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SECD - Standing Committee

National Security, Defence and Veterans Affairs


Proceedings of the Standing Senate Committee on
National Security and Defence

Issue 19 - Evidence - Meeting of June 1, 2015

OTTAWA, Monday, June 1, 2015

The Standing Senate Committee on National Security and Defence met this day at 1:01 p.m. in public to study and report on security threats facing Canada; and in camera for the consideration of a draft budget on the subject matter of those elements contained in Divisions 2 and 17 of Part 3 of Bill C-59, An Act to implement certain provisions of the budget tabled in Parliament on April 21, 2015 and other measures.

Senator Daniel Lang (Chair) in the chair.


The Chair: Colleagues, welcome to the Senate Standing Committee on National Security and Defence for Monday, June 1, 2015. Before we begin, I'd like to introduce the people around the table. My name is Dan Lang, senator for Yukon. On my immediate left is the clerk of the committee, Mr. Adam Thompson.

Senator Mitchell: Grant Mitchell, senator for Alberta.


Senator Dagenais: Good afternoon. My name is Jean-Guy Dagenais and I am a senator from Quebec.


Senator Stewart Olsen: Carolyn Stewart Olsen, New Brunswick.


Senator Day: Good afternoon. I am Senator Joseph Day from New Brunswick.


Senator Beyak: Lynn Beyak from Ontario.

The Chair: On June 19, 2014, the Senate agreed that the Standing Senate Committee on National Security and Defence be authorized to study and report on security threats facing Canada, including, but not limited to, cyberespionage, threats to critical infrastructure, terrorist recruitment and financing, and terrorist operations and prosecutions, and that the committee report to the Senate no later than December 31, 2015.

During the course of our hearings, we have been learning more and more about radicalization and threats to Canada. Just this past Friday, the RCMP released the full unedited video of the radical Islamist who stormed Parliament Hill on October 22, 2014. The release of this video allows Canadians to gain a full look at this jihadist and hear from him firsthand what motivated his actions and in whose name they were carried out.

Over the weekend we learned more about the Montreal ISIS supporters. According to media reports, of the 21 individuals who have either gone missing, been charged with terrorist offences or had their passports confiscated in the last six months, at least nine have been linked in some way to Adil Charkaoui or the Assahaba mosque. This is the second mosque which has come up in relation to radicalization.

Over the last eight months, we have heard about Canadians and foreign preachers who interpret the religious doctrine in extreme ways that lead to radicalization. We have heard about the significant number of Canadians who have provided material support to ISIS, some 80 Canadians who were abroad and have returned, over 145 Canadians presently abroad, and over 90 who are seeking to join the Islamist group. Most of these individuals have not been charged, prosecuted or convicted. In fact, of the 21 radicals in Montreal who have been identified, only two have apparently been charged. When it comes to prosecutions, Canada is lagging far behind France, Britain and other countries.

We've all heard that in the last five years FINTRAC has identified over 683 terrorist financing cases, yet we do not have any charges, prosecutions or convictions, after spending $250 million during that period for the federal agency collecting that information.

Colleagues, to further our study, we will be joined by Mr. Gilles de Kerchove, EU Counter-Terrorism Coordinator at the European Council. As a senior Belgian official, he previously served as Director of Justice and Home Affairs in the Council Secretariat of the European Union from 1995 to 2007, amongst other positions.

Mr. de Kerchove, welcome to the committee. I understand you have an opening statement. Please begin.

Gilles de Kerchove, EU Counter-Terrorism Coordinator, European Council: Thank you for the invitation. I think I've been given five to seven minutes, so I will try to stick to that to give you a quick snapshot of the threat we face in Europe, and then where the EU stands in its response.

In fact, we have three main sources of threat in Europe, and it's not mutually exclusive. We have first a growing number of people being radicalized but who have no links with a terrorist organization or have not been abroad for the jihad. They get radicalized mainly on the Internet, but also in prison as for example some cases in France have shown.

The second category is the between 4,000 and 5,000 European citizens so far who went to Syria and Iraq, and we have unfortunately not been able to stem the flow.

The third source of threats might come from the growing competition between al Qaeda and Daesh for the leadership of global jihad. Daesh is on the rise in the EU. They want to mount an attack to remind us that they are still in the game.

