot establish the identity of the client. The bank must be certain that it knows the identity of the client. Furthermore, the bill ensures requires any institution that does business with a politically exposed foreign person, foreign judge, head of state or minister, to obtain the approval of its senior management before entering into a transaction. Thus, safeguards are established. Such requirements apply to all sectors. For example, in the case of electronic funds transfers, the bank or other business must include the name, address, account number and all client reference numbers, whether sending or receiving such transfers.

This is where we must consider the issue of authorization given to officials of the Canada Revenue Agency to disclose information to the Financial Transactions and Reports Analysis Centre of Canada. We will have to be very vigilant to ensure that we do not erode the right to protection of personal information and to establish an appropriate balance so that the legislation falls within the desired framework.

Of particular concern is the laundering of proceeds of crime, which is the conversion of the proceeds of criminal activities into goods making it difficult to trace the proceeds to their criminal origins. It consists of hiding proceeds of crime by making them seem legitimate. It is money laundering. A large portion of these goods and assets are derived from the illegal drug trade and others result from criminal activities such as burglary and cigarette smuggling. The criminal activities that they seek to hide are, by their very nature, clandestine activities. It is difficult to have a precise idea of the extent of money laundering operations.

Experts estimate that, overall, some US$300 billion to US$500 billion in criminally derived funds enter international capital markets annually; $300 to $500 billion is a lot of money.

In Canada, the federal government estimates that between $5 billion and $17 billion in criminal proceeds are laundered in this country each year. There was therefore a need to take action and find a way of shedding light on these transactions in order, at least, to reduce them as much as possible.

There is also the problem of the financing of terrorist organizations. We know that terrorists were going so far as to take advantage of charitable organizations and ultimately use them for purposes other than those they were intended for. We need to re-consider things in this regard as well to be sure that we can also follow the financial transactions.

The financial action task force on money laundering established in 1989 is an international organization which wants to ensure that the different countries around the world have legislation for dealing with this problem. However, we have seen a major increase in terrorist group activity over the last few years. I think that we need to move faster and provide more support. The FATF’s mandate was renewed in 2004 to run until 2012, and it will continue to monitor the situation.

Through the mandatory reporting of suspicious transactions, this bill will ensure that we do not suddenly find ourselves in a situation where a whole series of suspicious transactions have to be identified because they were not being followed. The mechanism being put in place will hopefully take care of this.

In regard to the reporting of major cross-border currency movements, the bill will ensure that certain precious metals are also regulated and included in the currency to be reported.

There are two provisions authorizing customs officers to search people or the vehicles of people when the officers have reasonable grounds for suspecting that the people are hiding on or near their persons currency or monetary instruments that were not reported in accordance with the act's regulations. Finally, a new provision makes it possible to conclude cooperation agreements between Canada and the customs agencies of foreign countries that have similar requirements to report cross-border movements of currency and monetary instruments.

The comparison I made with the Arar affair also applies here. We must ensure that we are not creating a ripple effect by inadequately protecting personal information. When we give information to a foreign agency, we must ensure that we do so in accordance with the law and that the other country uses it in accordance with the law. We must not damage people's reputations because of incorrectly conducted transactions. In this case, it might not end with the kind of torture Mr. Arar suffered through, but it could damage reputations. We must be vigilant in ensuring that, if necessary, this bill is amended in such a way as to guarantee the protection of personal information.

The third important element is the creation of the Financial Transactions and Reports Analysis Centre of Canada covered under clauses 40 to 72. This is the framework, the organization, the structure that will ensure the implementation of this legislation. We hope the centre can operate because it will be responsible for analyzing and evaluating the reports it receives, as well as other information. If necessary, it will provide information to law enforcement organizations. It will also be responsible for making recommendations to the Department of Justice, the RCMP or other organizations. Here, too, we must be vigilant to ensure that the management and analysis of personal information are done correctly.

Bill C-25 sets out guidelines concerning individuals and groups eligible for registration with the centre. Any person whose name appears on the list of terrorist groups, who was convicted of terrorist activity or of participating in, facilitating, instructing to carry out or inciting to commit terrorist activities, who was convicted of participating in organized crime activities, or who was convicted once on indictment or more than once for fraudulent transactions or for an offence under the Controlled Drugs and Substances Act, except for consumption, is eligible to register.

Clearly, what we are seeking is a comprehensive framework that will allow for proper intervention regarding cash flow linked to terrorists. Accordingly, the Bloc Québécois believes that this bill deserves our support.

It also includes serious offences so that criminals are well aware of the seriousness of their actions.

