Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce

Issue 16 - Evidence

The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-22, to facilitate combating the laundering of proceeds of crime, to establish the Financial Transactions and Reports Analysis Centre of Canada and to amend and repeal certain acts in consequence, met this day at 3:45 p.m. to give consideration to the bill.

Senator E. Leo Kolber (Chairman) in the Chair.

[English]

The Chairman: Honourable senators, we are here to continue our hearings on Bill C-22. Appearing before us today is Mr. Roy Cullen, Parliamentary Secretary to the Minister of Finance, and a host of witnesses from the Department of Finance, the Canada Customs and Revenue Agency, the Department of Justice, and the Office of the Solicitor General of Canada.

Welcome, please proceed.

Mr. Roy Cullen, Parliamentary Secretary to the Minister of Finance: Mr. Chairman, I appreciate the opportunity to speak to your committee today on Bill C-22, the proceeds of crime or money laundering bill. I should like to use this opportunity, if I may, to highlight why this bill is needed, the safeguards that are built into the bill to protect individual privacy, and the importance of early passage of the bill. I should also like to respond to a number of concerns that have been raised by witnesses before this committee and by members of this committee.

Honourable senators, while there are different ways of estimating the magnitude of money laundering, and it is difficult to do so with great precision, there is no doubt that it constitutes a problem of staggering proportions. In Canada alone, it is estimated that between $5 billion and $17 billion in criminal proceeds are laundered in and through Canada each and every year. The IMF has estimated that it represents some 2 per cent to 5 per cent of global GDP.

Money laundering imposes significant social costs, fuelling further activity and perpetuating a vicious cycle of crime. It can lead to the corruption of otherwise law-abiding citizens. It can result in the distortion of business and financial activity by criminals.

When money is laundered through financial institutions, the reputation and even the integrity of individual institutions can potentially be undermined. The current tools at our disposal no longer suffice to detect and deter money laundering. It is clear that Canada now needs stronger and more effective legislation than what we currently have on our books. This committee was informed of the limitations of the current voluntary reporting arrangements, the existing statutes, and the traditional law enforcement methods of uncovering money laundering activity.

Law enforcement agencies here and abroad and the Financial Action Task Force on Money Laundering, the international body to which Canada belongs that sets standards for combating money laundering and that monitors compliance, have called on Canada to make the reporting of suspicious transactions and large cross-border movements of currency mandatory. Those organizations have also called on Canada to establish a central anti-money laundering agency. Our own law enforcement agencies here in Canada need and want this legislation to combat money laundering.

While the details of various regimes differ, Canada is the only country in the Financial Action Task Force that has not yet implemented some form of mandatory reporting of suspicious transactions. The experience of other countries has demonstrated the benefits of financial transaction reports to law enforcement efforts. It has also provided a variety of models that the government was able to consider in preparing this legislation and in designing Canada's anti-money laundering centre.

[Translation]

As committee members have requested, I am pleased to present a table comparing the models put in place by the G-7 and other countries. It shows that the model proposed in Bill C-22 contains several characteristics that are similar to models in other countries.

[English]

With respect to the benefits, officials and other witnesses have cited statistics demonstrating the effectiveness of reporting schemes in other countries. Money laundering is a global problem. International cooperation is essential to combat increasingly complex forms of laundering. The prerequisite for cooperation is the implementation of common and effective anti-money laundering controls. Failure to do so allows criminals to exploit the weak links in the chain.

Honourable senators, Bill C-22 is the government's response to this need for stronger legislation, but it does so while ensuring the protection of individual privacy. It is significant, in my view, that the expert witness, Mr. Jean Spreutels from Belgium, noted before this committee that, compared with legislation in other jurisdictions, Bill C-22 is most protective of individual privacy.

[Translation]

We have been careful to ensure that the centre's structure as well as the legal framework in which it operates will protect Canadians' privacy. Allow me to point out the following protection measures.

[English]

First, the reports required by this bill will be sent to an independent agency and not directly to the police. Second, only if the centre has reasonable grounds to suspect that the information would be relevant to an investigation or prosecution of a money laundering offence will certain information be disclosed to the police. Third, the centre cannot disclose all its information to the police, only designated information. Only key identifying information as defined in the bill and regulations can be disclosed by the centre. Fourth, if the police want additional information from the centre, they must request that the Attorney General obtain a court order for disclosure, specifying the type of information or documents sought from the centre. Fifth, there are severe penalties for unauthorized disclosure of information by the centre's employees. Sixth, the centre is subject to the Privacy Act. That means that its operations will, in effect, be subject to the oversight of the Privacy Commissioner. It also means that individuals have rights under the Privacy Act in relation to the information that the centre has about them.

With respect to the importance of early passage of the bill, police across Canada and provincial and territorial governments have been asking for this legislation for several years. Police see this initiative as a litmus test of the government's commitment to fighting organized crime.

Promoting the implementation of international anti-money laundering standards and cooperation is a high priority for G-7 countries and the Financial Action Task Force. The Financial Action Task Force will be deciding next week whether to publish a list of countries that failed to implement key anti-money laundering controls. Without this legislation before you here today, senators, Canada clearly does not meet the standards that these countries are being measured against. This is the single most important initiative undertaken by the Financial Action Task Force of the G-7 in recent memory. Canada must shoulder its international responsibilities and lend as much credibility to this initiative as it can.

I should also like to remind the honourable senators that Canada remains a non-compliant member of the FATF, the Financial Action Task Force, having been publicly criticized in 1998. Canada will be reporting to the FATF next week on its progress in correcting the deficiencies in its system. For these reasons, Mr. Chairman, there is a pressing need to have this legislation passed before the Senate rises for the summer.

A number of witnesses and committee members have raised some legitimate concerns. We do not believe that these concerns strike at the foundation of the bill, but we believe that they must be addressed. Therefore, I should like to make a commitment to this committee that, following passage of Bill C-22, legislation will be introduced, as soon as possible after Parliament returns in the fall, to amend the bill to deal with the following four issues. These issues and the government's commitment to address them by bringing forward amendments are described in detail in a letter from the Secretary of State for International Financial Institutions to the Chair of the committee, dated today. It is my understanding that that letter may be tabled later. I will not go into the details of what is proposed in the letter. It is my understanding that one of the senators will describe that in more detail later. I will describe the headings or the subject matters that the letter addresses: first, the ability of non-lawyers to ensure that solicitor-client privilege is protected; second, the Privacy Commissioner's recourse to the Federal Court; third, the scope of the designated information that can be released by the centre; and fourth, the destruction of records by the centre.

Mr. Chairman, this committee has asked us to respond to three other issues, one of which is the five-year review. Clause 72 of the bill states:

Within five years after this section comes into force, the administration and operation of this Act shall be reviewed by the committee of Parliament...

I wish to confirm to you that the section leaves it to the Parliament, that is both the Senate and the House of Commons, to establish the committee that will undertake the review of the administration and operation of the act. Moreover, the clause further requires that:

...the committee shall submit a report to Parliament that includes a statement of any changes to this Act...

With respect to regulations, the committee expressed concerns regarding the regulation-making authority in this bill. I should like to remind honourable senators that clause 73 of the bill requires a 90-day pre-publication period for regulations and an additional 30-day notice period for any further changes to proposed regulations. These requirements go well beyond what is set out in many federal statutes and they provide interested persons with ample opportunity to be informed of the proposed regulations and to provide comments and critique to the government on their content.

