Peter MacKay

[Proceeds Of Crime (Money Laundering) Act, April 6th, 2000]

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) Act, April 5th, 2000]

Madam Speaker, I congratulate the previous speaker on his recent designation as world expert in the area of money laundering.

Bill C-22 is of course a very important bill before us today and it is long overdue. In the final analysis it will bring about some very necessary and important changes in the country.

Put quite simply, Bill C-22 will make it mandatory for financial institutions to report suspicious transactions and will create a new federal centre to receive and manage reported information with respect to potential criminal activity, both inside and outside our borders.

It is quite obvious that this should and is a priority for many in the country. Sadly, the government has waited a significant period of time before introducing the legislation, although there was an outcry from around the country, particularly within the policing sector, asking that something be done to assist them and to give them the tools to address this growing problem.

We all know that this is but part of a larger problem. That larger problem obviously being organized crime, again here in Canada.

To reflect upon the government's addressing of that, it took a motion from the Bloc Quebecois to bring this matter to the forefront, based on the fact that one of their own members was under threat of violence as a result of his addressing the issue.

This particular legislation focuses the efforts of the law enforcement community and the entire system on addressing the problem. The money that is often shifted between countries and financial institutions, investments of that sort without a paper trace, is something that opens the door to a significant ability to launder money, which is highly criminal and obviously highly attractive to criminal organizations.

We have to be more aggressive and more vigilant in addressing this problem. I commend the solicitor general for the legislation at this time because it does empower law enforcement agents to address this. This centre I do hope will become a focal point and will receive the funding necessary to do that good work.

Giving law enforcement agents the tools is the belief of the Progressive Conservative Party. I know the member for St. John's East, as do all members of our party, do support the idea that law enforcement agencies throughout the country, sadly, have not been given the resources and the support from the government to achieve the very important task that they have before them. This legislation does move in the right direction in that regard.

Canada has been under heavy criticism in recent years with respect to the fact that the United States is feeling more vulnerable as a result of our lax internal security measures.

When I am talking about trafficking, it is not only in money that we see this occurring. It is often very much the illicit drug trade, firearms, pornography and all those things which Canadians want to feel a significant degree of protection from and where we should be focusing our efforts to close down our borders with respect to that type of material.

Money laundering, in and of itself, poses to law enforcement personnel one of the greatest challenges in the ongoing battle of organized crime. To fight organized crime effectively, law enforcement agencies and we as legislators must address those challenges posed specifically by current trends in money laundering, and adapt strategies to respond to those challenges.

[Supply, April 4th, 2000]

Mr. Speaker, I have to take some umbrage with the latter comment by the hon. member opposite, who I have the greatest respect for and who I think has the highest degree of integrity.

However, we have found, throughout this entire affair that has been going on now for some months, that there have been incredible efforts undertaken by his government to not only deny that the problem existed but to then point an accusatory finger across the way at the opposition.

It would be ludicrous for me to suggest that there was not a political element to all this. However, when it comes down to the facts of the case that are before the Canadian public, we have the auditor general himself saying that 85% of the programs were flawed in one form or another. We know that when we talk about flaws we are discussing things like companies getting more money than they applied for, companies applying for money under numbered companies and then did not set up the company in the way that they were supposed to or create the jobs that they were supposed to. Therefore, there is a very serious undertone to the motion that is before the House.

The hon. member should not simply shrug his shoulders and say that there is a process in place that is doing this work. He should admit that the problem is there. This motion is worded in such a way as to perhaps give Canadians some confidence that this problem will be dealt with in a very open and transparent way, which is again just a word when it comes to this government and is not in fact the practice.

I think Canadians would like to see—and it applies to opposition members as well—the government stand before the Canadian public and say that it was wrong, that it made a mistake and that maybe, based on the information it had at the time, it did something that it would have done differently in retrospect. Canadians have now come to expect that from the government.

Will the member please elucidate to us why it is that the government is not prepared to admit that the problem is there and that it will do something in a substantive way to give Canadians confidence in the future about this?

[Income Tax Act, March 30th, 2000]

Mr. Speaker, I appreciate the opportunity to speak to this very important private member's bill.

I appreciate the introduction by the illustrious member from the New Democratic Party. He has been a long time member of the House and has been around for many, many years. He is a very useful tool in reminding us of things that have taken place in the past. Certainly the sins of the father are sometimes revisited on the son.

This is a very important piece of legislation because it brings about a very positive change in an industry that is very much in need of attention at this time. That is not unlike other industries and other Canadians generally who are suffering from the high cost of tax that is taken from their income. Mechanics are no exception.

