Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 12 - Evidence - Meeting of December 13, 2006
OTTAWA, Wednesday, December 13, 2006
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-25, to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another act, met this day at 4:10 p.m. to give consideration to the bill.
Senator Jerahmiel S. Grafstein (Chairman) in the chair.
[English]
The Chairman: We welcome everyone to the Standing Senate Committee on Banking, Trade and Commerce's consideration of Bill C-25, to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make consequential amendments to another act. We have two distinguished witnesses: Mr. Everett Colby, the Chair of the CGA-Canada Tax and Fiscal Policy Committee of the Certified General Accountants Association of Canada, and Mr. Gary Rogers, Credit Union Central of Canada.
I have a few preliminary comments. We are seen on television coast-to-coast-to-coast and around the world by Internet, so everything we say should be considered and thoughtful.
You will recall, Mr. Colby, that this committee did some preliminary work and issued an interim report before this legislation was introduced. The legislation has now been introduced. We are in the final phases of the legislation and considering it in committee. It has been through second reading in principle. We welcome your comments. We have half an hour, so I hope in your preliminary comments you would be as brief as possible. Perhaps we could divide the time in two: 15 minutes with you, Mr. Colby; and your issues, Mr. Rogers, are separate.
Everett Colby, Chair, CGA-Canada Tax and Fiscal Policy Committee, Certified General Accountants Association of Canada: On behalf of Certified General Accountants Association of Canada and our 68,000 members, I thank you for the opportunity to appear today to present our views on Bill C-25.
I am a public practitioner as well. My client base is principally small- and medium-sized businesses. As mentioned by the chair, I have appeared before your committee before and have been involved with this legislation since its inception.
Given that time is short, I will keep these comments even briefer than my speaking notes would indicate to allow more time on the question side.
We have one principal concern with this legislation. Our comments are focused primarily as it relates to the accounting profession. Mr. Chair, senators, we really have a lot of difficulty with the addition of the attempted suspicious transactions.
We as a group, as members of the public and as residents of Canada believe in Canada's efforts to fight and combat money laundering and terrorist financing, but we also want to make sure that you appreciate that while the legislation in principle is good, there may be aspects that are relatively impossible for us to comply with potentially.
The legislation is still relatively new. It is only about five years old. We recently conducted the five-year review. Frankly, we have seen no statistics or any other information from Financial Transactions and Reports Analysis Centre of Canada, FINTRAC, that would indicate that this addition of the attempted suspicious transactions would in any way enhance this legislation and make it more effective.
I will cut the rest of my comments to leave more time for questioning, as I think that will be more fruitful for everyone.
The Chairman: I understand you have one other comment to make, which I have considered and hope we can deal with it. You have asked the committee to allow for sufficient time before the act comes into force to allow you to accommodate the revisions and to provide the communications to your membership, to inform them about the implications and their new responsibilities.
Mr. Colby: Yes, sir, that is correct. I thought that might come up in questioning. When the initial legislation was introduced, it took us almost two years, as with many other organizations, to ramp up not only with communication to members but with materials that they could use. We need to teach people how to exercise a judgment to try to comply with this legislation, so now this legislation is significantly different, and it will take some time to do that. I appreciate you making note of that.
The Chairman: It is important to headline this because, frankly, when the government imposes a new responsibility, it is incumbent upon them to be sensitive to the time necessary to make sure that the professionals are up to speed on it. We will deal with the issue perhaps in a different way later on.
Senator Harb: I have a question with regard to the client service provider relationship. The legal community has made a big deal out of the fact that there is privileged information when they deal with their client, and therefore they want the information to be excluded from a wide range of things. Is it your concern as well that those kinds of relations between yourself and your clients remain confidential, or are you of the view that if you suspect that there are suspicious activities taking place by your client, then you must turn the client in? How do you handle situations like that?
Mr. Colby: Not easily: In fact, when the initial legislation came into play, the question of privilege came up. There are three terms to be dealt with: privilege, confidentiality and privacy. Obviously, with the privacy legislation that came into play after this legislation came on the books, there were certain carve-outs in that legislation that would allow us as a profession to disclose the information to a government or regulatory body.
Accountants do not enjoy privilege in the same way lawyers do, but our profession is based on the fact that we have a confidential relationship with our clients. As with a doctor and other certain professionals, clients are supposed to be open and honest with us about all their financial affairs, and we collect a lot of sensitive information. They want to know that we are in a position to handle that information and to keep it confidential. We had to change the entire code of ethics to allow us to comply with this legislation the first time. We suggest that not only this legislation but many other pieces of legislation that have come on the books in the last five years alone have strained the relationship that accountants may enjoy with their clients. Clients begin not so much to distrust us but to have concern about the fact that we are supposed to disclose information about them. For this reason, clients may not be as forthright in coming forward with that information.
Senator Harb: How big is the problem of money launderling, from your professional point of view? Have you done any studies to find out what percentage or number of clients you may or may not suspect have been involved in money laundering? How big is the problem? Do you think we should be alarmed, or what are we talking about here?
Mr. Colby: Let me make sure I understand the question correctly. Are you asking for my opinion on how involved accountants are in the money laundering process or how much of an impact the client relationship is having?
Senator Harb: How big is the money laundering situation, from your perspective, from your involvement with your client base of 65,000 or so, probably even more? How big is the problem of money laundering? Obviously, you have come across situations where you have turned in a client to the authorities because you suspected something or saw a problem there. Has your organization conducted any studies to find out how big it is?
Mr. Colby: We have not done any studies. As a matter of fact, as part of the five-year review that was done, we were waiting to hear statistics from FINTRAC, and there has been nothing in regards to the accounting profession per se. We know that accountants globally are, in fact, involved, but not from the point of view that they necessarily know they are involved.
Money laundering is a business. Most people think of it as a crime, a backroom thing, but it is not. This is a business for them, and a lucrative business. Many of them will use entities such as companies and so forth to facilitate their activities. Most of them file tax returns, so there is a natural inclination for accountants to be involved, albeit unwittingly.
I have been personally teaching and providing seminars and guidance to accounting practitioners across the country, as well as in the Caribbean, for the last five years. I have yet to meet one that has actually had to file a report, in their opinion.
Many of us, like other professionals, try to get to know our clients before we take them on as clients. Our reputation is valuable to us and no one client is worth risking reputation for. I want to suggest that the accounting profession, as a whole, take enough time in getting to know their clients before dealing with them so that they never run into a situation of having to report a client.
Senator Nolin: I am new to sitting around this table, but listening to you, I am a little concerned. How do you want us to do it? If you think we should do it differently, how should we do it? Definitely, you are an important link in trying to circle those who are going against the law. I am not saying that you are part of the problem: I am saying you have the knowledge and the expertise. Because you are professionals, we count on you to be our eyes — the eyes of the people of Canada. Therefore, how should we do it? What is the right way to do it?