The committee believes that there would be added value in establishing a further mechanism by which the committee would be informed on a yearly basis of regulations made pursuant to the proposed legislation. We have given this matter careful consideration and believe that the most effective means of providing this information to the committee would be to include it in the annual report of the Financial Transactions and Reports Analysis Centre of Canada, which is to be tabled by the Minister of Finance in each House of Parliament. That would ensure that updates of the regulations would be available to Parliament on a yearly basis, coinciding with the tabling of the centre's annual report. It would also mean that a regulation report would be communicated not only to the committee, but also to all interested parties.

Therefore, I undertake to this committee that we shall ensure that the Financial Transactions and Reports Analysis Centre of Canada will include, in each of its annual reports, a report on the regulations made pursuant to the proceeds of crime (money laundering) bill during the period covered by the report.

Before we move on to questions, Mr. Chairman, allow me to address the issue of the independence and accountability of the centre. The table on international comparisons that you have before you shows that, more often than not, the central repositories of financial information are independent agencies set up at arm's length from the police and accountable to ministers of finance or other ministers.

It demonstrates a preference for separating the financial intelligence gathering function from the police investigative function. The model proposed under Bill C-22 is justified, not just for purposes of structural efficiency but, more important, as a means of safeguarding individual privacy. The safeguards required for protecting individual privacy are such that merging the financial intelligence gathering function with an existing agency would provide minimal savings overall.

[Translation]

In conclusion, Mr. Chairman, I would like to clarify that Bill C-22 was developed in cooperation with several interested stakeholders including the provinces and territories, the financial sector, consumers' groups and privacy organizations.

[English]

This bill will update and strengthen the existing act and improve the prevention, detection and occurrence of money laundering in Canada. Together with the undertakings that we are providing to the committee, Bill C-22 will give law enforcement agencies the tools they need, but in a way that maximizes the protection of individual privacy. Furthermore, these measures will also bring Canada into line with accepted international standards in the fight against money laundering and allow Canada to fulfil its responsibilities in the international fight against money laundering.

Senator Tkachuk: Mr. Chairman, we have the letter that was sent. Is there a French copy?

Senator Meighen: No, there is not.

The Chairman: I was told that it was faxed to your offices about two hours ago.

Senator Tkachuk: It was, but there was no French.

Senator Hervieux-Payette: I was not there, so I do not know if I received one.

The Chairman: Is there a French copy?

Senator Tkachuk: I thought you might be concerned.

Senator Hervieux-Payette: I was in Montreal this morning.

Senator Tkachuk: I am certain that your office has a French copy.

The Chairman: I do not think there is a French copy, because it is being translated.

Mr. Cullen: It is on its way, as we speak. We may have it in the next few minutes.

The Chairman: Continuing, there are two parts to the meeting.

Senator Tkachuk: Should we address the issue of the letter?

The Chairman: After we have questions we will do a clause-by-clause review, on which we will have to agree or not agree. The purpose now is to ask any questions of the minister and all of the other experts.

Senator Tkachuk: On the question of regulation, you mentioned the parliamentary review at the end of the fifth year. The concerns were not the fact that it was being reviewed but whether it would be reviewed on a regular basis, because it seems that that is sunsetted -- that is, the review is after a five-year period and then it never happens again.

Mr. Cullen: I will have a first stab at that question and then perhaps Mr. Lalonde could respond as well. The reality is that the Parliament of Canada is able to review any piece of legislation or matter, at its discretion.

Mr. Richard Lalonde, Chief, Financial Crimes Section, Financial Sector Policy Branch, Department of Finance: Honourable senators, I would add that, as part of the five-year review, it is open to parliamentarians to propose extending that five-year review for a further period. It could be proposed to amend the legislation.

Senator Tkachuk: It would require amendments to the legislation to have that happen?

Mr. Lalonde: That is correct.

Senator Tkachuk: On the subject of the regulations, I do not know if I understood what you were saying. I know you are having them posted. However, this has been a concern from both sides in committee. Were you saying that the bill will be laid before Parliament and that the regulations would be sent to the appropriate members of the committee, which is what most parliamentarians would be seeking?

Mr. Cullen: I will address the general question of why so much is left to regulation. "So much" is a subjective term, I suppose. In this legislative package, with the new centre we are starting something relatively new. As we all know, money launderers, like any criminal, will look for loopholes the whole time. As we proceed with this, the intent is to be as flexible as we can so that if money launderers begin to change their patterns of operation, the centre will have the flexibility to alter its approach. The centre is basically leading with this for the first time in this particular context.

With respect to the actual tabling of regulations, they will be under this statute. There is a minimum 90-day pre-publication requirement for any regulation proposed under the bill, and I presume that would be gazetted in the normal way. There is a minimum 30-day notice if further changes are made to the proposed regulation.

We are sensitive to the fact that there is some volume left in terms of regulation for this bill. This gives any stakeholder groups, including parliamentarians, a full opportunity to comment, critique and provide input into those regulations or changes in regulations. The 90-day requirement exceeds by far what is available in any other statute.

Senator Tkachuk: We understand that there seems to be more and more regulations because the executive and the bureaucracy want to have more flexibility to change, rather than having to deal with that nuisance called Parliament where it would be necessary to make amendments for certain things. Our concern is that, as the regulatory framework builds, there is no parliamentary responsibility.

I understand that it is posted. Let us say that I object. So what? What can I do about it? Nothing really. I can write you a letter. I can complain, but in the end there are no witnesses, no discussion with the people affected, no anything. Unless it is formalized, it is difficult for parliamentarians to deal with this. You could post it on July 1, when Parliament is not in session. Things like that.

Mr. Cullen: I understand what you are saying. This bill and the regulations that will follow the bill have already been developing the guidelines, for example, that are already used for the voluntary reporting. Other regulatory matters will be completed while consulting broadly with comprehensive stakeholder groups.

Money launderers will change their shape and form. If we had to go back to Parliament every time to change what would more optimally be a regulatory issue, we would lose as Canadians.

Senator Tkachuk: I want to get back to the letter. By the way, Chair, we did receive the letter before, and some of us were actually in our offices when it arrived. It was very much appreciated as well, Mr. Cullen. I think you addressed many of the issues that we have. We have other issues that I am sure other senators will discuss with you. I want to point out that we appreciated this.

Senator Kelleher: There is an issue that I should like to discuss that we raised in great detail the other day. It is not dealt with at all in your letter. The issue is that of the diminishment of the solicitor-client privilege. That concept is fundamental to people's privacy. It is not dealt with at all. I should like to go through it with you and get your comments, please, if I may.

As I understand the bill, under clause 62, someone from the new commission could deem it necessary to continue. In other words, someone has looked at the report that came in from a financial institution and that person says, "I think this bears further investigation." Then, under clause 62, they could, without a warrant, come into my office as a lawyer, and demand to see the various and assorted documents relating to the matter of the investigation. Under clause 64(2), if I say to that person, "Hold on here, I want to claim a solicitor-client privilege," the person who wandered into my office could determine to put everything under lock and seal. That person could tell me that my client and I could go to court within 14 days, at our expense, to try to prove to the court that there is a solicitor-client privilege.

Not even the tax department today can wander into my office on a tax matter, except under a warrant. You people are giving yourselves this rather, to say the least, extraordinary privilege of wandering in without a warrant. To the best of our knowledge, the existing U.S. legislation does not even deal with the solicitor- client privilege. There is no authority under the U.S. legislation to do this.

It is our understanding that no other country permits the authority that has been established to wander into a lawyer's office without a warrant. I should like to know why you are asking for this extraordinary privilege. I would love to hear your explanation. We feel that if you want someone to wander into the lawyer's office, they at the very least should have a warrant.