This bill, which has garnered a great deal of support, in a very non-partisan way I hasten to add, has also gathered a great deal of support around the country. I commend the member for Beauport—Montmorency—Côte-de-Beaupré—Île-d'Orléans for the work he has done, and the member for Lakeland who brought forward a similar private member's bill. There is a sense that the government may in fact be listening but that remains to be seen.

This legislation is very much a common sense approach to a problem that has existed for a long time, namely that mechanics are faced with an incredible startup cost when it comes to beginning in their profession. As has been alluded to, indications are that the average startup cost is anywhere from $15,000 to $40,000 to break into an industry that, like other industries, is moving toward a more technological and highly advanced profession. The tools themselves, the power tools and the basic tools, are extremely costly and often the power tools are in need of a great deal of ongoing maintenance.

The bill is aimed at giving an industry in need tax relief that is brought about in a very straightforward way and, I would suggest, in a common sense fashion. This is uncommon in this place when it comes to legislation.

In many ways my initial reaction when we started talking about amending the Income Tax Act was to be a little concerned that once again we would be making a more convoluted attempt than was necessary. Short of the Revenue Canada Act or perhaps the new youth criminal justice act, the bill is aimed at streamlining as opposed to adding layers of legislation and layers of bureaucracy on top of one another, as is far too often the case.

The government members who have spoken to the bill would lead Canadians to believe that significant tax relief has already been brought about by this administration. We know that nothing could be further from the truth. In fact the most recent budget is rear end loaded; that is to say, much of the benefits of the budget will not be felt for a number of years, in fact years that go far beyond the government's current mandate.

This bill is aimed at assisting mechanics in a very real and tangible fashion. There is a great deal of need in this area. There is a great deal of need when it comes to the tools themselves being considered very much a part of the profession, which they are. They are an integral part of any mechanic's existence and profession. The proportionate investment that is made by mechanics and the reliance on their tools highlights that very fact.

The cost as I alluded to is extremely high. Sometimes that cost, being as high as $40,000, may be more than the annual income of a mechanic who is starting up in that profession.

There is a need for standardization across the board. For example, chainsaw operators and musicians are permitted to deduct the cost of their chainsaws and musical instruments. Why then should there not be a similar tax deductible mechanism in place for mechanics? There has to be some uniformity and fairness with respect to industries and eligibility for tax deductions. Not unlike other industries such as fishing and farming, there is an intrinsic connection between the individual and the tools and machinery that are required to provide the service in the profession.

The other important issue with respect to this bill is that there is a labour aspect, an element of employment, attached. Currently with such high initial costs, many young Canadians who have the possibility to get work after receiving training, be it at a community college or through a mentoring program, are faced with a monumental startup cost that they simply cannot afford. Therefore it continues this trend that we have seen in other professions which has become colloquially known as the brain drain.

Mechanics are no exception. Indications are that many mechanics are facing the very gut wrenching decision of whether to stay in their hometown, their community, their country or to go to the United States or other countries where they are given greater tax relief and perhaps a better life by virtue of being able to keep what they earn.

An element of this bill talks about maximizing job potential which we in the Progressive Conservative Party are very supportive of to say the least. Studies have shown that the mechanics industry has experienced a serious decline with respect to enrolment in technical institutions. I think this good faith initiative that has been brought forward addresses in some measure that exact problem.

The Canadian Automobile Dealers Association and other national organizations have embraced this legislation as a good idea. They have lobbied not only opposition members but presumably government members. They have reminded them that this is something that has been in the works, has been in the hopper, for some time. There is a great deal of support and demand that the government adopt such an initiative.

Time and time again the government has demonstrated that it is quite devoid of new ideas and this is quite sad. It trundles along in mediocrity. We are seeing more and more that the real initiatives are coming from the opposition benches. Therefore, we are faced with the difficulty of it becoming a partisan effort which is unfortunate because this does not benefit Canadians. I see that Mr. Speaker is nodding in agreement with that suggestion. The government is not listening to Canadians and is not responding with the initiatives and the legislative change that is required.

With regard to tax deductibility for technicians, this idea was established in response to the industry itself and the growing concerns over the unfair treatment of automobile technicians. Working groups consisting of automobile industry associations from across the country have all banded together and spoken in support of this type of initiative.

The mechanics, like other Canadians, cannot be denied access to some form of tax relief. This is a very straightforward and common sense approach. Mechanics singularly are hardworking Canadians who want to take part in the new economy and be able to keep their hard earned working dollars. There is no reason whatsoever that they should not be afforded access to the same types of tax breaks that are prevalent in other industries.