Mr. Colby: I will give you a couple of ideas to think about. Number one would be, if it is not broken, why fix it? We have legislation now that calls for the reporting of suspicious transactions. However, in the legislation, the transaction must be completed.
This legislation now goes further and calls for us to report attempted suspicious transactions. The difficulty that we had with the initial legislation and the suspicious reporting was that it called for judgment that professionals such as accountants or other professionals are not trained to deal with as part of their professional training — how to recognize potential criminal activity.
That is why all the accounting bodies and other associations — insurance, real estate and so forth — have had to invest so much time and resources in developing training materials to teach their members how to exercise that judgment so that we can comply with the law.
We feel that we have done a good job until now. We have seen no feedback from FINTRAC that would indicate there is anything wrong with the legislation as it currently is.
My understanding behind the inclusion of "the attempted" is because that is what the Financial Action Task Force, FATF, is calling for. It is also my understanding — and I do not know if this is still correct or not — that neither the U.S. nor the U.K. has yet included "the attempted."
The reason this bothers us so much is that when exercising judgment in looking at a transaction, we can put the pieces together. However, here now, when you talk about "attempted," if I have a conversation with you and you express a thought, am I supposed to use a crystal ball to guess where you are going with it?
The ability to comply when there has been no transaction will be extremely difficult.
Senator Nolin: I know it is difficult. Lawyers who are involved in criminal law know a lot about "attempt" too — and "attempt" is a crime, by the way. Attempting to murder and attempting to commit various acts that are contrary to our Criminal Code are crimes in themselves.
Mr. Colby: That is correct.
Senator Nolin: Even thinking of committing a criminal act is a crime, so the mens rea, the mindset, of people is critical to the commission of that crime.
I know it may be new for accountants to be confronted with that reality. For lawyers, it is not new. Criminal lawyers are informed of that type of situation. It is not easy, I admit. Any Crown Attorneys who try to prosecute "attempt" are faced with a lot of evidence problems. Nevertheless, it is a crime.
The people of Canada have decided that it was against the values and that we must do everything to prevent that from happening. We are trying to bring you into the fold to help us.
Mr. Colby: If I may, I would disagree with you.
Senator Nolin: You are totally allowed to.
Mr. Colby: The reason is that the premise behind FINTRAC gathering information on suspicious transactions — and now attempted suspicious transactions — is not necessarily because we believe there is a crime. We are asked to use judgment to ascertain whether or not the transaction could be a type that might be criminal — not that we know it is or that there was some end result and we are looking at the beginning pieces here. They are using it for information gathering that they will piece together with other information that they have.
One potential downfall of gathering too much information that may not be good is that you use up the valuable resources that you have rather than focusing your efforts on good information that may be available. One reason that I do so much work with this issue is because I am so familiar with it; a large part of my clientele happen to be criminal lawyers, so I am familiar with what you are talking about. I will ask you the question: You come to my office, and there has to be a triggering activity.
Senator Nolin: We know each other?
Mr. Colby: Not yet, you are a new client. I do not know you.
Senator Nolin: You do your due diligence effort.
Mr. Colby: That is right, and I find that you appear to be a legitimate businessman. You say to me, I am thinking of doing some offshore tax planning — which is perfectly legal as long as it is done the right way. What would be the implications if a company my brother owns in Austria were to wire money to this company and then I use it to make a mortgage? All these transactions could be legitimate, but at this point you decide to leave my office. Now, this activity could be an attempted suspicious transaction but I do not know. Nothing has been completed and no action has been taken. Perhaps you come in simply to ask me questions.
I suggest that we have a hard enough time with people exercising judgment when a transaction has been completed, because they have to look at the bigger transaction before they can say this could be a money laundering offence. Now, there will not be anything necessarily for us to look at, analyze or draw inference from other than perhaps a conversation.
Senator Nolin: In your effort to be on top of those new laws — and you have referred to that — I am sure you have attempted to understand the police work, those who need that evidence and the way they are gathering the information. I am sure they are giving you some insight how they want you to proceed.
The example you gave us is a perfectly legitimate approach of a client dealing with a professional accountant.
Mr. Colby: Correct.
Senator Nolin: There is no problem there.
Mr. Colby: You raise a good issue. When this legislation was initially introduced, the entire thing went through in maybe six or eight months. Then we spent about a year or a year and a half before FINTRAC — and we were involved with them in developing these guidelines — developed guidelines from which people were to exercise that judgment. At this point, no guidelines or even proposed guidelines have been published as to how they expect our profession — I cannot speak for the banks or anyone else — to even attempt to comply with the provision.
What I fear, with all due respect, is that understanding the public service that FINTRAC serves — and they are not supposed to do police work necessarily — if they conclude there is a strong suspicion, they can disclose to law enforcement but they are not a law enforcement agency. My fear is that when they come into my office and conduct a search to see if I have been in compliance, and they think that conversation has occurred and they say to me, you will now be fined because you failed to report an attempted suspicious transaction, how do I defend my judgment that I did not think it was a suspicious transaction, because there is no actual transaction?
The Chairman: Time is pressing. Let me conclude, because we must move on to the next witness. I think, Mr. Colby, the committee is sensitive to the question that you raised. You can see from Senator Nolin that he is sensitive to it as well.
We understand the problem, but we have a deeper public-interest problem. In the various studies we have done on this bill and the subject matter, we have found that there are literally billions of dollars of illicit funding in Canada, whether for money laundering or other illegal purposes. I think the measure here is to move deeper into the problems so we can deal with this large problem in our economy. The economy has this grey hole, and the government is trying to move towards it an inch at a time.
Your testimony is precise, and we appreciate that. You say that without the benefit of these guidelines and regulations it will be difficult to comment further.
We have been told that when the bill is passed — which we expect it will — that there will be extensive guidelines and regulations. We expect that those regulations will not only be extensive but will be careful and hopefully economic so they do not put an undue burden on the profession. This committee is also concerned with productivity in our economy and we do not want accountants to waste time on pure regulation.
I cannot speak on behalf of the government, but I think the government also will be sensitive. This measure is not brand new and we are still covered; therefore I am sure the government will allow ample time for you to express your concerns.
This committee is seized of this matter and if, in the fullness of time, you find you do not receive adequate redress from the government on this legislation, this committee is open for you to come back and tell us you are having problems with the guidelines and regulations, and we will look at those questions. We understand your difficulty. This committee is geared to business and productivity and we do not want to undermine that. We are sensitive to everything you have said.
Senator Nolin: If I may add to what the chairman has mentioned, when you look at the coming-into-force section, the bill talks not only of one day, but of days. The coming-into-force may have multiple days.
I think the objective is to have in place a law that will give everyone the capacity to achieve an objective. Do we know how we will do it? Probably someone is working on those guidelines.