Mr. Cullen: Let us assume that the centre has information. Only if the centre had other corroborative evidence that would lead the centre to believe that there was adequate suspicion would the centre then report some tombstone information, if you like, to the RCMP. In other words, information arriving at the centre on its own does not start anything. It is only if that information is corroborated with other information that the centre would then report to the RCMP. If the RCMP corroborated that with other information or data that they had, they would then go to the Attorney General to request more information if they wanted it.

In terms of someone from the centre arriving at a lawyer's office, there must be some confusion regarding when that might happen. The only time the centre would do that would be to do with a compliance issue with respect to reporting. In other words, if the centre had reason to believe that a financial intermediary should be reporting, they would make contact with that financial intermediary and begin a dialogue to ascertain whether or not that financial intermediary realized what the responsibilities were. The centre would attempt to determine if there was any notion of any transactions that they were involved in.

In any case, if at some point the centre felt that there was still a suspicion that the reports should have been provided to the centre but were not, then they could go to the office of the lawyer or the accountant or any financial intermediary and do a very targeted review of information. The issue of solicitor-client privilege may crop up in such a situation.

I wanted to make it clear that the centre itself will not send someone to the office of a financial intermediary to investigate further potentially suspicious transactions. That only happens through reporting to the police. If there are other reasonable grounds, and the police themselves then feel there are additional reasonable grounds, they could ask for a warrant. We could come back to that in a moment.

As I understand it, in the United States, accountants and lawyers are required to report certain defined transactions to the IRS. The U.S. money laundering centre can in fact obtain that information from the IRS.

In our legislation, we are sensitive to the issue of tax evasion. Our objective through this bill is to attack money laundering and, only as an incidental, perhaps an important incidental, tax evasion. Our procedure goes the other way. Clearly, one could be laundering money with a high probability of evading tax. However, the first priority is money laundering. There would be coordinated efforts by law enforcement agencies.

I am a chartered accountant myself, and I do not mean to disparage lawyers. If you weave a hole in the system, there is a potential for the launderers to go to that hole. We are trying to ensure that this bill covers the major financial intermediaries.

I should like Mr. Carrière to expand on the topic of solicitor-client privilege.

Senator Kelleher: Before we go to Mr. Carrière, I wish to point out that our concern is not about you trying to plug the loophole of the accountants and lawyers. When I was solicitor general, I was the one responsible for the money laundering legislation that is presently in place. I know a bit about this area. I am concerned only about the issue of solicitor-client privilege and access to my office or the office of any lawyer you suspect is a financial intermediary, and access without a warrant. It really is as simple as that.

Senator Oliver: You have not dealt with the warrant part of it as yet. That is the essence of our concerns.

Mr. Yvon Carrière, Legislative Senior Counsel, General Legal Services, Department of Finance: An official of the centre could not enter into a lawyer's office. He is authorized only to enter to determine if the lawyer filed the reports that he is required to file.

Senator Kelleher: Where does it say that?

Mr. Carrière: Subclause 62(1) says:

An authorized person may, from time to time, examine the records and inquire into the business and affairs of any person or entity referred to in section 5 for the purpose of ensuring compliance with Part I...

Part I does not talk about detecting money laundering or not being involved in money laundering. It says that one shall file a report when required to file a report. Therefore, when the centre is doing a compliance check, it is verifying that the lawyer has reported the large cash transaction in which they were involved. It is not checking whether the lawyer's clients were involved in money laundering. We would not be authorized to do so. That is a fundamental point I want to bring to you.

Senator Kelleher: I do not understand that explanation. As far as I am concerned, under the bill you may come to my office and under paragraphs 62(1)(a), (b), (c), and (d), you could request all kinds of access to my records. I am saying that if you want access to my records, you should have a warrant.

Under the Income Tax Act, as I am sure you are probably aware, you used to be able to go into offices without a warrant. The lawyers in question challenged that. As a legal person, you would know that there are numerous cases that hold that you cannot do it. It is unconstitutional, and you need a warrant. I do not understand why, for this bill, we are suddenly going against the grain. No other country permits this kind of access without a warrant. I do not understand why you feel you are entitled to get this under this bill. It is quite a departure.

Mr. Stanley Cohen, Senior Legal Counsel, Human Rights Law Section, Department of Justice: I believe that what is perhaps engendering some difficulty is the distinction that exists between a search and seizure and a regulatory inspection. In terms of the constitutional law, that distinction carries a great amount of significance. As has been explained by Mr. Carrière up to this point, these inspectors -- not police officers -- who carry out searches are looking for compliance with the statute. The case law tends to hold that a lower standard applies with respect to regulatory inspections. This is an administrative matter and there is Supreme Court of Canada jurisprudence. I can give you two cases, although not the citations: one is Comité paritaire, and the other is Potash or Tabah. Both of those cases uphold the rights of inspectors to inspect on a lower standard than would otherwise be the case in a criminal investigative setting.

I believe that, if one were to examine the nature of the statute that is under consideration and the powers that are being exercised in this instance, those cases would basically support the ability of the inspectors carrying out a regulatory purpose to ensure compliance with the legislative scheme. If one examines the types of powers that were accorded in the particular statutes that were involved in those cases, one would find very wide-ranging powers to enter in order to inspect books and records and to copy documents and take away files, et cetera. Those cases would tend to support the approach that has been advanced in this context.

Senator Kelleher: My concern is that an inspector might say that they are only wandering in to see if there is regulatory compliance. In order to look around to see whether or not there has been regulatory compliance, the inspector might go through all of the individual's client records and documents. Therefore, you do through the back door that which I do not think you should do through the front door. I do not know how a confirmation of regulatory compliance could be done without going through all of the client documents and records.

Mr. Cohen: In response to that, the Supreme Court of Canada is leery about anything that constitutes a pretext search. There is abundant case law on this subject. There are cases that demonstrate that when police officers carry out functions under the Highway Traffic Act -- stopping vehicles, et cetera -- where they try to transform that particular kind of activity into a wider ranging search for criminal wrongdoing, they have lost the fruits of their investigation and the evidence has been inadmissible. The leading case on that, for example, is R. v. Mellenthin.

I would suggest that any inspector who enters a lawyer's office with the intention of trying to gain access to files in a holus-bolus manner and who is not focused in terms of what they request to see or into what areas they might enter would be running the grave risk of compromising their ability to carry out that type of investigation. You cannot look for a television in a desk drawer.

Senator Kelleher: They are getting pretty small these days.

Mr. Cohen: They cannot do that which is inappropriate to the function that they are entrusted with under the legislation.

Senator Kelleher: I am not disagreeing with that fundamental principle that you have just enunciated. However, the clause, as presently worded, leaves it open to abuse. If I think that the gentleman who has come into my office is abusing his position, I am the one who has to go to court, at my client's expense, to prove the solicitor-client privilege. Under any normal circumstance, you would have had to go through a preliminary procedure to obtain a search warrant. I am concerned about the lack of that preliminary safeguard. Under this clause, you have shifted the onus to the lawyer and the client, at their expense, to go to court on such an issue. I do not see why it should be that way.

I think that it is commendable to talk about privacy and trying to shield the person, but I am very concerned that inspectors would be able to skip the necessary procedure of having first obtained a warrant. What other legislation do we have that permits someone from government to wander into my law office and demand to see my client records without the assistance of a warrant? Is there any other legislation that exists?

