Mr. Speaker, on behalf of the New Democratic Party caucus I am pleased to stand in this assembly and join with all of my colleagues to trash money laundering and to say to Canadians that we unanimously support eliminating criminal activity in this country. Otherwise, it would be a very different debate, if some of us defended the criminal activity that exists in our economy.
Bill C-22, which deals with the proceeds of crime from money laundering, is a very important piece of legislation in many ways, but it could be better. We have heard some of the speeches from the minister and others who talked about the wonderful and positive things it might do, and I believe that it will have a positive effect on our economy. However, I am concerned about a number of issues with respect to the bill.
The NDP supports this bill in principle. It is obviously important to support the introduction of legislation that curbs illegal activity.
However, there is a problem because of the wariness concerning the lack of certainty and clarity in some parts of the bill. Before I address that, Mr. Speaker, I would like to share with you some of the concerns I have with this bill.
First, I am concerned that this is going to be a piece of feel good legislation. The Liberals in the past have introduced legislation which I classify as feel good legislation. I hope this bill will not fall under same definition. What I mean by that is that the Liberal government tends to address very serious criminal activity in this country with a piece of legislation that makes Canadians feel good that something is happening to protect them, but in fact nothing ever happens to protect them. There is a law on the books, but there are never any resources to back up the legislation.
I would use two examples. There was cigarette smuggling in Quebec and Ontario a few years ago when the Liberals were cutting everything, including customs agents, police and security forces. A certain group of individuals started smuggling cigarettes into Canada, selling them in Quebec and Ontario. Rather than pass legislation which supported the customs and duty officers and our police forces in nabbing the people who were smuggling, they introduced a piece of feel good legislation. They made people feel good because they were doing something by passing a law which took federal tax off cigarettes in Quebec and Ontario, but that cost taxpayers $2 billion a year. Guess what. The smugglers went from smuggling tobacco to smuggling guns.
Rather than dealing with legislation like the Firearms Act, they should have committed resources to nab the gun smugglers. What did the government do? It passed a gun registration law, which has nothing to do with protecting Canadians, but it made them feel good that the Liberal government was actually doing something to protect Canadians. In fact, it was not doing a darned thing. It was encouraging smugglers to continue to smuggle.
We have these two pieces of feel good legislation which the Liberals passed. One was on tobacco taxes, which cost us $2 billion a year, and which will probably add tens of thousands to the debt because more people will be smoking in Ontario and Quebec because of the low price of tobacco. Then they passed the Firearms Act, which forces criminals to register their guns. As we know, criminals do not register their guns. Nothing has changed.
We now have Bill C-22, which is supposed to stop money laundering in Canada. If anybody believes this is going to be the epitome of legislation, they are dreaming in technicolour. I hope it has some effect, but if the bill is not backed up with some cash and resources to provide our country with more security, more police officers and more customs agents to look into these issues, then the law will be useless. It is a feel good piece of legislation. The government is trying to make Canadians feel good about it, but nothing will ever happen. The same old story continues, the money laundering, smuggling and all the criminal activities committed by people who want to use handguns and other kinds of illegal weapons.
The potential in this bill is very great, but I want to raise a couple of issues which I feel have to be addressed.
First, I am hoping the Liberals will put some money where their mouths are for a change when it comes to a piece of legislation which is in principle very good, but will not work unless there are some resources put behind it.
Another problem we see with the legislation is the potential for charter violations. The guarantees of reasonable search and seizure in the charter are at risk in our view with this bill.
The Criminal Lawyers' Association argues that the standard of suspicion outlined “fails to meet even the first and fundamental requirements of reasonable grounds”.
The legislation may create an irreconcilable conflict for professionals, such as lawyers, who remain subject to certain codes of conduct that prohibit them from disclosing information. It must also provide a mechanism to absolve an individual from the potential liability that may result from disclosing this particular confidential information.
The third issue in terms of our concerns is a possible pressure on consumers. As the consumer affairs critic, I am very concerned about every piece of legislation that comes before the House which would cost consumers more money than it would benefit them. We feel that the reporting regime set up to track and communicate suspicious transactions from criminal activity have at least two financial repercussions for consumers.
First, there is a cost to be borne by the taxpayers for the establishment and maintenance of the financial tracking system that will be set up. Second, in having to establish compliance mechanisms, there is a concern that the cost for setting up reporting mechanisms for financial institutions will be borne by these institutions' customers. That means that the consumer stands to pay the fare one more time.
The fourth issue of concern for us is the question about the system's effectiveness. There remains a series of concerns about the planned reporting scheme's effectiveness. There is a warning that the new regime has the potential to create a bureaucratic behemoth and the chance that organized crime could short-circuit such a system through a series of shadowy sophisticated transactions. Money might be better spent by granting law enforcement investigative bodies additional resources to detect and prosecute money laundering offences.
The fifth concern we have is that the bill does not address technology based crimes. Technology based crimes include credit card and debit card fraud, telephone fraud, stock market manipulation, computer break-ins and so on. These are very important because they are on the rise. More and more people are using the Internet. There is a huge growth in the debit card business. More and more consumers are using cards for instant transactions. A lot of personal information is on the Internet and is in the hands of tens of thousands of businesses in the country.
Increasingly organized crime syndicates are using technological and digital means of communication, such as encryption and scanning devices, potentially circumventing the provisions of the bill. People can buy a scanner for $200. Things can be scanned quickly, and then that information is put into a computer, which puts it all at risk.