The Chairman: We have had evidence that the government is working on the guidelines. They obviously need the policy to be finalized in the legislation to complete the guidelines, but it is a laborious task. Senator Nolin, you have not been party to the hearings before and we welcome you here. We will remain seized of this subject matter because our reports are temporary. We are not giving up on our terms of reference, and we are sensitive to the issues both of you have raised. The same concerns have been made by other professionals, especially the legal profession. This legislation is a work-in-progress, and we hope we can accommodate the public interest with private needs.
Mr. Colby: When the initial legislation came in five years ago, FINTRAC had a publicly stated position that they would work for the first few years with the stakeholders in a capacity to help one comply. Now we are at the point where they are enforcing penalties. For a change this significant, will they carve this section out and work with people in the same way they did on the initial legislation, while still being forceful on the balance of it? This process will take a while.
The Chairman: Again, we are not the government. We are a committee of the Senate. We have said that we will continue to be seized of this. If there is egregious conduct on behalf of the government in implementing this legislation, obviously we will be a voice of reason, as the Senate continues to be. We thank you for bringing these issues to our attention. We want to make sure it works not only for you and your clients, but in the public interest.
Mr. Gary Rogers is Vice President, Financial Policy, of the Credit Union Central of Canada.
Gary Rogers, Vice President, Financial Policy, Credit Union Central of Canada: We were pleased to receive the invitation to come before the committee today. My employer, Credit Union Central of Canada, commonly known as Canadian Central, is a federally-regulated financial institution that operates as the national trade association for our shareholders, which are the 504 credit unions across the country.
Our credit unions employ 24,000 people. I highlight that statistic because those 24,000 people require training. Of course, a significant number will require training relating to money laundering. I will provide one other statistic: Credit unions currently have about $93 billion in assets. Credit unions are provincially regulated, but of course they are all, big or small, subject to the anti-money-laundering legislation.
I want to share with you a couple of specific concerns our members have raised about the proposals in this bill, and to outline broader comments about the evolution of Canada's anti-money-laundering and anti-terrorist-financing regime.
In preface to those comments, we recognize the need to pass this bill quickly, so some of the comments are intended to inform the committee, as members spend time looking at some of these issues, perhaps in the coming months.
First, credit unions are concerned that the legislative provisions will be put in place with little time for a full public debate on some of the broader concepts, assessing issues of need, effectiveness and fairness. For example, are the new regulatory requirements needed to address money laundering and terrorist financing in Canada? Perhaps more importantly, will the proposed measures be effective in preventing money laundering and terrorist financing rather than merely producing more transaction reports? Are the requirements fair in spreading the burden of compliance across entities and sectors in our society?
To date, the federal government has not really presented much evidence to stakeholders that the measures proposed are needed and will be effective and fair. We make that statement after reviewing the recent testimony from the Department of Finance. Officials were not able to provide statistics or any particular analysis indicating how these new reports will lead to enhanced enforcement.
Canadian Central has participated in consultations with the department as the legislation was developed. The discussions focused on how we will meet the international requirements rather than addressing some of those broader issues I mentioned.
Second, credit unions are concerned about the additional burden that some proposals will entail for credit union operations. As you know, credit unions are relatively small financial institutions when compared to the banks in Canada. More regulatory requirements add another layer of regulatory burden, resources and personnel, et cetera.
As we weigh that burden against effectiveness, we have noted, as I am sure you have, the Auditor General's reports recently. The 2000 report referred to 10 million transactions, yet only 197 of those transactions were disclosures made by FINTRAC to law enforcement agencies. More recently, in 2005-06, 14.9 million transactions were reported, and only 168 disclosures were made to law enforcement agencies. After a number of years of operation, are successful prosecutions coming out of this, and how many?
To put it in more direct terms, you can understand why the counter staff in a small credit union on Cape Breton Island or in a rural credit union in Saskatchewan would ask why we are doing this. Is what we need to do here truly worthwhile?
Third, credit unions have concerns about the bill because of what we do not know yet — the devil is usually in the details. The full impact of the provisions cannot be assessed accurately because so much of the substance will be in the regulations yet to come. Someone else noted that the word "prescribed" appears 54 times in the 48-page bill. The bill introduces a number of high-level concepts with the details to be worked out later. Mr. Colby referred to "attempted suspicious transactions," which is a new term, and that there is little guidance as to how we identify such transactions. We will participate with credit unions in the discussions on the new regulations, but these discussions will not come back to the committee for parliamentary review and will not receive public debate.
The Chairman: If you would pause for a moment, the terms of reference for the committee are open-ended. We are dealing with this bill as a subject matter but under the committee's general terms of reference, we are able to deal with this matter. We have indicated to you and to other witnesses that we will have an ongoing review, and not two years hence. Should the committee determine that a number of issues need response, we will come back and deal with them. You should be confident that we want to make this bill work in the private and public interests. This legislation is not something that we are finished with and are ready to walk away from. Rather, we are here to ensure that the bill works properly and balances all interests of society.
Mr. Rogers: Excellent: We look forward to the ongoing dialogue at this committee and at the departmental level.
The Chairman: If the committee does not hold hearings, feel free to send additional information to the clerk of the committee, who will circulate it to members of the committee. The committee meets on a regular basis. If a preponderance of evidence indicates that the bill is going awry, the committee is prepared to work with the government and with you to ensure that it works in the public interest.
Mr. Rogers: I want to comment on two specific concerns mentioned in our brief. The first relates to attempted suspicious transactions and the second, to politically exposed persons. Currently, all reporting entities are required to file reports on financial transactions that have been completed. The bill will require reporting of transactions that have been attempted unsuccessfully. This provision is a concern because it provides little guidance as to how to identify incomplete suspicious transactions. A compliance requirement may be introduced that will be difficult to meet in a satisfactory manner. If a transaction is attempted but then abandoned, it might be difficult, if not impossible, to obtain the information that is required to file the report. From an operational perspective, the immediate impact is training, changes to policies, changing to information technology systems, et cetera. It is always a concern but I will not belabour the point.
With these concerns in mind, and building on the comment Mr. Colby made a few moments ago, we recommend, when this legislation is proceeded with, that there be advance notice. We suggest at least six months from the time that we have the regulations until implementation so that we can give all our credit unions and other financial institutions time to develop the compliance procedures.
With regard to politically exposed persons, this concept is new: not only politically exposed foreign persons but prescribed family member. Once that determination has been made, then senior management approval is required within the financial institution. The definition of "politically exposed person" includes not only the obvious categories such as heads of state, and so on, but also some obscure personages as well. I note it includes not only an ambassador but also the counsellor of an ambassador or the head of a state-owned company. This definition will add some questions as to how we comply with this provision, and how we identify these people and the family members of these people. Again, we have uncertainty, and another layer of regulation and training is required.