These three sources of threat are likely to be amplified by several factors. The first is the growing number of ungoverned spaces where terrorist organizations can regroup. One example is the groups in northern Mali, AQIM and Al-Murabitoun, finding in southern Libya a place to rest and rebuild.

The second aspect is the growing tension between the Sunni and the Shia, and, as we understand, the temptation for the Sunni world to fight against Iran by proxy.

The third one is in a way the consequence of the Arab Spring. Countries like Tunisia are much less well-equipped today than five years ago, and for a very good reason, to ensure security. They have dismantled the security apparatus of the service which was the arm of repression.

Number four is a personal concern: the spread Wahhabism, especially in Africa.

Five is new high tech, which makes the possibility to mount an attack much easier than before.

That is the context within which the EU heads of state or government on February 12 adopted a strong statement mainly prompted by the Paris attack.

We're already very active in trying to find solutions to stem the flow of foreign fighters, and in the last three years we have, in a way, worked in all the elements of UN Security Council Resolution 2178, trying to better understand the phenomenon why all these people are going to Syria and Iraq, trying to prevent people from getting radicalized and how we can detect suspicious travel.

We know, by and large, 60 to 70 per cent of those willing and trying to go to Syria, but 30 per cent of the time we don't know. We discover they are there when they put their picture on Facebook. We need to improve that figure.

We have to handle it in the proper way. I will come to that later on.

Finally, how to handle that legally and in justice raises a serious problem of evidence. We need the proper provisions in the criminal code, and we need also to define a European criminal policy.

That's a bit of context within which heads of state or government decide to boost this work and ask the different formations of the council to work more in the following fields: one, the Internet. It is a major incubator of radicalization. How can we first pool our resources together? We have decided to do that at Europol, which is our agency for police cooperation.

How can we get more legal content removed from the Internet? We have decided to set up a European Internet referral unit at Europol. If you are interested, I can provide more information on that later.

How can we be more strategic in our communication to counter the single narrative of al Qaeda and Daesh? We now have experts working for the 28 member states to help do so.

Finally, with regard to the issue of encryption, because of the Snowden leaks, more and more Internet companies — most of them American — are developing very sophisticated encryption devices, which at some stage will make the life of our intelligence, security and law enforcement agencies a bit more difficult. That's the first set of questions.

Next is border control. At the external border of the Schengen free movement zone, we want to collect new data, something you already do in Canada. We want to collect passenger name records and allow the police to have access to that sort of data, but it's quite sensitive and the European Parliament is keen that we strike the right balance between security and freedom.

The second one is to optimize the current system, the current database, especially the Schengen Information System, and finally, have a more harmonized way to check EU citizens when they cross the external borders of the European Union. That's the second set of issues.

The third one is a bit commonplace, but it is the need to share more data between the intelligence and the law enforcement communities on the one hand and between the member states and through Interpol on the other.

Fourth, as I said before, justice is a huge challenge because it's not that easy to get evidence that someone is fighting alongside Daesh or Jabhat al-Nusra, for example, because we're not present. We're not working with the Assad regime, and unless these people leave electronic traces, it's difficult to prove they were not with the Free Syrian Army.

How can we improve this? How can we get quicker access to e-evidence, electronic evidence, especially when there is evidence? That's something we're trying to discuss with our American colleagues, because sometimes the requirement of probable cause is difficult for the law enforcement community to reach. Our American friends are overwhelmed with requests, so it takes time.

Finally, with respect to a rehabilitation program, my message to the 28 ministers of justice is to try to convince them not to systematically send returnees to criminal court. The other incubator of radicalization for sure are prisons, and if we have someone with no evidence or someone who has no blood on their hands, provided he is willing to do so, it would probably be better to send him to a rehabilitation disengagement program, but we need to set up effective and robust rehabilitation programs in Europe. To be honest, we're not there yet. We've had some interesting experiences in Denmark, Germany and Britain, but we need to do more.

The fifth subject we have been asked by heads of state in government to do more with is arms. Too many military weapons are still easy to buy in Europe.