To conclude, I refer back to my comment on privacy. I would like to see this bill passed as quickly as possible, given the study that will be required in committee. Indeed, it must be carefully studied to prevent individual cases from slipping through security and, above all, to prevent honest, law-abiding citizens from being penalized by such legislation.

Significant amounts of money circulate in this area of activity and this legislation could, in due course, have implications for human life. Terrorist activities funded at the source by this type of monetary flow often lead to the deaths of innocent bystanders.

It is a fine idea to create tools to stop this money from circulating, but we must strike a balance with the protection of privacy.

The Bloc Québécois supports the principle of this bill. We will see if, through amendments, we can adapt it more to the reality of these people and make it more compliant with the Privacy Act.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I congratulate my colleague for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup on his speech to which I listened with great interest. I would like to take this opportunity to ask him a question about the ideological winds that are blowing these days in this House with the minority Conservative government. Of the 30 or so bills introduced by the government, a dozen concern law and order.

[An hon. member]

There are 17.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

There are 17.

In my opinion, that is also the case for this bill. I understand and believe that it is important to bolster our system because of terrorism. That being said—and my colleague mentioned this in his speech—we must be careful that this does not lead to unfortunate situations such as those experienced by Maher Arar. Perhaps others have had similar experiences.

I would like the member to comment on the ideological winds that we hear, feel and sense coming from the Conservative minority government. It is fortunate that they are in the minority.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I wish to thank my colleague for his pertinent question.

The current government is quite taken with the issue of public order. It often believes that it can resolve situations by, for example, increasing sentences for certain criminal activities, investing fewer resources in rehabilitation, and believing that stiff punishment will lead to an automatic change in behaviour. This causes resistance to adoption of these bills. We can feel it in the House. All opposition parties, at one time or another, have shown their opposition. This leads us to realize, in my opinion, that this vision does not correspond to the values of Quebec society nor the values of Canadian society at large.

For this reason, each bill must be assessed individually. That is the practice that the Bloc Québécois has adopted. When a bill is advantageous for Quebec, at the very least, we support it, we promote it; when it is not, we do not support it.

Obviously, the Bloc Québécois will oppose this wind from the right and not support any government initiative to tighten the Criminal Code and, for example, criminalize younger and younger people, including children and adolescents. The Bloc Québécois will stand up to the government and make sure that such bills are not passed and that they are subjected to every possible parliamentary test before returning to us, when we in the Bloc Québécois will clearly show our opposition.

I remember that we opposed the Young Offenders Act in the past, and we were proven to have been right at the time, and now we are opposing other bills.

In this case, it is a bill that refers to laundering proceeds of crime. The Bloc Québécois led the war on organized crime in the past, to reduce organized crime and make sure it can be dismantled.

Consider the anti-gang bill. There is a very clear difference between this type of bill, which is designed to ensure better, fairer treatment in our society, and all the bills that criminalize young people in particular and, in my opinion, do not reflect how we want things to work in our society in future. The Conservative Party has a minority government—fortunately, as my colleague said—and will have difficulty getting these bills passed.

In the end, the next time we face the voters, we will have seen, this year, that the Conservative government is borne along by the right-wing current coming from the United States, but more from the Alliance and Reform parties that preceded the Conservative Party. Nevertheless, the Conservative members from Quebec have been asleep at the switch all this time. And when the next election is called, these people will have to answer to their constituents for the bills they passed or supported that ran counter to the values of Quebec society. They will have to answer to the people.

We are already seeing it in the polls, which show the Conservatives at 16% to 18% of decided voters in Quebec. They will pay the price if they do not alter their policy on these issues.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, small branch credit unions, of which I am a member in my riding, have difficulty with administration costs and making ends meet because they do not have the resources of large banks and larger institutions.

What does the member think of the issue of credit unions having to monitor and carry the burden of the investigation process with respect to criminal activities and the hardship of that for them?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I thank my colleague for her question. I myself am a member of the Desjardins Group, the largest association of credit unions in Quebec and in Canada. Desjardins collaborates with international credit union-type organizations.

I understand the argument. This is one of the things that the committee will have to study to ensure that small financial institutions can cope with the implementation of such measures and will not be taken over by larger institutions. This issue is not directly related to fighting terrorism, but it would have an impact on how small financial institutions are run. The committee will have to pay close attention to this. Its work on this bill will be very important.

Earlier, I talked about Canada's privacy commission. It is important that financial institutions, both large and small, appear before the committee so the bill can be amended as necessary and to avoid adding too many additional rules to current regulatory regime. That could penalize the cooperative movement, which is very significant at home and also gaining strength in developing countries.