An important concern about this particular aspect is the lack of any materiality threshold such that transactions large or small would trigger the requirement. We recommend, if this legislation is proceeded with, that a materiality threshold is added to distinguish between politically exposed person-transactions of significance and those that are not politically exposed.
That concludes my comments, Mr. Chairman. I am happy to answer your questions.
The Chairman: I thank the witnesses for comprehensive information.
Senator Goldstein: Mr. Rogers, that information was excellent. It has given us a significant advantage to be able to review your thoughts on the matter.
I have a question that you seem not to have covered in your witness submission. As a result of this proposed legislation, FINTRAC appears to have the ability to impose fines for non-compliance of a significant amount, which is up to $100,000 for individuals and up to $500,000 for entities. That ability makes an agency that determines its compliance rules, a judge as to whether its subjects or objects, so to speak, have complied. Do you have any observations about that? I ask a leading question and I hope you will give me the answer that I want.
Mr. Rogers: Of course, we are always concerned about our ability to comply with requirements when fines and penalties are involved. It is always ideal to have specific parameters as to when those requirements will be applied and when they will not be applied. The uncertainty around that application heightens our concern. If we miss a transaction that should be reported, what are the repercussions because it appears that a range of repercussions are possible?
Senator Goldstein: Fortunately, an appeal procedure is available through the courts. Traditionally, we have had more respect for, and confidence in, the courts than we have had in virtually all agencies. Recent events appear to have proven that principle. Do you have any specific recommendations to make? Mr. Colby, you indicated concern about whether ordinary mortals are able to determine when an attempted suspicious transaction has taken place. Would either of you care to comment on whether you are at peace with that kind of power for FINTRAC?
Mr. Colby: An advisory committee was proposed. It is our opinion that to determine such subjective matter as "completed suspicious" or "attempted suspicious," perhaps some kind of committee should be struck that would include stakeholders or others besides FINTRAC to make a final assessment before levying penalties for failure to exercise that judgment, because it is not black and white. Perhaps the committee could comprise members of this committee or someone independent of FINTRAC to look at all the circumstances and explain whether the judgment should have been exercised.
Mr. Rogers: It is a double-edged sword. It can be advantageous to provide discretion in administering penalties but it depends on who the arbitrator is, and that can be the risk.
Senator Harb: Mr. Colby raised the issue that, to a large extent, you also raised: At what point do you determine whether a transaction is suspicious. Mr. Rogers, you seemed to echo what Mr. Colby is saying. How do you recommend that government deal with that element to satisfy you, in a sense, and the 50-per-cent chance that something has occurred? How should the government handle that situation?
Mr. Rogers: Our concern is an attempted transaction. If the transaction is completed, we have not had real concerns about that definition in the past. We are looking forward to the regulation and the discussions on attempted transactions.
Senator Eyton: Thank you for your submissions. Some of the points you made are valid. In particular, I had some sympathy for your observations when you mentioned a small credit union — one of your 504 members suddenly burdened with a regime they are not used to, and it may be a one- or two-person office. I recognize much of the burden will come out of the regulations. However, can you suggest a two-level approach so that the large institutions have a particular regime and must fill out certain forms and reports, while the smaller ones, who have fewer human resources and cannot afford the cost, may have something that is more delicate and compatible for them?
Mr. Rogers: Not only on this issue, but on a range of them, we are in favour of finding ways that recognize that one size does not fit all. For smaller entities, especially, where they know the people coming in, we are in favour of a different compliance in that regime.
Senator Eyton: That two-level approach happens in the corporate world with large public companies, smaller companies and quasi-public companies. There are different levels of reporting and compliance.
Mr. Rogers: There are many examples of different types of legislation and issues. There is a difference.
Senator Eyton: Do you any specific representations in that regard?
Mr. Rogers: No, we do not.
Senator Eyton: I guess you would wait for the regulations.
Mr. Rogers: Yes, and we look forward to further dialogue on this legislation.
The Chairman: I repeat what I said at the outset. Your submission is focused and timely. It points out a number of issues within this amended law. We are waiting with anticipation to the form of the regulations and the guidelines. A number of issues give us some pause — for example, the question of materiality threshold, and the idea that some person is an exposed person, but what about the person's family, and how do you find out all that information quickly? There is also the question of electronic transfers, where you point out rightly that you will not be able control both sides of the transfer if it goes to an unaffiliated member. These issues are all sensitive and important, and we expect the government to pay careful heed to this testimony. We will emphasize this expectation to the government as we go along. I give you our assurance that we will keep this file open. If the question of regulations and guidelines seem complex, difficult and incapable of providing a way of dealing with this horrendous problem, we will be open to using our best efforts to readdress the government on this issue.
I thank you both for your evidence and your briefs. We will peruse them again carefully, and hopefully the government will consider them as well. They will be appended to our transcript. We will use our best efforts to make sure this legislation works. We cannot give you an explicit undertaking, but we can use it in accordance with the jurisdiction we have as one of the chambers of Parliament.
We are delighted today to have, as our concluding witness, the Office of the Privacy Commissioner of Canada. Welcome, Ms. Stoddart. We are running short of time today. We understand some of your concerns and have received your comments about the measure. You know that when the minister came, we addressed the measure in our cross- examination, so we are up to speed. However, I do not want to impede your testimony. Please proceed.
Jennifer Stoddart, Commissioner, Office of the Privacy Commissioner of Canada: I have a short presentation, honourable senators, and I will try to skim through some of it. We know that this is an expert committee. We congratulate you for your report on stemming the flow of illicit money, a priority for Canada. We found that your concerns echo many of our concerns. There are dual objectives — on the one hand, the protection of personal information and privacy rights, and on the other, money laundering and terrorist activity financing that are of increasing concern.
Honourable senators know that the changes in this bill, although incremental, are significant for us in terms of the number of organizations and the type of information that are affected. New categories of information are being collected, including, of course, personal information, and FINTRAC has added information-sharing powers.
It is difficult for us to assess the extent to which this legislation is necessary. I leave that with the honourable committee. As with most Canadians, we do not have a reliable grasp, and we have gone through the testimony of many witnesses on the extent of money laundering or terrorist activity financing. Proportionality, which is a key concept in protecting personal information, is hard to judge in this case.
We understand, though, that there are pressing international commitments. Canada feels it needs to update its act for those commitments.
[Translation]
There are three specific provisions in the bill that I would like to raise. The first concerns a new provision that would allow FINTRAC to share information with the Communications Security Establishment (CSE) if it determines the information is relevant to the mandate of CSE to acquire and use information for the purpose of providing foreign intelligence.
Our concern is that CSE is not an investigation or enforcement agency and that any information shared with CSE cannot be used for enforcement purposes, unlike the information FINTRAC can share with the RCMP, the Canada Revenue Agency or the Canada Border Services Agency. CSE can, however, use this information to subject individuals to increased surveillance and any intelligence information obtained by CSE could then be disclosed to the RCMP and CSIS, and potentially fed back to FINTRAC by both these agencies. We question the need for a provision with so many indirect implications. If the RCMP or CSIS want to provide information to CSE with respect to possible surveillance targets it should do so directly.