Mr. Cohen: I have an initial observation relative to the question that you asked. Basically, any lawyer who is involved in any type of activity that would bring the lawyer within a field of regulation would be subject to the rules and regulations that apply. Hence, a lawyer would be subject to having his or her trust accounts examined by the Law Society. Lawyers are regulated by the Law Society of the province in which they practice. Similarly, I am certain that there are other statutes under which lawyers become subject to inspection, depending upon the nature of their involvement. However, I cannot give you rhyme and verse on that.

Senator Kelleher: I do not think there are. How do you respond to the fact that our examination of the other countries that have this legislation presently on their books shows that they do not authorize this type of entry without a warrant?

Mr. Cohen: Again, I would not want to present myself as an expert in comparative law, but I understand that in the United States there is a much broader umbrella that is cast over the area of organized crime, in terms of their RICO statutes, the federal and state racketeer-influenced and corrupt organization legislation. Lawyers are certainly highly implicated in the nature of that scheme and are subject to a great deal of potentially invasive investigation under those statutes.

Senator Kelleher: In the U.S, at present, there is no invasion of the solicitor-client privilege. Our examination of the other countries showed that they do not have this on their books. Everyone suggests that Canada has been late on this, but we have taken the opportunity to review other countries' legislation. Why are we proceeding with giving something to this commission that no other country has given to theirs?

Mr. Cohen: I am here to offer advice as to whether the kinds of questions that you are raising enter the field of constitutional prohibition or are illegal in a constitutional sense. I can advise, without offering legal advice on the matter, per se, that we have had regard to constitutional norms and standards as well as to the kinds of considerations that the Supreme Court has said are applicable in the context of inspections, searches and regulation. Basically, we have attempted to provide advice to policy-makers who have constructed this particular legislation in that regard.

Senator Kelleher: Mr. Cullen, I should like you to reconsider, if you would, this particular clause with respect to the fact that this might perhaps be done after obtaining a warrant, as it is for all other types of government investigations. It is not that big a thing to obtain a warrant. I am not arguing, nor are we arguing about the necessity for stronger money laundering legislation. I would be the last person to argue against that. I simply wish to ensure that there are sufficient safeguards in place.

Mr. Cullen: I will certainly take that under advisement. The graph that you have in front of you does not deal specifically with the point you raise in terms of how other jurisdictions deal with this particular question. It deals with whether accountants and lawyers are covered, and you are not debating that. In terms of the privilege aspects, we will certainly take your comments under advisement.

Senator Kelleher: I am relying on research done by the researcher that Senator Meighen and I have. This is the report that we received saying that no one else has that privilege at this time.

Senator Oliver: Before coming here, Mr. Cullen, did you read the testimony given before this committee by the Canadian Bar?

Mr. Cullen: I have not read their testimony before this committee, but they did appear before the House of Commons Standing Committee on Finance.

Senator Oliver: Senator Kelleher has asked you a series of questions regarding the concept of solicitor-client privilege. The Canadian Bar dealt with that here and in the other place. They also dealt with the concept of confidentiality. You have not addressed that.

Senator Kelleher asked you about a hypothetical circumstance of someone coming in the office, looking for papers, finding papers and, therefore, breaching the confidentiality that is so important to the client-solicitor relationship. In its brief, the Canadian Bar said that it is a fundamental protection of both privilege and confidentiality. They said:

The importance of privilege and confidentiality has long been recognized in the law and it is central to the rules of professional conduct governing lawyers. Clients must be able to seek the assistance of a lawyer knowing that the information they communicate will remain with the lawyer and go no further.

What can you say about that longstanding, several- hundred-year-old concept of client-solicitor confidentiality that now seems to be breached in this bill?

Mr. Cullen: Bill C-22 does recognize solicitor-client privilege.

Senator Oliver: In Clause 11. I asked them about that, and it is way too narrow in its definition.

Mr. Cullen: The issue of confidentiality, as I understand it, is a much broader issue. Mr. Carrière, could you expand on that?

Mr. Carrière: I am not an expert on confidentiality, but I understand that confidentiality is of a different nature than solicitor-client privilege.

Senator Oliver: Exactly.

Mr. Carrière: Because of the necessity to ensure that everyone is filing the reports that they have to file, the protection guaranteed by clause 11 deals only with solicitor-client privilege.

Senator Oliver: What does that say about confidentiality?

Mr. Carrière: All I can say is that it is not covered by clause 11.

Senator Oliver: That traditional right is being blown away by this legislation.

Mr. Cohen: I wonder if I could ask a question back.

Senator Oliver: No.

Mr. Cohen: I am trying to understand the nature of the question as it relates to the legislation. If there is a situation in which an inspector comes into a lawyer's office and asks to see books or records in order to determine compliance, the issue would simply be about whether or not anything that is being asked for is shielded by solicitor-client privilege. The issue of confidentiality does not arise in that particular context and the procedures that are created under the legislation offer full protection.

Senator Oliver: No, they do not.

Mr. Cohen: One must consider a lawyer confronting an inspector and saying, "I am not going to answer that question because it involves a matter of solicitor-client privilege and I will have these documents sealed up." He is then asked a further question about whether or not there is anything further of a confidential nature that can actually be disclosed in that context. A lawyer should certainly be adept enough to protect his client's interests in that kind of a setting.

Senator Oliver: Not if they are being taken away by language like this. Since Mr. Cohen is back again, I should like to ask a question I asked the Canadian Bar about clause 11. Clause 11 states: "Nothing in this Part requires a legal counsel to disclose any communication..." -- the key words here are "any communication" -- "...that is subject to solicitor-client privilege." Does the word "communication," to you, include things like any activity, any transaction?

Mr. Cohen: Under the case law, including the case law to which you were referred at the last meeting when the Canadian Bar was present, the understanding of the term "communication" is that it is a broad notion that can embrace, depending upon circumstance and context, transaction, the name of a client or a great range of information. One could, even on as basic a matter as a name, assert solicitor-client privilege. Thus, confidentiality as regards that kind of information is safeguarded through the assertion of privilege. Communication should not be read as a narrow thing in terms of the case law.

Honourable senators, you have been concerned with these issues with respect to how this legislation might fare in the courts and how it might be affected by some of the challenges going on in the courts with respect to section 488.1 of the Criminal Code. That is the Lavallee case out of Alberta. That case has gone to the highest level. You will find support for what I am suggesting in that particular case. The notion of what is embraced by privilege and what is embraced by the notion of a communication is broad enough to capture a transaction or a name in a given circumstance.

Senator Oliver: An activity, perhaps, as well.

Mr. Cohen: Potentially; it would depend on context.

Mr. Lalonde: Mr. Carrière is quite right that Bill C-22 does not address confidentiality, which is a much broader issue than privilege. Many professionals, including accountants and other businesses such as financial institutions, banks, owe a duty of confidentiality to their clients. The bill provides other provisions to ensure that the information that is provided to the centre is protected. That is the way the bill deals with the broader issue of confidentiality between the client and the professional.

Senator Angus: Mr. Cohen, I noted that you were present last week when the Canadian Bar witnesses were telling us some of their concerns. In particular, I was struck as a lawyer by their bald statement that they consider it very likely that this bill is ultra vires of Parliament. I have been ruminating on that since, and I saw you scratching your head when the evidence was given. I am asking myself why the legislators and you people behind this act would take the chance of having it struck down when it is so easily remedied, or at least so I believe. I refer to page 3 of the CBA brief where they say:

...we believe it may be ultra vires of Parliament. We recognize that the Federal Government may rely on the Criminal Law power... However, we believe the Bill could be interpreted as intruding upon the legislative jurisdiction of the provinces as to "property and civil rights" and "administration of justice within the province."..