In Africa, Desjardins' markets are growing significantly. I would also like to draw attention to the Nobel prize awarded to the creator of microcredit lending. These small institutions must be allowed to continue to progress, protected from manipulation by terrorist movements. They must not be crushed under superfluous regulations. I support its ideology and hope that the parliamentary committee studying this bill will look closely at this matter. I hope the committee will hear witnesses who can discuss it concretely, that is, administrators and managers of these small institutions.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Kamouraska for his sensitivity to the needs of these smaller institutions and the burden that the bill might place on them.

As I was speaking to the bill, I received an email from a general manager of a credit union on Vancouver Island. He has pointed out that his small credit union may have to deal with costs of up to $200,000 per year just to track, administer and file the necessary paperwork stemming from Bill C-25.

His second point, which I would like my colleague's view on it, is that in a small neighbourhood community institution, he resents that he may have to turn in activities of his friends and neighbours, which may not quite meet the standards or may seem suspect to some from thousands of miles away. He is not comfortable having to report private information to the government in his function as the general manager of a credit union.

My colleague mentioned the Privacy Commissioner. Is he concerned as well that neighbours may be called upon to blow the whistle on other neighbours?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, that is a good way to illustrate my suggestion that the Privacy Commissioner appear as a witness to reveal what effect this will have on privacy.

We could also study its effect on other individuals within the same community. The Desjardins group is based on the democratization of banking and financial processes. In the beginning, each credit union had a credit committee made up of people elected locally to review credit applications. In small municipalities, this often led to friction. Privacy must be guaranteed.

In this sense, we must also make certain that this does not become an open door for terrorist groups. If we regulate this problem only among the big banks and suddenly open a side door to the smaller institutions, we must ensure that they have sufficient protection, that they are able to deal with this influx, and that tools exist to properly identify relatively ordinary transactions without disproportionate costs. We must not find ourselves faced with the monetary flows to finance terrorist groups taking a new path that is not covered by this legislation.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am quite happy to join the debate on such an important subject as Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act.

This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record keeping and reporting measures applicable to financial institutions and intermediaries.

It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.

It allows the Financial Transactions and Report Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies and to make disclosures to additional agencies.

The bill permits the centre to exchange compliance related information with its foreign counterparts. It also permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.

The bill creates an administrative monetary penalty regime, something which certainly seems to be needed.

It also amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.

Everyone in the House will likely agree that one of the best ways to fight organized crime and terrorism is to starve those involved of the funds that they need to operate. Stemming the flow of illegal money is of great importance, and it is equally important that we protect the privacy and the charter rights of individual Canadians.

Bill C-25 is a step in the right direction and contains much of what the previous Liberal government was in the process of developing. We will certainly support it in principle at this stage of debate.

The proposed amendments in the bill will make Canada's anti-money laundering and anti-terrorist financing regime more consistent with new financial action task force standards. They also follow some of the recommendations made in the 2004 Auditor General's report and in the 2004 Treasury Board evaluation of the regime. I will now turn to some of the key features in this bill.

There are enhanced client identification and record keeping measures for financial institutions and intermediaries. The proposed amendments include requirements for reporting entities to undertake enhanced monitoring of high risk situations, correspondent banking relationships and transactions by politically exposed persons. Banks, insurance companies, securities dealers and money service businesses would be required to take measures to identify and to monitor the transactions of foreign nationals and their immediate families who hold prominent public positions.

There is the reporting of attempted suspicious transactions. All reporting entities currently reporting suspicious transactions would be required to report suspicious attempted transactions to FINTRAC. This is the practice in other G-8 countries and is consistent with financial action task force recommendations.

Another feature in the bill is the registration regime for money service businesses and foreign exchange dealers. The proposed amendments would create a federal registration system for individuals and entities engaged in money service businesses or foreign exchange. FINTRAC would act as the registrar and would maintain a public list of registered money service businesses and foreign exchange dealers. These businesses are already covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act; however, given that this is an unregulated sector, the registry will assist FINTRAC in ensuring compliance with the act.

The bill refers to enhancing the information contained in FINTRAC disclosures. As recommended in the 2004 Auditor General's report and at the behest of law enforcement, the proposed amendments enhance the information FINTRAC can disclose to law enforcement and security agencies on suspicions of money laundering or terrorist financing. This will increase the value of FINTRAC disclosures, ultimately leading to more investigations and eventual prosecutions.