[English]
Our second remark has to do with the covered entities that are required to take special measures on the politically exposed persons and their families. I am one of several witnesses that have concerns about the additional scrutiny for those individuals and their families. We understand why this provision was introduced, but in the light of 40 information-sharing agreements that FINTRAC has with many different countries around the world, we are concerned that this provision could be a back-door way again, des problèmes de contournement, for other countries to obtain information for their own officials. Because the exact application is subject to definition by regulation, we ask honourable senators if they have comments on possible regulations pursuant to this act, that they specify that these regulations be narrowly tailored.
Finally, I was pleased that this committee recommended increased oversight of FINTRAC, and pleased that the House of Commons committee, with which this legislation originated, requires my office to conduct a review of the information-protection activities. The legislation, as it now stands, specifies two years. In the press of legislative business, that time frame is not possible. Although the committee asked me to come, unfortunately I was at an international conference on surveillance society and could not come, and they stipulated two years. If there is any leeway, it would seem appropriate to give us a little longer time before conducting an audit review, given that the review period for the legislation itself is five years. We were, in fact, planning to audit FINTRAC in the next fiscal year under our existing authority under the Privacy Act.
In closing, I will come back to the proportionality principle. With all the witnesses you have heard, I encourage you to consider whether you think the seriousness of this proportionality problem justifies all the measures set forth there.
I am happy now to take your questions.
The Chairman: This committee has been seized of this matter and we are concerned because the size of this problem is in the billions of dollars. We had startling evidence before this committee that the RCMP does not have enough funds to investigate even 25 per cent of the problem. The problem is that a huge, grey hole in our economy is being filled by illicit funding. We have a statute but not the proper surveillance to protect privacy on the one hand, or prosecutions on the other.
We are keeping this file open because every member of this committee is concerned that our economy will not attract foreign investment and will not be fair to investors unless we can satisfy foreign and domestic investors that our economy is safe and sound. This issue affects productivity and prosperity.
We are trying to address this systemic problem. We understand the question of privacy, and we dealt with that in our recommendations. The government saw fit to amend the legislation and deal with this matter, which we are delighted with. We are here to serve the public interest, not the private interests of the various stakeholders.
I want to start by saying this problem is large, and it is growing by leaps and bounds. We must address it if we want our economy to prosper and become productive. We are mindful of your problems and, hopefully, in this hearing we can address them somewhat.
Senator Angus: I heartily agree with the points made by the chairman. Commissioner and colleagues, welcome. Clearly you have followed the legislative process with this bill. The legislation is complicated and complex.
As you know, when the bill was originally tabled in the House of Commons it had no provision of oversight of FINTRAC. At one stage, the recommendation from our report of last spring was included: having someone like the security intelligence review committee be in that position of oversight. It was pointed out to us and members of Parliament that in the current legislative framework, that recommendation was impractical. That is when the focus came on your commission.
I am interested that you said that the commissioner has an ongoing mandate anyway without the specific legal provision to oversee various organizations. Can you elaborate: What is the scope of your mandate to look at FINTRAC without this legislation?
Ms. Stoddart: We generally have powers in the Privacy Act, since 1983, to review the personal information-handling processes of federal government entities. We have a wide mandate to choose an assortment or range of organizations and review them every year, to the extent that our resources permit it. Traditionally, resources have not permitted much, which has been a privacy oversight challenge, but we have been granted increased funding and are undertaking a more vigorous audit program.
Senator Angus: I am curious, because I was involved in the compromises that were worked out so that all the interested members of Parliament and the Senate could be comfortable with the legislation today. Would you say the provision is redundant?
Ms. Stoddart: No, I would not. I welcome the provision. You may have followed my call for reform of the Privacy Act. It is important to Canadians in sensitive areas that our oversight role be named in particular instances. I welcome it. I would simply say that if there is any room, a little more time than every two years would be welcome; for efficiency as much as anything.
Senator Angus: My take is superficial, I grant you, but you would have an ongoing supervisory role, and the two- year limit is for filing an actual report to Parliament. Are you saying that you are strapped and you need more resources and authority — you welcome this provision, but frankly it will stretch you to have an ongoing oversight and file a written report to Parliament every two years?
Ms. Stoddart: It would be a stretch because our recent budget did not foresee an ongoing two-year repeating role. FINTRAC is on our list of audits for next year. We audited Canadian Border Services Agency, CBSA, last year, and we are now auditing the exempt bank of the RCMP this year. At this juncture of Canadian pubic life, we think these organizations are important processes for us to review. We conducted a quick analysis, and if we audit FINTRAC every two years, it will take a quarter million dollars in person years or the equivalent salaries for experts. These issues are complex. Our budget at this time does not have those resources.
We can perform different degrees of audits. We can audit part in one year and part in another two-year period. We can live with two years, but if you have the possibility, a little more open time is preferable.
Senator Angus: Commissioner, not only is this day lucky for you — and it is December 13 — but it is the RCMP's lucky day as well because this room is chock full of learned officials from the Department of Finance, and also from the minister's office. They are focused on the new budget, which will come from the new government in the early months of the new year. Frankly, it is a good opportunity for you to make your plea for more funds.
The Chairman: This meeting is part of the pre-budget process.
Senator Angus: Absolutely, it is becoming that. With the views of this chairman and his deputy chairman, we feel we are advocating more money for some of these important areas, whether it is the oversight and protection of the rights of Canadians to certain privacy or in response to the shocking revelation that was made to us last Thursday about the RCMP being able to investigate only 150 out of 800 organized crime groups.
Having said that, can you then move to proportionality? I think you said that in the privacy protection business, proportionality is one of the key tenets that gives you a sense of measure, if I can use that phrase. In terms of proportionality, based on what you have heard and seen in the transcripts of our evidence, do you think that this legislation is a case where the balance needs to be weighed carefully — because a big crime element needs to be dealt with?
Ms. Stoddart: Senator, I do not know if the concept of balance, in these days, is as useful as it used to be. I think we have taken a direction of increased security, to the detriment of privacy. That choice is reviewed before the courts, which is the proper place to review it.
I guess I am asking senators, who have heard all the evidence and perhaps know more about the type of security threats that exist and threats to the integrity of our economy, whether they think the provisions in the act are proportional? I raise that as a general question. Many provisions are in the act, many provisions for regulations still to come down, which either will widen or narrow the scope of the act. As a general principle, I am saying this is —
The Chairman: Commissioner, the regulations will not widen the scope of the act. They cannot do that. The regulations must be within the confines of the act.
Ms. Stoddart: I believe you are right legally but I think the regulations could give a flavour to the act, shall we say.