Are you very comfortable that the bill is intra vires?

Mr. Cohen: That particular issue is an issue of division of powers, not a Charter issue.

Senator Angus: They talk about the Charter as well -- section 8.

Mr. Cohen: Under section 8, I do not think the Canadian Bar Association necessarily has as much support as the statements that were made would tend to indicate. Even on a challenge to section 488.1 of the Criminal Code, the case law is divided. There are decisions in Ontario that uphold the constitutionality of that provision. It is not this provision, but it is similar to it.

On the question of whether this falls within the scope of the criminal law power -- and I hesitate to use words of advice here -- it is difficult to see how a bill that addresses money laundering as its subject matter does not fall within the federal criminal law power. I would say that at the very least there must be a strong and persuasive case to be made for the vires of this legislation and the constitutionality of the legislation.

Senator Angus: That is an elegant way of telling me that you totally disagree with what the lawyer from the bar has said. I have a great deal of respect for you and your colleagues, and I know you have put a lot of time into this. Candidly, do you see a risk that this could be held by the courts to be ultra vires? If there is a risk, is it not quite easily remedied by an amendment that would render it clearer?

Mr. Cohen: If the concern is with ultra vires, that it falls within provincial jurisdiction rather than federal jurisdiction, I have not personally seen case law that supports that point of view. With respect to the Charter, the jurisprudence is mixed on this subject at the lower courts in relation to a similar statute, not this particular statute. The undertaking that has been given with regard to solicitor-client privilege and subsequent amendment probably fortifies this particular measure.

Senator Angus: You are comfortable with the bill as drafted.

Mr. Cohen: You would be justified in drawing that conclusion.

Senator Angus: My colleagues and I were discussing this unilingual letter before the session began. We were wondering, from a legal point of view, whether it is worth more than the paper it is written on in terms of enforceability. Can we bind Parliament to come back here in September and introduce all these amendments? I want it on the record, if that is your legal opinion.

Mr. Cohen: I am not here to offer a legal opinion on a subject of that nature. That is a political question.

Senator Oliver: No, it is not. It is a legal question.

Mr. Cohen: I can tell you that I was involved in the recent passage of Bill S-10, which originated here. It was a follow-up to Bill C-3 on DNA data banking and involved a similar process of undertakings and then the introduction of subsequent legislation.

Senator Angus: There is no question that there are precedents. I think you are perhaps using one of your lifelines here. The precedents have been based on the goodwill of the committee and the willingness of senators to not unnecessarily retard the process.

We have concerns about fundamental matters such as the ones that Senator Kelleher has raised and those that other professions, such as the accountants, have raised about the intrusive elements. I believe it could be remedied and would not take anything away from what we are trying to do. As I said the other day, I heartily support the initiative, and I think Canada should be doing its piece within the group of the task force. I am troubled that we would say, "Well, we will satisfy you in these various ways, and we will come with an amending piece of legislation in the fall." We are also informed that we might be in the middle of an election and this parliament will have been dissolved. Mr. Peterson, who uses the first person singular in introducing a bill, might not even be a member of Parliament at that time.

I am not asking you to give me a legal opinion, but I think it is fairly reasonable for me to ask one of Her Majesty's law officers whether or not he feels this has legal weight.

Mr. Cullen: Not dealing at the moment with the question of legality, I can tell you that this letter is a firm undertaking of our government. In the meantime, it helps to clarify the intention of the bill. I know that the intent in terms of the government is absolutely cast in stone that we will deal with these issues.

Senator Angus: The problem that I have is that it is then rather than now. These amendments make sense to the government, without taking this other risk to which I alluded and which I believe is real. Notwithstanding good faith and everything else on the part of the minister, he just might not be here. I feel there are ways to amend this bill and to address them.

Senator Meighen: Senator Angus has been exploring the area that interested me. As Senator Kelleher pointed out, Canada was in the forefront of anti-money laundering legislation in the early 1990s, thanks in major part to his personal efforts. All of a sudden we seem to have woken up. Now there is an incredible rush to produce legislation, which is clearly challenging to draft so that it protects individuals as well as deals efficiently with the admitted problem of money laundering. We rush into it, and by Minister Peterson's own admission, he is prepared to propose, and I do not doubt his good faith and his good intentions, four or five amendments in the fall.

I find it difficult to convince myself that the difference between the middle-to-end of June and the middle-to-end of September is crucial to Canada's standing in the world with respect to anti-money laundering legislation. I can easily convince myself that, by rushing, we can make a serious mistake that it is not necessary to make with respect to people's fundamental liberties and the basic question of solicitor-client privilege that Senator Kelleher explored. What concerns me even more is that, similar to an act such as the EDC, we are suggesting that we should not review this. Yes, we will review it, but only after five years.

With great respect, Mr. Cullen, I do not think this is good enough. If you are going to make these amendments in the fall, I should like to see it reviewed by the end of the year. If that is not acceptable to you, and I would be surprised if it were, at the very least there should be a three-year period, as opposed to a five-year period, to see how it is working.

The minister cannot control the Order Paper of Parliament. He cannot control whether Parliament is sitting or not sitting. What he can control is to work with us in the Senate to get the amendments through in an expeditious fashion so that when the bill is passed in a short period of time, it does not run the risk of offending basic civil liberties. Why can we not, as Senator Angus and others have suggested, work on these amendments, get them in, and then change the review period from five down to three years? Why do we have to rush to pass what may be a very imperfect and dangerous bill by the end of June?

Mr. Cullen: I understand there are some concerns. In the view of the government, with what has been proposed and the response of the government, we do not believe the bill is fatally flawed at this point.

The longer we wait, the easier it will be for money laundering activity to expand and grow. We have a unique opportunity here to put in place some legislation that will give some teeth to the law enforcement agencies.

Senator Meighen: Agreed. Let us do it in September.

Mr. Cullen: It will not be any easier in September.

Senator Meighen: Explain the danger of waiting until September. Are you telling me, Mr. Cullen, that three months will imperil Canada's ability to deal fundamentally with the problem of money laundering?

Mr. Cullen: As I said in my remarks, this must be dealt with on a coordinated international basis. Right now we are in danger of falling behind. There are initiatives moving now that need a coordinated response. Any further delay will simply mean that the money launderers will be able to advance their activities and we will still be the open link for money laundering activities to expand.

I am sure you, as a senator and a citizen of Canada, are not happy with the idea that Canada would be labelled as a safe haven for money laundering activities. This is something I find offensive and I am sure you do.

Senator Meighen: You know that is not what I said. What I said was that I am having trouble convincing myself that three months makes a fundamental difference. You are suggesting that it will place us in the category of a safe haven for money launderers. I do not accept that and that is not what I said.

Mr. Cullen: I did not mean to imply that you were saying that there was that kind of tradeoff. What I am saying is that, in our view, we have responded to some of the critique and we believe we have improved the bill. At this point we do not think the bill is fatally flawed. We should get on with setting up the centre, putting things in motion, and being a responsible part of the international community.

The police law enforcement agencies are waiting for this. You may find this hard to believe, but one of the reasons for the delay has been the fact that we have been paying a lot of attention to privacy issues, maybe not in as comprehensive a way as some senators would like, but privacy is one of the areas we have focused much attention on. In fact, the expert from Belgium confirmed that our structure, framework and legislative package pays more attention to privacy issues than does any other jurisdiction in the world.