The bill creates an administrative and monetary penalties regime. Currently the act only allows for serious criminal penalties if the act is contravened. FINTRAC requires the ability to levy fines to deal with lesser contraventions in order to take a more balanced and gradual approach to compliance. The amendments create an administrative and monetary penalty system whereby fines can be applied for non-compliance. This was a recommendation in the 2004 Auditor General's report.

The bill reintroduces requirements for legal counsel. The government is working with the legal profession, including notaries in Quebec, to finalize requirements for client identification, record keeping and internal compliance procedures for legal counsel when they act as financial intermediaries. The bill removes the obligation for legal counsel to file suspicious transaction reports or other prescribed transaction reports.

The bill expands information sharing between federal departments and agencies. The amendments in the bill would expand FINTRAC's ability to share information with the Canada Border Services Agency, the Canada Revenue Agency and the Communications Security Establishment. In addition, FINTRAC would be able to receive terrorist property reports under the United Nations act regulations.

Internationally, the enforcement of the anti-money laundering and anti-terrorist financing requirements would be strengthened by information sharing provisions on compliance related information between FINTRAC and its foreign counterparts on obligations applicable to the financial sector and between the Canada Border Services Agency and its foreign counterparts on the enforcement of the cross-border currency reporting regime.

This bill proposes to make some necessary changes to the previous government's Bill C-36, the Anti-terrorism Act of 2001. Changes such as these will likely be required every few years as money launderers become more sophisticated and police need new powers to fight them. This is precisely what makes money laundering so difficult to combat. No matter how many safeguards and checks we as legislators put in place, the criminal element will always look for new ways to avoid or to counter them.

Canada's financial intelligence agency reported $5 billion worth of suspected money laundering and financing of terrorist activities last year alone. That total is more than double the one a year earlier. Of that, $256 million is tied to suspected terrorist financing. Of the 143 reports FINTRAC made to law enforcement agencies, there have been no convictions. The Auditor General in 2004 suggested that allowing more information to flow to law enforcement authorities would help in investigating these suspicious activities. This bill provides these powers.

This bill is largely derived from recommendations made by the Department of Finance under the previous Liberal government's tenure. Money laundering and terrorist financing have economic and social costs against which we must remain vigilant. In order to achieve this, we must continually re-evaluate how we monitor and disclose suspicious transactions as the nature of these activities changes and continually becomes much more sophisticated. The government must move to stem the tide of money laundering and terrorist financing and at the same time protect the privacy rights of law-abiding Canadians.

Given that both the Auditor General and the RCMP have expressed concern that exemptions for the legal profession leave serious gaps in this legislation, I am concerned with the government's decision to remove the obligation for legal counsel to file reports of suspicious transaction with FINTRAC.

Our colleagues in the other house recently tabled a report entitled “Stemming the Flow of Illicit Money” which made several recommendations, some of which are in the bill and some of which are not. I would also like to see the Senate Standing Committee on Banking, Trade and Commerce recommendations for Parliament to have greater powers to also scrutinize FINTRAC.

One of the main concerns I have is that we are not bringing some of the businesses that currently do not fall under FINTRAC's guidelines into the bill. As the banking, trade and commerce committee reported, the RCMP believe that as stricter regulations are imposed on businesses in the financial services industry, criminals are seeking alternative methods of laundering the money accumulated from criminal activity.

Various characteristics of the precious metals, stones and jewellery industry make it highly vulnerable to criminal activity. The RCMP has identified these businesses as a likely place for criminals to launder money, yet this bill does not require them to report suspicious transactions as financial institutions must. I strongly recommend that all of us in all parties work together to make sure that we amend this law so that it reflects clearly what is needed.

Another weakness that has been identified by both the Auditor General and the RCMP is that lawyers are not required to disclose suspicious transactions to FINTRAC. This is, of course, another delicate balancing act. On the one hand, we need to give law enforcement the ability to track down those who launder money, using a lawyer as a financial intermediary. On the other hand, we have the issue of protecting solicitor-client privilege. This bill strikes a compromise between the two and I look forward to studying whether this compromise is appropriate under the circumstances.

Another major concern with the bill is that it does not adequately ensure that the privacy of Canadians is protected. The bill will allow FINTRAC to share greater amounts of information with law enforcement agencies. This is necessary in order for those agencies to fully investigate suspicious transactions and to eventually prosecute where appropriate.