Finally — what I am saying is not pejorative, but soft policies — anything that can improve the integration in Europe, fight against discrimination, and reduce anti-Semitism on the one hand and what I would call Islam or Muslim bashing, referring to the PEGIDA demonstration in Germany. That requires mobilization of other policies, such as education, social integration and regional development.

That is on the internal side. On the external side, I won't be too long and I will stop shortly.

The good news is that the 28 ministers of foreign affairs, some days before the meeting of heads of state in government, decided to engage much more than previously in our direct vicinity, including all countries from Morocco to Turkey. We have probably not been engaged enough in the field of security. We have probably not been up to the challenges of the Arab Spring, so we've decided to provide more support, help them rebuild their security sector and engage in a more positive security dialogue.

In a nutshell, that's the context of the threat and the policy response. We are very much mobilized, and we have a huge agenda ahead of us.

I am more than happy to answer any questions you may have on this.

The Chair: Thank you very much, sir.

We will start with the deputy chair, Senator Mitchell.

Senator Mitchell: I second that. Thank you very much, Mr. de Kerchove.

You mentioned briefly the question of prevention. There are basically two ways to do that. One is laws as deterrence, and two is what some might call a softer approach — I wouldn't — but things like community work and policing in the community. What experience have you had with the latter? What emphasis are you placing on that?

Mr. de Kerchove: Those are important. Since I was appointed seven years ago, I've invested a lot on prevention. It is interesting that countries like France, which was a bit more skeptical seven years ago, is now very convinced of the need to do much more. When you see what Prime Minister Valls, when he was Minister of the Interior, and now Bernard Cazeneuve are doing, it's quite impressive. They asked someone to look at the best experience in Europe, and then they decided to set up a French policy on prevention, such as a toll-free phone number where families may report a problem. They work at the local level because the local level is the relevant one. They train front-liners to detect, as early as possible, signs of radicalization and provide non-security responses through schools, support to parents and in many other ways.

On the other hand, the European Commission for some time was not reticent but cautious when it came to developing prevention policies, and now the commission is very much engaged. They produced an interesting communication last year, in early 2014, and it was an excellent idea. They set up a network of, I would say, 1,000 front-liners, 1,000 field workers engaged in different aspects. That has proven to be extremely valuable. We have been able to detect a lot of good experience in civil society, in schools and in municipalities, so I would tend to believe that a lot more needs to be done.

As I have said, besides what has already been achieved, the top priorities at the moment are the Internet, rehabilitation programs and radicalization in prison.

Senator Mitchell: You mentioned the problem of anti-Semitism, which is serious in most parts of the world. Certainly you've had that experience in Europe and we have as well. It's absolutely, of course, reprehensible. You also said anti-Islamism is an issue. Could you elaborate and comment on that further?

What I'm getting at is if we focus on a group like that, do we not begin to alienate that group, making it more difficult to work in a constructive way within that community? I don't mean this to be a leading question, but isn't the issue more broadly that we're concerned with terrorism and violence no matter where it comes from?

Mr. de Kerchove: True.

With respect to anti-Semitism, I fully share your concern. I was told recently that in France in 2014, 7,000 French Jews left the country to go to Israel, and they expect 10,000 in 2015, which is unbelievable. I've heard the same worries in other member states.

As I said, I don't want to enter into the debate that is currently taking place in France as to whether we should call it Islamophobia or what I call anti-Muslim or anti-Islam bashing. I understand the debate as being if you put them on the same footing, it would no longer be possible to question some excessive interpretation of Islam because it would amount to some sort of Islamophobia, and in a way that's something that some people are keen to promote.

But the core of the problem is there is, indeed, some Islamophobia in Europe, and it's growing. How do we address this without stigmatizing, which is exactly your question, a specific community? I think one way to do so is first, in the discourse, to avoid maybe the simple equation that terrorism comes only from the Muslim community. But Europe has been confronted with other forms of terrorism in the past — local, regional. And remember that what happened in Norway with Breivik was not related to jihadist terrorism at all. So I tend to agree with you

On the other hand, I was interested by some discussion which took place in France after the Paris attack, where, especially on the left side of the political spectrum, some intellectuals were blaming themselves and acknowledging that they may have made a mistake in not calling the problem by its real name. They said that because of good intentions, we were in fact refraining from adding to the problem of integration or adding another dimension which might be linked to an incorrect interpretation of Islam. You don't solve a problem if you're not able to name it.