Competition, increasing attention to detail, and the increasing bureaucracy that small businesses are faced with are other drags on the economy and on the mechanics industry itself. Insurance and the cost of maintenance when it comes to maintaining a garage and the tools of the trade are burdens for which mechanics, like others, are looking for some form of assistance. That could be brought about through the adoption of this type of legislation.

In November 1998 the Canadian automobile industry appeared before the finance committee in various capacities and organizations and made specific recommendations very much akin to this legislation. Since 1992 all of these groups representing mechanics and organizations across the country have been urging the government to move in this direction.

I have met personally with individuals like Brad Smith of Westville's Radco Enterprises and Dan McDonald of Scotia Diesel in Antigonish. Both of them were very open and frank in their support for this type of legislation which would allow them to keep their hard earned tax dollars. That we know will generate further growth through spinoffs in the economy.

Allowing mechanics to write off their expenses in relation to the cost and maintenance of their tools and their workshops is something that the Progressive Conservative Party very much embraces and supports.

We support the hon. member who has moved this bill through the Commons. We are hoping that the government members will try to break away from the tired and arrogant approach that we have become far too accustomed to, with no ideas coming forward, no innovation and no constructive moves. We on the opposition side are urging the government to support this legislation.

Again I congratulate all previous speakers who have brought forward their support. I encourage other members to do likewise.

[Justice, March 30th, 2000]

Mr. Speaker, that is encouraging because the Truscott case, as we know, has been a festering wound on the psyche of this nation and casts a shadow over the entire criminal justice system.

The case against Truscott was based on ambiguous, circumstantial and inconsistent testimony from children, impossible medical analysis of the murder victim and Mr. Truscott himself.

It seems obvious that the irregularity surrounding the investigation and subsequent trial and the new evidence warrant a full inquiry. In the pursuit of justice and public confidence, will the Minister of Justice commit to conducting a full public inquiry upon receipt of Mr. Truscott's application?

[Justice, March 30th, 2000]

Mr. Speaker, last night Canadians watched in horror as the CBC's Fifth Estate told the story of Stephen Truscott, a man who may have been wrongfully convicted of murder on scant and unreliable evidence. It appears that investigators fit the evidence to the guilt of the crime. Much of what went wrong occurred in the handling of the matter by members of the Canadian armed forces in conjunction with the OPP.

Will the Minister of National Defence instruct his officials to undertake a thorough review of all files relating to the involvement of the Department of National Defence in the Stephen Truscott case?

[Justice, March 29th, 2000]

Mr. Speaker, tonight on the Fifth Estate Canadians will be reintroduced to Stephen Truscott, a man convicted of killing 12 year old Lynn Harper 40 years ago. At age 14 he was sentenced to death and ultimately spent 10 years in prison for a crime he claims he did not commit. Shocking new evidence suggests that there was compelling evidence in the hands of DND officials that would have exonerated Truscott.

Based on what could be the most egregious miscarriage of justice in Canadian history, will the minister agree that it is incumbent upon her department to conduct a full public inquiry into this situation?

[Human Resources Development, March 29th, 2000]

Mr. Speaker, since the minister was unaware of the Telile situation I will be glad to provide her with information.

I want to read from a memo penned by the chairman of Telile, Silver Donald Cameron, to the executive. It states:

A principle to bear in mind is that the government wants to see that the bill has been paid, but has no particular interest in seeing where the money came from. We show them receipts, invoices and cancelled cheques and they pay. That's it. In principle creating a paper trail for community contributions is simple.

Upon review and if warranted, will the minister agree to her departmental auditors taking a look at whether this organization was making proper use of taxpayers' money?

[Human Resources Development, March 29th, 2000]

Mr. Speaker, I would be glad to do that because once again we are talking about a long term lease, in this instance involving 10 years of inappropriate use of taxpayer money.

Would the minister undertake in her department to look into whether the approval of this funding for the organization was in fact a conflict or whether it was appropriate? Was there any semblance of inquiry both before and after cheques were sent?

[Human Resources Development, March 29th, 2000]

Mr. Speaker, Telile Isle Madam Community Television Association has been receiving HRDC funding for a number of years. Telile negotiated a long term lease with a commercial property owner. After the lease was signed HRDC funds were then used to make improvements to the property.

We have been informed that the owner of the property and the chairman of Telile are one and the same person. He negotiated the deal with himself.

Considering the involvement of HRDC money and the apparent conflict of interest, will the minister tell us if she considers this to be a judicious use of taxpayer money?