Another part of the bill that does not work as effectively as we would like to see is to provide increased protection for the privacy of Canadians, such as by creating an independent review commission with the powers and authority to conduct random reviews of an agency's files and an agency's operations. The Auditor General has also recommended that some such commission be created. In her 2003 report, she wrote:

The government should assess the level of review and reporting requirements to Parliament for security and intelligence agencies to ensure that agencies exercising intrusive powers are subject to levels of external review and disclosure proportionate to the level of intrusion.

It is extremely important that be put in place as this legislation goes forward for the review. Essentially, if we are going to give FINTRAC the ability to share more of Canadians' personal information with bodies like the RCMP and the Canada Border Services Agency, then should we not also move to ensure there is sufficient oversight of FINTRAC to ensure that the information that it is disseminating is appropriate?

As I said before, this is by and large a good bill. It has certain omissions and weak points and I feel that we should all work to amend it at the committee stage, but overall it will provide the police and prosecutors with some of the tools they require to combat money laundering and terrorist financing.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, I thank my colleague from York West for her excellent presentation.

I would like to ask her the following question. Given that, under this law, officials will be able to disclose information to other authorities, does the member not see that there should be a committee of judges or another type of filter so that information that could possibly ruin an individual's life is not disclosed to persons who do not necessarily understand their responsibilities or to certain people who could use the information to undermine another group?

It is possible to imagine that such practices could be used in the Canada of the future. According to the member, what type of filter would suffice in this case?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, clearly that is one of the reasons why we recommend it go to committee and that we all work together as parliamentarians to ensure the privacy of Canadians is respected. There is lots of opportunity for work at the committee level to ensure that is exactly what results by the time it comes back here.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, I did not hear in the hon. member's speech mention of credit unions, the implications for small institutions and the impact it would have on their budgets.

What does the hon. member think about that and could she maybe comment on the negative situations these credit unions and small institutions could find themselves in?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, part of the reason we are sending the bill to committee is to ensure we look at a lot of avenues, including how do we ensure credit unions and those kinds of organizations are able to deal with the kinds of changes being recommended in the bill.

Credit unions are have been very successful in the country. I bet if we took a poll of the 306 members here, many of us, at some point or another in our lives, have participated and have been members of various credit union.

As we move forward on the legislation, it is important to ensure that this protection is there and that what we bring in is not so cumbersome it becomes impossible for smaller banks and credit unions to work with and work through. However, we also have to remember how important it is for us to ensure that we do our jobs as parliamentarians, which is to ensure the safety of Canadians and many other people when it comes to financing terrorist activities through a variety of ways.

I am quite sure people would be aware of our trusting attitude toward credit unions and because of that, they would not be watched quite as carefully. We need to ensure we bring things in place that allow us to achieve our goal in terms of money laundering, but that do not become impossible for our various institutions to deal with.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, when my hon. colleague was in government, I know she did a lot of work in this area and provided a lot of constructive solutions to deal with an issue that the RCMP quite correctly said was a major plague within our country and an impediment to its ability to provide justice to Canadians.

I am very interested to know the conundrum that occurs when we try to pursue this, and that is the issue of privacy rights. We need to have a balance, and the member, quite correctly, brought this up in her speech and delved into it. However, I would be interested in knowing her further views on ensuring there is an adequate balance between the rights of privacy for the individual and the rights of our collective to pursue those individuals who are abusing this right in the interest of criminal activity.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, it is always interesting and difficult to have that balance. I have often had people come in and complain because they were trying to send money back to whatever country and they were being asked a lot of questions, and so on and so forth.

It is important that we find the balance. Hence this is the reason the work of the committee on the legislation will be so important. We need to ensure that money is not being sent abroad for terrorist activities. At the same time, we also have to ensure that we do not intrude too far into rights and privacy rights of Canadians.

I believe we all value and share the charter and its protection and that we want to be respectful of people's privacy. It is quite a difficult challenge, with whom is it safe to share information and with whom is it not safe to share information. As Canadians, who do we want the government to share our public information with, and with what agencies?

It is really important that we work carefully on these issues, that we spend a lot of time with this at committee to ensure we do it right and that Canadians understand why it certain parts and amendments will have to go through.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, earlier when I spoke, one of the questions I was asked, and I would be interested in the member's point of view on this, was on the utilization of the proceeds of crime.

As federal legislators, we make amendments to the Criminal Code, but it is up to provincial and regional policing authorities, as well as federal policing authorities, to carry it out. If they do not have the resources to deal with these things, the suggestion was that a greater degree of the proceeds of crime could be made available to those police forces that detected and exposed this kind of thing.

My concern was that there may be some inequities across the country, but I think the principle is probably valid, in terms of ensuring as much as possible those proceeds are available for the policing authorities at all levels of government across the country.