Senator Oliver: Yet two of the amendments you want to bring in the fall deal with that very issue.

Mr. Cullen: Perhaps, senator, perfection is something that you can claim. I would not sit here and say that this bill is perfect. What I am saying is that, in our view, the bill is in darn good shape, particularly with the comments that we have received and the changes that we are prepared to deal with. To delay these very important initiatives to counteract money laundering would, in our view, not be in Canada's best interests.

I should just like to comment, because it may be germane in terms of the comments made earlier by Senator Kelleher and Senator Oliver with respect to other jurisdictions or acts that provide for access without warrants, I am advised that the Ontario Securities Act, section 11(4), provides for warrantless search powers similar to those contained in this bill. With respect, I do not think that what is being proposed here is setting new precedents in that context. I just wanted to put that on the record.

Senator Meighen: Is that with respect to third parties or with respect to individuals with their own records?

Mr. Cullen: I believe this just deals with the issue of warrantless search powers, which Senator Oliver raised.

Senator Meighen: I make a distinction between the Securities Commission coming in and looking at my personal records, and coming into my office and looking at Senator Tkachuk's records that I have by reason of the fact that I am his lawyer.

Mr. Cullen: This particular provision relates to registrants under the Ontario Securities Act.

Senator Meighen: That is very different. With respect, I do not think it is an apple-to-apple comparison, but I could well be wrong.

In any event, I must weigh the decision as to whether a warrantless breach of solicitor-client privilege is necessary in order to have this legislation in place before the summer recess rather than in the fall, and knowing that, with the best goodwill in the world, there is no guarantee that Minister Peterson can introduce much less see to the passage of these amendments.

Mr. Cullen: I know that Minister Peterson is committed and the government is committed at the highest levels to make these changes. Beyond that, I cannot give you the shirt off my back at this particular meeting.

Senator Angus: I should like to address this document that has been placed before us today. I believe I can refer to it as the chart or the table that some senators asked for in earlier sessions on Bill C-22.

Mr. Cullen: Excuse me, this is the comparative chart.

Senator Angus: First of all, I should like it to be formally in the record. Who prepared it, sir?

Mr. Cullen: The Department of Finance.

Senator Angus: Are you familiar with it?

Mr. Cullen: Yes, I am.

Senator Angus: You have said this document was prepared by the Department of Finance and that you are familiar with it, and you have colleagues with you who, I am sure, are equally familiar. It is entitled "International Comparisons of Anti-Money Laundering Regimes." We have page 2 of 2, but I understand that page 1 was simply a fax cover sheet. Is there a page 1?

Mr. Cullen: I just have this.

Senator Angus: Does yours say page 2 of 2?

Mr. Cullen: Apparently the footnotes were previously on page 2. Did we not need the footnotes?

Senator Angus: I think it is reasonable: it does say page 2 of 2. Page 1 was the main table, and the footnotes were at page 2.

Mr. Cullen: The footnotes have been incorporated onto page 1.

Senator Angus: I should like to have this document formally in the record. People under your supervision dispatched that to the committee?

Mr. Cullen: That is correct.

Senator Angus: Could we let it form part of the formal record?

This document refers across the top to anti-money laundering authority. It lists Canada, Australia, the U.S., the U.K., Belgium, the Netherlands, France and Japan. In the footnotes, I notice Italy got a mention. That is nine countries, including Canada. What happened to the others that are in the group?

Let me elaborate by saying that, at the first hearing, when you gentlemen briefed us on this bill, we were told that Canada was one of 28 nations involved in this cooperative effort. We were further told that the bill was important because Canada was the last of 28 countries to get up to speed and introduce legislation. It became apparent during the hearings that, in fact, Canada might well be ahead of many of the other countries, having already passed the money laundering legislation of the Senator Kelleher regime. Indeed, we heard that we were covering the topic through provisions in the Criminal Code and so forth.

We asked for the comparative table so that we could see where we are at and where we are not at vis-à-vis the other countries. I am having trouble understanding this document for a number of reasons. I have mentioned one: Where are the other 19 countries mentioned? Furthermore, one footnote says that this is to be done in regulation.

Without me asking questions and confusing the issue, could you address this document? Tell us what it means and how it came to pass. Fill in some of my blanks for me.

Mr. Cullen: Perhaps, it would be helpful if Mr. Lalonde took the group through the chart. I should preface that by saying that we are the last G-7 country to implement mandatory reporting of suspicious financial transactions.

Mr. Lalonde: Just to amplify that, not only are we the last G-7 country, according to the 1998-99 annual report of the Financial Action Task Force, but that report also states quite clearly that the reporting of suspicious transactions by banks is mandatory in all members except Canada. We know that Canada is the only country within the 26 member FATF that does not have some form of mandatory suspicious transaction reporting. We were trying to be as comprehensive as possible in the table. Certainly, if we were to put all 26 countries down in terms of whether or not they have suspicious activity reporting, the answer would be yes for all 25 members of the Financial Action Task Force, with a blank for Canada.

In terms of our ability to obtain additional information, which may or may not have been requested by this committee, we did our best to obtain as comprehensive a picture as we could, in the time allotted, for the countries that are presented in this chart.

Senator Angus: In the time allowed by whom?

Mr. Lalonde: Well, since the time that we appeared before the committee on June 1, and the present.

Senator Angus: Are those your comments?

Mr. Lalonde: I am happy to respond to any additional questions.

Mr. Cullen: Would it be helpful to take the senators through the various categories?

Senator Angus: It would be.

Mr. Lalonde: I would be glad to. If we could take a look at the first line, "Accountability Structure," we see that in most cases the financial information agencies are structured as independent agencies and are for the most part at arm's length from the police. We notice, as well, that in some cases the centres -- agencies -- are accountable to, or they report to, ministers of finance, attorneys general or other ministers, as the case may be. There is no particular pattern, but they are accountable to ministers of finance in a number of cases, notably in France, Belgium and the United States.

I would just mention that in the United States, FINCEN is a branch of the Treasury Department, much like the Bureau of Alcohol, Firearms and Tobacco or the IRS. They are separate entities -- branches -- but they are within the Treasury Department.

As for the scope of legislation of entities that are covered, we notice that there is a fair bit of uniformity in terms of the regulated financial institutions.

Senator Angus: Excuse me. To make it clear and for the record, this chart, insofar as Canada is concerned, reflects what will be the case if this legislation passes. Is that correct?

Mr. Lalonde: That is correct.

Senator Angus: It does not show us where Canada is already, at least up to speed. Do you realize what we are getting at here? We are saying, "Okay, this is good stuff, and we basically support the initiative, but what is the big rush? We are not that far out of step with other countries, and you are infringing on some rights. So let's get it right and go ahead in September or whenever."

Mr. Lalonde: To clarify, it is perspective if we are talking about reporting requirements in analysis and disclosure since Canada does not have mandatory reporting and these are the criteria that we have. Certainly, if we are talking about record keeping or client identification requirements, those are embodied within the current Proceeds of Crime (money laundering) Act.

These businesses are covered presently by the record keeping and client identification requirements. In that sense, we are acceptable in terms of record keeping.

As I indicated earlier, the scope and coverage looks pretty uniform when we are talking about regulated financial institutions. It looks less so when we are talking about unregulated institutions or financial businesses, such as credit card companies, for example. In the area of lawyers and accountants, not in every country, but certainly four, in particular, address accountants and lawyers directly. And in Belgium and France, notaries are covered by the reporting scheme.