The Chairman: I agree with that.
Senator Angus: That is one of the main purposes of regulations. We have enabling legislation; and now the experts must administer that framework, enabling legislation. I think your advice is good — I wrote it down earlier — when you said that the regulations should be tailored narrowly to these particular problems, being sensitive to the potential for violation of privacy rights.
Ms. Stoddart: That is right. There is also the issue of how much of the substance of the act is left to regulations, and a growing state trend, as society becomes complex, to government by regulation. That trend also is potentially intrusive of privacy, and I gave you one example.
Senator Angus: I want to say two other things, echoing what the chairman said. First, we intend to continue our review. We have not had an occasion to finish our statutory review because of the urgent need for this specific piece of legislation. Hopefully, today our sober second look at this particular bill could well terminate.
However, before moving further, I would appreciate having your assurance that, as drafted, you find nothing in there wildly offensive, or something that you feel should not be there.
Ms. Stoddart: I mentioned in my submission that we are concerned about the provision of FINTRAC being able to give information to the Communications Security Establishment, CSE, because the CSE is not a law enforcement agency.
What is the difference, you will say? The difference is that when you give personal information to a law enforcement agency, the agency must act upon it in a fairly long time frame or, at some point, dispose of it. There must be some consequence to handling personal information, so our legal processes mean that there is a duty to do something.
In a surveillance agency such as CSE, they simply survey. They put a person under surveillance, and I presume one could do this almost indefinitely. We point out only that FINTRAC is a surveillance agency and it only shares information with another surveillance agency, which, from a privacy point of view, heightens the level of surveillance that Canadians are under.
Senator Angus: We understand that, and the regulations will keep that point in mind. We will make those points in terms of comments at third reading. However, I hope you do not think the issue is serious enough that we should stop the bill, do you?
Ms. Stoddart: No, I am not saying that you should stop the bill. However, I believe on page 18 of Bill C-25, we suggest that you simply take out the proposed amendment to section 55, subparagraph (3)(f).
Another matter that I can bring to your attention —
The Chairman: Sorry, commissioner, let us deal with one issue at a time. It is page 18, which paragraph?
Ms. Stoddart: If you read in the English version, to the left, it is the first full paragraph, subparagraph (3)(f), Mr. Chairman.
The Chairman: Please read it.
Ms. Stoddart: It reads:
The Communications Security Establishment, if the Centre also determines that the information is relevant to the mandate of the Communications Security Establishment referred to in paragraph 273.64(1)(a) of the National Defence Act.
The Chairman: You are proposing that is unnecessary?
Ms. Stoddart: That is right.
Senator Goldstein: Thank you for speaking with us again. It is always refreshing to have you testify, and we appreciate it.
Many of us are at least as much concerned, and perhaps more concerned about privacy, than we are about economics. Throughout our hearings on Bill C-25 — and before Bill C-25 was introduced, in our general inquiry before the bill was drafted — we were wary of the interference with privacy rights of Canadians.
We have now gone further to talk about politically exposed persons. We are now interfering with the privacy rights of Canadians and everyone else who is politically exposed in a definition spiral which, even to lawyers, is rather overwhelming. It includes not only family, but virtually, friends and acquaintances, people with whom one might have had contact at some time in the past. The definition is huge.
Regarding the references to regulations, which we have not seen, although technically the chair is perfectly right that regulations cannot change a statute, where an enabling statute provides that persons covered by the act will be determined by regulation, that is not regulation: that is legislation. Some of us are concerned about that as well. We recognize that your mandate is limited. Some of us find that regrettable, but it is what it is.
I want to talk to you only about oversight. Your mandate deals with privacy, and the oversight that you have been given is limited in both object and time. The limitation in terms of object is statutory.
The Chairman: Senator Goldstein, if you are referring to a specific provision in the statute, it would useful for us to have it, to follow your argument.
Senator Goldstein: It is the proposed amendment to section 72(2), of the act itself and clause 38 of the bill. It says the Privacy Commissioner "shall review the measures taken by the centre to protect information it receives or collects under this Act."
That is limitatively expressed. It does not deal with operations. It does not deal with the manner in which information passed on to others is in turn protected by the others. It does not require the Privacy Commissioner to determine whether FINTRAC, in complying with its contracts with 30-odd other countries, not all of whom have the same privacy laws we do, will assure that the other countries abide by the privacy requirements that we have learned to live with and love.
Are you able to give us any comment and suggestions as to whether your review enablement should be broadened? Notwithstanding your assertion that it is difficult to perform a review every two years, do you consider that the Security Intelligence Review Committee, SIRC, would be a more appropriate agency to perform this review, and whether SIRC should do it at least annually, if not more frequently?
Those are many questions, commissioner.
The Chairman: There are four questions. Those will be his four questions. Proceed, commissioner.
Senator Goldstein: I have to be elsewhere shortly, in any event.
The Chairman: You should answer as many as you can.
Ms. Stoddart: It is a marathon. Yes, in the recently handed down report of Mr. Justice O'Connor I believe there is a recommendation that oversight of FINTRAC be done by SIRC.
As it was pointed out in the O'Connor report, we, like the Auditor General, have a limited oversight role. I think that role should continue. We will need to cooperate with the other agencies, but we do not have any problem cooperating with the Auditor General on what we review, so I do not think that is a problem. Other people can look at the national security aspect.
Could our mandate be broader? I suppose it could be, but the term "protection of information" could be interpreted to cover basically the respective privacy rights. If the committee has the time to draft many things you mentioned — for example, whether this information is sent abroad with assurances that it will be treated in the way it would be treated in Canada, issues of the global use of information — that action would be welcome, but that issue arguably could be put under the general term of protecting information.
Senator Goldstein: May I continue, more in the form of a statement, I think, than a question?
The Chairman: If it is a statement, make it brief because we have six more minutes.
Senator Goldstein: I will make it brief, because I have to be elsewhere and others should speak as well.
We find ourselves in the unenviable position of dealing with a piece of legislation that, for a variety of reasons, must be passed quickly. We are in this position frequently, and frequently in the last days of any session. It is a misfortune that legislation of any kind is passed in this kind of framework. I say that publicly because it is time to say it and it is specifically time to suggest to the other place that this place, which is supposed to give a sober second thought to legislation, needs the opportunity to give that sober second thought. Starting next session, I will vote against bills that come to us on the day they are expected to be passed. I find it intolerable and I am not prepared to continue, especially when one deals with legislation of this nature, which may affect adversely the rights of virtually every Canadian.
My last question, commissioner, is about something totally different. Fines are available for non-compliance and they are significant, or they can be significant. Admittedly, there is an appeal procedure to the Federal Court and that assuages many of us because we have confidence in our judicial system. Do you have any comments with respect to that issue? From your perspective, is this power an appropriate sort of power to be accorded to an information- gathering agency?