I would tend to be extremely cautious and would not suggest that a problem is confined to one community or group or religion, which is in a way counterproductive and may amplify the problem. On the other hand, I think I would try to in a way name the problem as well, and so I acknowledge it's a difficult balance.

Senator Mitchell: Thank you very much.

I was in Europe on a parliamentary delegation. The reason that you're here today is because we met with your deputy. She was very impressive and talked a great deal about what you were doing.

She mentioned there is almost a triage system when somebody returns from foreign travel for terrorist or terrorist-related purposes, and there is actually a process by which you try to determine the nature of the problem and then you may deal with different returnees differently. I think you alluded to that.

Could you give us some insight into why it is, apart from the danger of prison radicalization, and how it is that you differentiate and what kinds of programs you do that are different, and are they working?

Mr. de Kerchove: I will answer the question, of course. The member states are doing that, so we don't have a uniform approach. But most of them have set up interdisciplinary platforms with different expertise so that they can assess each and every returnee and assess the dangerousness, in a way.

I suppose we have people who come back completely disillusioned and, as I said, we have no evidence that they have been directly associated with a crime. They probably need psychological support more than anything else. Others may have come back with the feeling that they have fulfilled their duty as a Muslim, and that is linked to the reason why people are going to Syria.

I suspect that, at the outset, some Muslims thought the West was not supportive enough of the "Syrian Spring" and had the feeling we were not helping the Syrian people. When you watch television and see the very high number of 250,000 Syrians killed by Assad and his regime, you may reach a point where you find the only way is to take a Kalashnikov and go and fight. And slippery slope, step-by-step, you may start with the Syrian army and then reach another group better staffed and resourced with arms.

To be honest, there is an alphabet soup of groups. You see the fluid nature of these groups; they regroup, merge and split. We know Daesh and Jabhat al-Nusra, but you now have Jaish, a new group with Ahl al-Sham, and so it's not crystal clear where to divide the line between Islamist and jihadist. It's not always clear.

The second category, unless they have blood on their hands, may be to help them return to normal life. For those where we have evidence, no doubt we should send them to court, but that's the problem with evidence that I alluded to earlier.

Finally, where you don't have evidence, you need to monitor them discreetly. But I'm told by professionals that you need between 20 and 25 members of a security service to do that 24/7 which, if I take the country I know best, it's beyond our resources. We have 400 citizens who have been or are in Syria. We don't have 400 times 20, 25 members ready to monitor. That's why there is a need to distinguish in the different categories.

Senator Mitchell: Thank you.

Senator Stewart Olsen: Thank you for your appearance, sir.

I'm going to go to foreign funding. Has the EU identified foreign funding coming to your region that would specifically support those advancing Islamist narrative and radical views? I'm speaking specifically of the Muslim Brotherhood, the Wahhabi and Salafist religious ideology.

Mr. de Kerchove: I don't have an exhaustive report on this. We have money coming from outside to promote the religion for sure. Just in the city where I'm living, there is Saudi money to help build the biggest mosque, and the imam is sent by Saudi Arabia and probably paid by Saudi Arabia, so we have a flow of money.

The question is if there is a linear development between Salafism and jihadism or Wahhabism and jihadism. It's a difficult conclusion to draw. You may say that sort of extreme or very conservative interpretation may create an environment that is not very tolerant, but it does not lead immediately to violence or terrorism.

The problem with the foreign fighters is, coming from Europe, it's extremely cheap to go to Turkey. You have flights for less than $100 Canadian. You can take a bus or go by car. We have seen auto financing, in a way. People are borrowing money to buy a car, and as soon as they have the car, they sell it at a discount and take the money and run, with no intention to get back home. You don't need external sponsors to do so.

Where it's more worrying is the flow of money coming from the Gulf in support of the extremist groups in Syria and Iraq. The way Daesh finances itself is through smuggling and illicit trafficking in antiquities and kidnapping for ransom, but more in Syria and Iraq.

To be honest, it is something we are working on. We recently adopted the fourth iteration of our legislation against money laundering and the financing of terrorism.