As indicated by Mr. Cullen earlier, the IRS requires accountants and lawyers to report the receipt of cash transactions of $10,000 or more to the IRS. The information contained in these records is accessible to FINCEN for purposes of enforcing its acts.

The next category indicates the range of different kinds of reporting requirements, be they cash transaction reporting requirements that are suspicious or cross-border reporting requirements.

Finally, the last box is for information about some of our concerns, which involves the performance of the amount of disclosures that are made to the police or reports received, whether or not reporting entities can report electronically or otherwise.

Senator Angus: Mr. Lalonde, your comments and they are very helpful. May I ask you whether, in your view, those boxes -- the mandatory reporting, the accountability, and so forth -- cover the main elements of either Bill C-22's money laundering provisions or those that are already in our law, or are there other key things that are needed and are in Bill C-22 that are not referred to there?

Mr. Lalonde: Certainly, if we wanted to put down all of the safeguards to protect personal privacy, we could have listed all the ones that we have and researched whether or not every other jurisdiction has those protections as well. That would have required exhaustive research. Perhaps that would have been helpful, but we were told by Mr. Spreutels in his testimony that in his opinion our regime was fairly comprehensive. I do not know whether that would have added too much to the chart itself.

We could certainly have found other criteria within the bill to add. We were trying to address the main issues. The main issue raised with us when this chart was requested was essentially what is addressed in the first line. There were some issues relating to accountants and lawyers, so we thought that it might be useful as well to include a line on that. Also, we thought it would be useful to include the different kinds of reporting requirements in the different jurisdictions.

Senator Angus: It is very useful. I believe you mentioned the individual who came from Belgium. My sense from him was that he thought that this bill was terrific. It goes beyond anything they have seen in Belgium and they wish they had something like it there. Again, that made me feel this is going beyond what other countries have, and it may end up serving as a model in terms of being a terrific tool for combatting organized crime and money laundering. It is just the urgency aspect, as I say, that bothers me.

Mr. Lalonde: Mr. Spreutels was referring to the safeguards to protect privacy, not so much whether or not the regime that we have in place would be far and above anyone else's regime in terms of combatting money laundering. Certainly, in the European context the protection of privacy is a high priority and there is stringent legislation in member countries, so I do not think that Mr. Spreutels would want to say that the basic protections that are afforded under Canadian statutes to personal privacy are far and above those that are available in Europe as well.

Senator Angus: You may have covered this on the earlier occasion but let me just ensure that I understand your position. There has been an issue raised as to why this special agency should be set up to receive all this data, this suspicious information, as opposed to the RCMP. The RCMP has a great amount of information, as we have found out over the years, and there are exceptions, but, by and large, the citizenry tends to feel not so nervous about all this sensitive information being in the hands of the RCMP, whereas there is more concern and fear that these fundamental rights will be violated and breached in the hands of this new agency.

I should like to know once and for all what your position is. I know you do not want to change it and I know you feel it is the right position, and that is fine. I just wish to hear the reasons.

The Chairman: We have gone over this ground at least five times, senator. Representatives of the RCMP were here when you were here and said they did not want to take the responsibility because it would end up being abused.

Senator Angus: Is that going to be the official answer, senator? I have always liked your answers, we think alike on so many things, but it would not take long. It is my last question.

Mr. Cullen: I will start off by saying that there are tradeoffs in everything we do, but one of the clear advantages of having the centre is that it acts as somewhat of a filter. It really addresses some concerns that have been raised by you and others that information by itself that is reported should not necessarily trigger a ground for suspicion. It triggers recording of the information, against which other corroborative information is matched, and only in the case where there are further grounds for suspicion would that information be forwarded to the RCMP.

In a sense, I believe it protects citizens from having information go directly to the RCMP. Even though I have confidence in the RCMP, I personally would feel that if frivolous information were being reported to the centre and there was no other corroborative information, then that is where it would end. It would not go further. In any regime, there are pluses and minuses. I feel that is a pretty compelling advantage.

Mr. Lalonde: Mr. Cohen has given a very good explanation as to why it was advantageous to have this function set up in a separate agency and at arm's length from law enforcement. I will not go over that territory but will say simply that there are very good Charter reasons why that is so.

We have also indicated to the committee that, even if you set aside Charter concerns and personal privacy concerns, the cost savings of merging that activity within another agency would be minimal.

Senator Tkachuk: The letter was sent to the chairman from Mr. Peterson; do you know whether he would be willing to make changes in the letter?

We have some additional concerns. We appreciate the fact that he is willing to make amendments so quickly. I, along with those on this side, do not understand why the changes cannot be made now, but let us put that aside for a moment.

Senator Kelleher has concerns under clauses 63 and 64 on client-solicitor privilege, under clause 85 under access to information, and also about the review process of the bill. We have tried to raise these points with the witnesses during our meetings. Do you know if Mr. Peterson would be willing to add that as part of the process, or is this it?

Mr. Cullen: Minister Peterson has attempted to respond in a positive, concrete and constructive way to the concerns raised by senators and other witnesses who came to this body. At this point, I do not think he would be in a position to expand further on this letter.

Senator Tkachuk: Did this letter come about because the minister and his officials were listening to the witnesses and they said, "Oh, these are the items"? Or was there a whole list of items from which he decided?

These were not the only concerns raised. Many concerns were raised, some of which I have indicated and some of which we explored previously during these meetings. Those were larger matters than the ones addressed here by the minister.

The Chairman: I hear where you are going and obviously you are free to go wherever you like, but my understanding was that you folks would not accept a letter of any kind. That is why we worked out a letter that was acceptable to us to show to you. You had told me that nothing less than regular amendments would do and that letters were not acceptable. You are catching me unaware here.

Senator Tkachuk: There are two issues here. You had asked whether we would accept a letter. Of course, over the last seven years while I have been here, there have been many letters and nothing has ever happened.

The Chairman: I am not disagreeing with you. I am not suggesting you should accept it.

Senator Tkachuk: I am just saying that this letter caught us by surprise because it is unique. This letter promised, at the earliest possible time, to entertain and pass amendments in the other place. We do not get those kinds of letters. That is the letter I was talking about.

The Chairman: Would you reconsider your position? Would you accept a letter?

Senator Tkachuk: We would like to caucus for a minute, but our view would likely be that we would entertain the acceptance of this letter. That is why I am asking whether it is possible to have a couple of extra items included to cover the concerns that arose on this side. Some of the concerns on your side have been addressed here.

The Chairman: I wish you had told me that a couple of days ago, because we could have tried to work things out.

Senator Oliver: This is not the minister's letter? It is your letter that you wrote up?

The Chairman: Senator Oliver, I find that a very inappropriate and silly remark. It is not the letter that we wrote. It is the letter we ended up accepting.

Senator Oliver: That is not what you said earlier. The transcript will show what you said, senator, with all due respect. You do not have to shout at me.

Senator Tkachuk: While they talk, may we speak, Mr. Cullen?

Mr. Cullen: I should like to say that Minister Peterson is aware. He has been following, through staff and personally, the deliberations of this committee and the House of Commons committee. He is aware of the range of issues and concerns. At this point in time, these are the four issues that he is prepared to address in a letter. That is basically his position. He is aware of other concerns but, at this point, this is the extent to which he is prepared to respond.

Senator Tkachuk: I want to make it clear and it is on record that when I was asked about a letter, what came to mind immediately was the usual letter received from a minister saying that certain things will be done, but nothing ever gets done. I have an example here regarding Bill C-78. Meetings were supposed to take place. A new minister came in and refused to hold the meetings. Nothing ever happened.