Ms. Stoddart: To the extent that power is needed to encourage compliance with the act, I suppose it is being given. I do not know if there was a history behind this provision of non-compliance with the act.
Almost every statute has some kind of compliance section, as the honourable senator knows.
Senator Goldstein: However, no agency that I am aware of, except for securities issues, has the ability to judge non- compliance and to impose fines. The agencies go to court if there is non-compliance. I am talking about a situation where the agency determines itself the compliance or non-compliance with itself and unilaterally imposes fines of a significant nature.
Ms. Stoddart: Yes, that is unusual. I believe there is a review provision.
Senator Goldstein: Yes, there is.
Ms. Stoddart: It is certainly not ideal that the agency be the actor and then the judge. That part is unusual, honourable senator. I would be reassured, perhaps, if it could apply to the Federal Court, or the agency levy the fine and it be tried before the Federal Court. It is an unusual procedure in law and suggests the possibility of less than impartial treatment.
Senator Harb: Thank you for your excellent presentation. I will refer to several things in your report to us today. You said that you are not convinced that the case has been made to expand further Canada's anti-money-laundering regime at this time. At the end, you concluded by saying that you hope the committee will consider carefully the necessity in the proportionality of this legislation.
Two witnesses appeared before you today. They also raised the same sort of concern, that they feel that perhaps we are trying to hit a bug with a two-by-four. I wanted to find out first whether you will be involved in developing the regulations when the government proceeds to that level — whether the government would extend an invitation to you and if they do, whether you will participate in that.
Ms. Stoddart: I would be surprised if we were involved in the regulations. You may know, Mr. Chairman and honourable senator, that I have asked, for some time, to be consulted on some of the legislation that has a privacy impact, because we know by the time it arrives in committee stage it is much more difficult to make those changes for the reason your colleague said.
So far, we have not been consulted on this legislation ahead of time. I would think we would be consulted even less on draft regulations. I do not know that consultation has happened.
The Chairman: As I have said to all witnesses, we have open terms of reference with respect to this subject matter. We have done an interim report. This is our second view of the legislation itself. We have undertaken to speak to other witnesses because, as Senator Goldstein has pointed out, we are concerned about the ambit of the regulations and the guidelines. You heard our response to previous witnesses who are concerned that they have not had an opportunity to see regulations and guidelines or comment on them. There is a due process to do that. We do not want to interfere with that due process, but certainly if you felt that there was a serious clog or an egregious problem with those regulations, we would like you to refer that problem to our committee. If we consider that matter to be substantive we will try to readdress it.
However, I want the public to understand that there is a huge public interest question here and we are trying to balance the various interests as best we can. I think you should understand, commissioner, that we are not perfect, we do not want the perfect to drive out the good, but we are here to continue to monitor the situation because we understand that this legislation is different. It gets into the private sector in a way that it has not before and we want to make sure that it works.
Senator Eyton: I have a supplementary question to note that both Senator Harb and I are members — and this may be a small help to you in your representations — of something called the Joint Committee on the Scrutiny of the Regulations. In effect, the concern of the committee — and it is the House of Commons and the Senate working together — is to see that regulations are drafted and processed properly, are consistent with the enabling legislation and, in particular, the regulations do not exceed the authority given by the regulation. The committee has excellent staff. Senator Harb and I and the others listen carefully to whatever the staff says. We will keep note of your observations today, and I think we may be of some assistance to you.
Ms. Stoddart: Thank you. Yes, I know you are interested in this question.
Senator Harb: My final question deals with the database. I understand a number of countries each have signed onto this international agreement. Each one of those countries will have a database where all this information will go into the database. Analysts will look at all the information and make decisions in terms of where they will take what file to whom.
To access that particular database, for example, your jurisdiction deals with information that is pertinent to Canadian citizens. Do you have any control if say, for example, another country that is a member of the same kind of organization was able to obtain information on Canadian citizens through their end and maybe pass them to a third party? How do we control that? It is an international system of sorts, whereby we want to capture the bad guys. One would suppose at some point in time someone will have access to the whole international database. Is anyone trying to figure out who gets where and when in terms of information and how we manage that trans-border access mainly?
Ms. Stoddart: My understanding is that there will be not one international database, but national databases and through memorandums of understanding — I gather there are several already — there will be an exchange of information on agreed terms. Canada, that is, FINTRAC for Canada, can decide the terms and conditions on which it gives out information from our Canadian database.
Senator Harb: It is conceivable that you give a password to someone else saying, go ahead, this is part of the agreement between us and you so if you want the information you can go into our database and we will go into your database. Is that situation conceivable?
Ms. Stoddart: You will need to ask an expert on that, but my understanding is no, they do not give other people passwords. They give the information that is requested. In fact, we performed an audit of the Canadian Border Services Agency last spring and they do not let other parties romp through their databases with their password. No, they have an agreement whereby they exchange information.
[Translation]
Senator Hervieux-Payette: My question is more specific. It seems we have given up on improving this bill. So I wonder how we compare to other countries. Do all OECD countries have money laundering legislation that is so far- reaching and that opens the door as widely on individual privacy? How do we compare to the average of these countries? When we try to measure the degree of freedom we enjoy, we often compare Canada to other countries having similar traditions.
You attend all these international conferences. In your experience, does this bill go further than the legislation in European countries and Australia who are faced with the same issues?
Ms. Stoddart: This is a good question. Unfortunately, I am not aware of any changes in the practices of the agencies responsible for the control of money laundering and terrorism financing and my office did not have an opportunity to make comparisons. As I understand it, the report that was published said that Canada has adequate legislation. This means we have strong provisions to protect against money laundering, but do we have an adequate protection of people's privacy? We can probably say it is better than it is in some other countries. As you know, however, these two don't necessarily go hand in hand.
We can be proud of Canada's international reputation for protecting personal information.
Senator Hervieux-Payette: By agreeing to this bill, we will damage our previous image.
The chairman asked you earlier if there is something in this bill that needs to be reviewed further or if you think we can live with that. Regulations will not specify how far we can go. It is in the bill. Regulations will only state how this will be done. You will recall my concerns about Canadian credit card transactions processed in the United States and accessed by US intelligence agencies. This is similar. Are we going to start sharing personal information with a select group of agencies in foreign jurisdictions?
Ms. Stoddart: Given the scope of this bill, I guess we will be sharing more information on more activities and more individuals. This is why we say that proportionality is important. There is no evidence that changing the legislation this way will help us deal with a problem that remains vague, important of course, but vague. This problem cannot be quantified.
Senator Hervieux-Payette: I agree with you that Canadians are not aware of the degree to which this can intrude on their privacy, particularly with these new provisions. What can you suggest to make Canadians aware of this scrutiny? Of course, not every one is involved in money laundering. In order to launder money, you have to be part of a criminal organization. However, if we have to scrutinize the actions of 34.5 million Canadians because, say, 500 people are laundering money, then more than 34 million people are being scrutinized for no reason at all. I am concerned when so many Canadians are scrutinized because of such a small number of individuals.