The issue of foreign fighters is not first an issue of financing. It's more to better understand the motivation. In this respect, if I take just the example of Belgium, why is it that this country has the highest number per capita in Europe, like Tunisia has the highest number worldwide? In Belgium, I think because we had a very active Salafi organization called Sharia4Belgium. They were active in the Netherlands, Sharia4Holland, and in the U.K. as well. They were recruiting people in the street, giving them tips on how to get there, who can help you to cross the border between Turkey and Syria, contacts and so forth. That was not so much providing money but more advice on how to proceed.

Senator Stewart Olsen: Thank you, sir.

Senator Beyak: Thank you for coming and speaking with us. It has been very informative, sir.

Could you tell me how the European Union views Austria's plans to implement and institute the training of imams and their plans to have the training spoken only in the local language rather than in Arabic?

Mr. de Kerchove: It's a very good question. The European Union has no policy of its own. Personally, I tried to convince the European Commission to look into this, at least to explore best practices. As you rightly said — and I was a bit shocked in a way. I remember several years ago visiting one member state and realizing that more than half of the imams were not speaking the language of the country they were in. So this is an issue; it is an issue of training.

Today, by the way, I had lunch with a Belgian colleague who is chairing a committee that has to look into this and how to improve the training, set up special masters in several universities to train them better.

For the time being, it is the member state's competence. We have not been discussing it. I try to raise this myself often and try to have the EU institutions involved, but in a way it is sensitive. We of course do not want to embark on any theological debate, and for the European Union it is not an easy file.

The first step I would advise to take is to look at best practices. To link up with the question of your colleague on financing, for instance, the Austrians recently adopted legislation banning external financial support of religion. That's one example.

But we are pretty diverse. My country, for instance, has a special regime by which it finances all denominations, all the religions, and the Belgian state pays the salary of the priest, the pastor, the imam, the rabbi. Of course, it gives the state some leverage, because if you pay the salary, you may at least require some level of knowledge. You avoid self-proclaimed imams completely ignorant of the religion. It is important, because we want to have more chaplains in prison, better education in schools. So I take it as a very important question, but we have not worked on that at the level of the European Union so far.

Senator Beyak: Thank you very much, sir. That was very helpful.

The Chair: I think that's a very important question regarding how we go forward in respect to the people involved within the various Muslim communities and the leadership they are expecting to ensure there is peace and tolerance and all the other fundamental principles that the Western world lives under.

I was quite surprised when you mentioned that one of the largest mosques in the world is being built in your city and that the imam was perhaps being paid from Saudi Arabia. We have had evidence and testimony almost continuously throughout our hearings that a lot of this money coming into Canada and other places brings with it extreme doctrinaire teachings of Wahhabism, which of course lays the foundation in the belief system that down the road you're going to have people who totally disagree with the values that you and I hold dear for our countries. Perhaps you could comment on that.

Mr. de Kerchove: Far from being the largest mosque in the world, I think it's the largest in Brussels, Belgium. But that was in the 1970s when it was built; it's not recent. We, the Belgian state, recognized Islam in the 1970s.

I would say it's not only imams in Europe. On this, I tend to follow and like the way a former President of France captured the idea. He said that we need a European Islam and not an Islam in Europe, if you see the difference, and that requires some sort of contextualization and Europeanization.

That's what I understand to be the policy in some of our member states. I think the French Minister of the Interior recently set up a new body to have this frank discussion with the Muslim community so that they can take ownership of their own religion and not being just led by the outside. But it's not that easy. Frankly, it is more member states' policy than an EU policy. I don't want to speak on behalf of the member states. They have different experiences.

I mentioned Austria, but Turkey has a more active policy toward its diaspora through the Diyanet. The Diyanet is the Ministry of Religious Affairs of Turkey. I think they are engaged. They have an impact on the sermons outside Turkey.

There are not only the imams but also the Internet — of course the Internet is global — and satellite TV. I remember that one TV owned by a country of the Gulf was broadcasting a lot of programs calling for the jihad. I know that some of the member states have expressed concern and asked that the signal be interrupted because it was possible to follow the program from Europe.