When this letter hit our desks, it was quite interesting because of the undertaking here to introduce amendments. We were quite pleasantly surprised. We want to know whether there is any chance that Minister Peterson could appear so that we could request the inclusion of a couple of items also.

We support the substance and the principle of the bill. We have some serious concerns that we want to see addressed, but we will be cooperative in dealing with this matter.

The Chairman: We should excuse the witness and discuss it. As far as I know, we must deal with it today.

Senator Tkachuk: We can do what we want, Chair.

The Chairman: Of course, you can.

Senator Tkachuk: You can, too.

The Chairman: I understand.

Senator Oliver: Some of the proposed amendments in the letter that was sent to Chairman Kolber are fundamental in nature. My question is this: If this bill were passed, is the minister prepared to hold up proclamation until such time as these amendments can be made?

Mr. Cullen: Honourable senators, I can say that we certainly could discuss delaying proclamation of certain clauses over the next little while.

Senator Tkachuk: Is that up to and including the time of the amendments, say December 31 of this year? That would give you time, if the amendments were done. Does that seem reasonable?

Mr. Cullen: Yes.

Senator Tkachuk: Which particular clauses?

Mr. Cullen: It depends. This is something new for me and I do not have the mandate to commit the minister to any particular clauses.

The Chairman: You cannot make that kind of an undertaking?

Mr. Cullen: No.

Senator Tkachuk: He just did.

The Chairman: Frankly, I do not know how he could do that.

Senator Meighen: He is a member of Parliament.

Mr. Cullen: Just for the record, Mr. Chairman, we would be prepared to consider delaying proclamation of certain clauses. That is all I can say. I am not the minister.

Senator Tkachuk: Could we have that answer by, say, Wednesday of next week?

Senator Meighen: That would be quite a good compromise when you think of it. We have done that with the bankruptcy bill and with some other money bills.

Senator Tkachuk: Mr. Cullen seems to be open to that discussion. It is good that we knew this before our discussion took place.

Mr. Cullen: To elaborate, it is something that could be discussed.

Senator Tkachuk: We understand.

Mr. Cullen: We would like to see the legislation.

Senator Tkachuk: We understand that, too.

The Chairman: I thank the witnesses for their time today.

Senator Tkachuk: Mr. Chairman, could we have five minutes to caucus by ourselves on this letter?

The Chairman: We can take a recess, of course. However, we will proceed to clause-by-clause consideration when we return.

Senator Tkachuk: If we do that, then there is no use talking about anything -- no letter, no nothing.

The Chairman: The letter will be appended to the report.

Senator Tkachuk: With no possibility that some of our concerns would be included in the letter?

Mr. Cullen: Mr. Chairman, I think I said clearly that Minister Peterson is not prepared to go beyond the letter at this point.

Senator Tkachuk: You made that commitment for him. At the same time you said other things.

Mr. Cullen: I happen to know, because I have discussed that particular matter with him.

Senator Tkachuk: Would you be willing to take up the matter with him about holding up particular clauses?

Mr. Cullen: If the bill is passed, we could consider delaying proclamation of certain clauses. We could have a look at it. That is what I committed to.

Senator Tkachuk: Would it be possible that you could have that decision to us by next Tuesday or Wednesday and then we could do clause-by-clause consideration knowing that that was going to happen?

Mr. Cullen: I do not think that is possible. It is a matter that could be considered in discussions over the summer, but not before then.

Senator Tkachuk: It seems very strange that concerns of the government members were met, but when our concerns come up, short shrift is given.

Senator Kroft: That is not fair at all.

Senator Tkachuk: Senator Kroft, tell me what is fair.

Senator Kroft: That is not accurate.

Senator Tkachuk: Tell me what is accurate, then.

Senator Kroft: The amendment about the Privacy Commissioner was an amendment expressed from all sides of this table. Those issues were expressed as concerns generally around the table. They are not identified one way or the other.

Senator Tkachuk: We have a number of amendments.

Senator Kroft: Was that issue not a concern of yours?

Senator Tkachuk: Of course.

Senator Kroft: How can you say your interests are not expressed in the letter?

Senator Meighen: Other concerns are not.

Senator Tkachuk: I said concerns that we had, Senator Kroft.

Is it possible to have a recess?

Senator Grafstein: Mr. Chairman, could I have one or two minutes to comment on this? I did not mean to speak, but Mr. Cullen is gone and one of the reasons I am interested in this bill is that I am vice-chairman of the economic committee of the OSCE. To deal with international money laundering was a major initiative by the OSCE, which Canada supported. Mr. Cullen led in making sure that that was an issue. Quite frankly, the evidence we heard at the international meetings is that this is an epidemic issue and the sooner we can close whatever doors we can, the better.

I have come here to satisfy myself on the privacy questions and I received good satisfaction. The key is to get things going as quickly as possible, not to delay. The fastest it can be proclaimed, even the three quarters of bill that is satisfactory, the better it is for the interests of Canada. We have an international reputation that can be enhanced by this bill. I say that not as a member of the committee but as a representative of the OSCE and a vice- chairman of the economic committee, which puts this at a key international priority.

The Chairman: We will recess for five minutes.

The committee recessed.

Upon resuming.

The Chairman: Honourable senators, we appear to have reached a compromise. We will report the bill as drawn with the letter attached. We will also put wording in the report indicating that both sides are suggesting that three more amendments are necessary. We are suggesting them. We cannot bind anyone. The amendments are things that you guys have drawn up. We will go along with them, and they will be in the report.

Senator Kroft: We will say "generally as expressed." We are not trying to tie it down to specific wording.

Senator Meighen: The three areas are solicitor-client privilege, regulations, and the review in three years instead of five.

The Chairman: Now that it is on the record, does everyone agree?

Senator Tkachuk: I have copies of those. You will have to draw them in the proper form.

The Chairman: We are making the request that these be considered seriously.

Senator Kroft: We want to make it clear that the committee collectively recommends those items.

The Chairman: We recommend that these changes be added.

Senator Meighen: Generally as expressed.

Senator Tkachuk: We have our amendments, and you can draw the wording.

The Chairman: Do the witnesses have a problem with this?

Senator Tkachuk: We understand it is not exactly the wording of the amendment, but all we have is the amendment, so those observations must be drawn.

The Chairman: Would you make the motion?

Senator Kroft: I move that the committee complete clause-by-clause consideration of Bill C-22. Must the reference to the letter be included? I would include in the motion that the bill stands unamended but accompanied by the letter from the minister, together with observations agreed upon by the committee.

The Chairman: By the entire committee.

Senator Kroft: By the entire committee on an additional three subjects.

Senator Meighen: As generally set forth.

Senator Kroft: As generally set forth. The report that we have agreed on is that the act goes unamended accompanied by the letter. The letter is a commitment by the government, so it is the bill plus the letter.

The Chairman: There are three recommendations.

Senator Meighen: The committee recommends, in addition to the minister's letter, three further recommended amendments to the act.

Senator Oliver: What about proclamation?

The Chairman: We cannot get into that.

Senator Kroft: The question has been raised, but with the letter plus these additional amendments, we know we are trying to strike a balance here. We could go through a great deal looking for perfection, but in fact we have a bill with which we are all comfortable.

Senator Meighen: He is committed to considering it. If he does not want to do it, he will not.

Senator Fitzpatrick: He said he would take the proclamation back for consideration and advice.

The Chairman: All those in favour of the motion?

Hon. Senators: Agreed.

The Chairman: Carried. Thank you, senators.

The committee adjourned.