Ms. Stoddart: I share your concerns. This is why I said that I am pleased with this specific provision that will allow our office to check on the activities of such a powerful agency which can control the transactions of millions of Canadians, in order to ascertain that there is an adequate protection of personal information and to report to Parliament within three months. This is over and above what we do under the Privacy Act. I hope this will give us an opportunity to educate the Canadian public and to engage in other discussions on the balance or proportionality of these measures, their impact and the threats we're trying to deal with.
Senator Hervieux-Payette: Personally, I think we need a two-year review period. We will give you the resources to do it. I believe five years is too long. We should not let this excessive collection of information go on and expose people to more intrusiveness than is required then wait five years to correct the situation.
Ms. Stoddart: In the technological cycle, five years is a very long time. Nowadays, technologies are outdated after six months. Of course, if we have adequate resources, we can report to Parliament every two years.
[English]
The Chairman: I think you will see from the questioning, commissioner, that this committee is seized with your agenda, which is privacy. We want to balance the public interest in terms of getting at this illicit crime and, at the same time, protecting the privacy of individuals as best we can.
We take seriously what you have said about your under-financing. Senator Angus and I represent both sides of the Senate, so we are unanimous about this. We will make our best efforts to see if we can obtain additional funding, because we do not like to give a mandate to enforce privacy without having the finances to do so.
When I look at proposed amendments to section 72, to which Senator Goldstein referred, this provision is cast a bit more narrowly than we would have suggested. We suggested a much broader surveillance under SIRC, which we will deal with shortly. The section says, "to protect information it receives or collects."
I asked the minister this question and I want to review it with you so you will understand it. We told the minister that he needs to be the first point of concern about the privacy of individuals, and he accepted that responsibility as the Minister of Finance.
In addition, as you know, Canada is now taking on the leadership of the Financial Action Task Force, which is the international task force responsible for this area. It is the belief of the staff and senators who have looked at this area that we are leading the OECD nations in terms of insisting on privacy. This is a work in progress.
Having said that, we look at the various checks on privacy. First is the minister's undertaking. Second, the ministry is here itself and it is responsible. Third, FINTRAC, the agency itself, will be sensitive to these concerns because it is mandated in the act. There will be a five-year review of FINTRAC, which we have mandated. We have also mandated — and I know you are unhappy with that, but we thought it was important — a two-year review, which gives you broad powers, but in addition to that, you have spot-check powers and extraordinary powers. You have confirmed that today. We heard that yesterday from Robert Marleau, one of your interim predecessors. The Senate's Committee of the Whole talked with him about access to information.
He assured us that you had strong powers for extraordinary spot checks. We think that we have all those checks, but in addition, the committee remains open to receive information from you or any of these agencies as to their concern about privacy. It is foremost in our minds. We need to serve the public interest as well, so we are trying to balance both those interests, as we do in Parliament.
We want to thank you very much for your evidence. We took your letters seriously. As Senator Angus pointed out earlier, based on your letters, we were instrumental in achieving an amendment to the act that gave the Privacy Commissioner these additional powers. We will deal with another check, I hope, when we go through clause by clause consideration, but I can tell you that this file is open, a work in progress, and we are doing the best we can.
We do not want the perfect to drive out the good, and we are working on that. We want to provide legislation that is workable, doable and protects the public interest.
There is no confusion in most of our minds. This problem is large and growing. To have a productive economy and to attract investment, both domestically and internationally, we must ensure that people feel that our economy is safe and sound. We want to be proportional about that side as well.
We are prepared to hear from you anytime through letters to the staff, because your work is important to our work. We thank you and your staff.
Ms. Stoddart: Thank you very much.
The Chairman: Is it agreed, honourable senators, that the committee move to clause-by-clause consideration of Bill C-25, to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another act?
Hon. Senators: Agreed.
The Chairman: Shall the title stand?
Hon. Senators: Agreed.
The Chairman: Shall clause 1 to 9 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 10 to 20 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 21 to 30 carry?
Hon. Senators: Agreed.
The Chairman: Shall clauses 31 to 39 carry?
Hon. Senators: Agreed.
The Chairman: Shall clause 40 to 47 carry?
Hon. Senators: Agreed.
The Chairman: Shall the title carry?
Hon. Senators: Agreed.
The Chairman: Is it agreed that Bill C-25 be adopted but with the following observations. Let us now consider the following observations. We have a draft. Let me give you a brief explanation. Honourable senators will recall that initially we recommended that SIRC be the supervisory oversight to Parliament. We were told, and we accepted the fact, that the Privacy Commissioner would be more appropriate to do that, which is one of the amendments which the government accepted.
We now hear from Mr. Justice O'Connor in the Arar commission that now they want to revisit that and have SIRC as another check and balance to Parliament. The deputy chair and I have decided to propose to honourable senators a recommendation. Perhaps the deputy chair would read the recommendation.
An Hon. Senator: Dispense.
Hon. Senators: Agreed.
The Chairman: Do honourable senators agree with the observations? Is it agreed that Bill C-25 be adopted with the observations as agreed?
Hon. Senators: Agreed.
The Chairman: Is it agreed that I report Bill C-25 at the next sitting of the Senate?
Hon. Senators: Agreed.
The Chairman: Thank you, honourable senators.
Senator Eyton: I think I have seen three bills go through today, all with observations. Is there some kind of a ticker system or a reminder so that these observations on a periodic basis come up for review and checking?
Senator Tkachuk: It depends if they are political or not. Some of them were on division, or highly partisan and not unanimous.
The Chairman: One advantage of having senators with some tenure is that we have long memories. We now have in this committee about 15 years of institutional memory of senators who have served on it. When I was on the Standing Senate Committee on Foreign Affairs, when we issued something, I would bring it back periodically. Let us hear from the clerk.
Line Gravel, Clerk of the Committee: They simply stay on the record, so you can go back to it and know that the observation has been made. They can be used.
Senator Eyton: I would like things to come up two years from now on a certain date, and then we can review it again.
Senator Harb: In the House of Commons, if there is a standing order, the government must respond to every observation after 120 days.
Senator Hervieux-Payette: We have said that on a specific date, we want an answer. We did that for things such as bankruptcy. We said to the minister, "You have to be back on a certain day."
The Chairman: I have been tracking the Judges Act for a decade, and we are almost back to where we should have been to begin with. We have a voice, and the Senate has one voice. All we can do is keep the issues in mind and keep reminding the Senate when we come to a bill to interject and to make amendments and changes. The Judges Act is becoming better, not worse, but it is still not in good shape. I will not be around for the next quadrennial. I leave it to Senator Hervieux-Payette to follow up on that. Thank you, honourable senators.
The committee adjourned.