What is more important is that money laundering is taking place in many cash businesses, not just with card transactions. I will not mention any particulars, but take for example a cash business such as a fast food franchise.
I happen to know someone from New Jersey who owns a fast food franchise. I asked him why he had it, because he was a very wealthy person. He said he had a couple of other businesses, but when his five year old daughter was asked what her father did he did not want her to have to answer something that was really not important or perhaps on the verge of not being legal. So he bought a fast food franchise and his daughter can now say that her dad owns a fast food franchise that sells ice cream. It is actually quite nice.
Of course, a cash business like that opens all kinds of opportunities for people to launder money. I am not suggesting that person is doing that, but it is one way to do it.
Another way to launder money would be for a family to buy five or six business class airline tickets to Europe, decide not to use them, cash them in and the money goes to the money launderer who gave them the money to buy the tickets in the first place, and then they split. I am not sure if that situation would be covered by the bill, but there are thousands of ways to launder money, more ways than I could recall.
We feel that we have to toughen up the bill and put some resources behind it to assist the lawkeepers and the peacekeepers in ensuring that the laundering issue is addressed in a tighter way.
A clearer and more precise definition of what constitutes a suspicious transaction is needed. The subjective nature of the definition could provide an excuse for compliance failure and, as a result, many suspicious transactions may not be reported.
In addition, the use of a vague definition could result in institutions over-reporting for fear of involuntary non-compliance, thus creating unnecessary and unwarranted scrutiny of innocent individuals.
The proposed legislation must clearly address the issue of the threat to the privacy of Canadians, specifically the possible disclosure of information to Revenue Canada, should it involve a taxation matter. Strict guidelines must be established.
It must also address the possible violation of the guarantees of reasonable search and seizure under the charter or rights and freedoms.
In addition, the issue of tax related offences should be addressed. Tax offences occur when money is transferred to offshore tax havens through offshore companies, trusts and bank accounts when the purpose is to conceal assets from Revenue Canada.
Money laundering, on the other hand, involves the intent to conceal criminal profits to make them appear legitimate. We have seen the Royal Bank, the Bank of Montreal, the Bank of Nova Scotia and the Canadian Imperial Bank of Commerce account for 80% of local banking in the Bahamas. Both the Royal Bank and the Bank of Nova Scotia have been implicated in money laundering cases in the Caribbean on more than one occasion. In one case the court ordered the Bank of Nova Scotia to pay $2,500,000 in fines, noting that laws should not be used as a blanket device to encourage or foster criminal activity.
What I am really worried about is that small aircraft and boats can land in our country and in the U.S. at tiny airports or marinas and they rely on the honour system when it comes to customs declarations.
The federal government also has plans to implement signing accords with major shippers that will allow them to cross into the U.S. without stopping. Companies would provide computerized updates to Revenue Canada of their shipments and custom agents would make spot checks at company locations rather than at the border.
The Liberal government has cut in half the customs enforcement budget, and it is still cutting. I am concerned that if this is not stopped and reversed, then this feel good legislation will be just that; it will not solve the problem, but through the public relations offices of the Liberal Party of Canada and the federal government they will try to persuade people that they should feel good because the legislation is there.
We heard that money laundering is the world's third largest industry by value. Between $5 billion U.S. and $17 billion U.S. is laundered in Canada each year. Money laundering extends far beyond hiding profits from narcotics. It includes trade fraud, tax evasion, organized crime in arms smuggling, and bank and medical insurance fraud. I would hope the government would provide the appropriate resources to address and look into these issues further.
American tax collectors estimate that they lose about $9 billion yearly to tax evasion. This comes from a book by Diane Francis entitled Contrepreneurs . At a rate of 1:10, because Canada's population is about 10% of the population of the United States, we stand to lose at least $1 billion. That sounds like a lot of money over a period of a year. When we look at it in terms of how the Liberals have helped their friends evade taxes, it is a drop in the bucket. Some members may be wondering what I mean by that.
If members will recall, the Liberals allowed the Bronfmans to transfer billions of dollars in trust accounts to the U.S. without paying taxes on the accounts. This created a loss to the Canadian taxpayers of almost a billion dollars. I think it was $750 million but we would not know because we were not told the value of the tax evasion, which was supported by the Liberals and the member for Wascana who also supported it front and centre. The Liberals allowed the Bronfmans to take this trust fund, which was set up in trust for the Bronfman family to use in Canada, and move it outside the country, thereby avoiding taxes.
I think Canadians view this kind of legal money laundering or legal tax evasion, which the Liberals support, as something that is a very big concern.
If the hon. member for Wascana has some suggestions we would appreciate his participation in the debate. I am sure he would be able to provide more information on that than I can.
The other concern I and the NDP have is that we have a money laundering bill that will be tough and that will addresses the issue of criminal activity and proceeds from criminal activity. Obviously if the government had the wherewithal it would try to shut down all the criminal activity in this country. That would be an honourable objective but I am not sure how the government views that. It has not really undertaken, in my view, a comprehensive attempt to do that.
In particular, the RCMP, which has really been choked for funds, has been strangled in terms of trying to hire and train enough officers in the country to handle just the bare, basic bones of police provisioning. The Liberals have choked back funding to the RCMP over the years to the point where in Saskatchewan alone we are 200 RCMP officers short. Over the last three years the Liberals have not provided enough funding to the Regina RCMP training depot.
I am happy to say that in this budget the Liberals did provide more money to the RCMP training academy, and I thank the member for Wascana for that effort. I think it is a very important initiative but it is too little too late. We are still waiting for the weather station that the Liberals promised in the last election.