So, yes, it is an issue. We don't have an EU policy on this. I know some of the member states are more and more looking at ways to facilitate to create that European Islam, but it depends on the constitutional setting of the member states. For instance, France has a complete separation between church and state, which is not exactly the case in Belgium, as I have said before, where the state pays the salary of the imams, except in France — in Alsace and Lorraine — where they have a concordat with the Vatican and different arrangements, but it is pretty different from one member state to another.


Senator Dagenais: I have two questions for you Mr. de Kerchove. First of all, what is the nature and scope of the terrorist threat facing Europe right now?

Mr. de Kerchove: I can't really say that Europe is facing a threat. As the head of one of the intelligence agencies said, at one point, France may have been more vulnerable than other countries because of its specific policies, mainly its international involvement in Lebanon, Afghanistan and Mali. Back when the head of the agency said that, France had just passed legislation banning the burqa. At certain points in time, one particular country may be more vulnerable than other EU nations. We haven't assessed the magnitude of the threat facing Europe. We assess the threat by country. Of the 28 EU nations, about 10 or 12 are facing what is considered a very serious threat, including Belgium, where the military is patrolling the streets. That's a first for law enforcement. France has the Vigipirate plan — I'm not sure whether it's a colour or a designation — which provides a strong presence. Military also patrols the streets. The U.K. is in the civil category. As for the 10 or so countries that may be more vulnerable, the threat is considered serious. In light of the 4,000 to 5,000 nationals who have gone to Syria — although I am hardly convinced that those who do come back will have plans to carry out an attack — we can't disregard the fact that a small number will contribute to the radicalization of other groups or contemplate violent acts or that an even smaller number will have been sent back to plan attacks.

The first such unfortunate incident we had experienced involved Mr. Nemmouche, who killed four people at the Jewish Museum in Brussels. He appeared to have acted on his own initiative. He wasn't carrying out an order. It's an example of a phenomenon where we could become more knowledgeable. The interior ministers of a dozen or so countries consider the threat level to be serious.

Senator Dagenais: I'd like to come back to the issue of terrorist financing. Presumably, terrorist financing is achieved through many of the same tactics that ordinary criminals use — credit card fraud, illegal taxation of diaspora communities and misuse of charitable donations.

Could you please discuss the enforcement challenge posed by charitable donations as a conduit for terrorist financing?

Mr. de Kerchove: You're right that many financing tactics are used, including petty crime. The perpetrators of the Madrid bombings were low-level criminals. The incident showed that it didn't take a considerable amount of money to carry out an attack.

We are aware of the trafficking in communities rampant within the DHKP-C and, especially, the Kurdish group PKK, which we added to the list of terrorist organizations and which uses pressure tactics in the community. Our police and intelligence services have to make a concerted effort to stem that flow. At one point, we had also conducted a number of operations in airports with direct flights to northern Iraq. That goes back a bit.

The misuse of charitable donations is indeed a conduit for terrorist financing. That isn't my main area of expertise, and the EU has probably put the least amount of focus on implementing the recommendations of the FATF. So we have a very advanced mechanism in place with respect to the formal economy, the use of banks, the flow of cash across borders and Hawala systems, but we certainly haven't done enough to combat the misuse of charitable donations. The previous European Commission didn't want to impose too many restrictions on the charitable domain, which, 98 per cent or 99 per cent of the time, work towards entirely legitimate objectives. They are often small organizations without any financial tracking or oversight capacity.

There was reluctance to adopt any oversight mechanisms. It's an area we could stand to reassess. The member country that is probably the most advanced in that regard is the U.K., with its Charity Commission, which has done a lot of work in the area. I recently attended a meeting with Peter Clarke, the former head of Scotland Yard, who authored quite a clear report suggesting that, in the case of Syria, certain NGOs and not-for-profits had misused charitable donations.


Senator Day: As we speak, Mr. de Kerchove, I'm thinking of your beautiful city and country that I always look forward to visiting. I have done a lot of work in Brussels with Daniel Bacquelaine. It's a wonderful city and we appreciate the leadership you have shown us in a lot of different ways.

What we are dealing with now is one of the points that you made earlier on of exchanging information between departments, agencies and countries, and the dangers that are there if you don't have proper control; the dangers to citizens that might happen by misinformation getting out and being traded.

The whole issue of the balance of civil rights and individual rights versus what must be done to provide the security that the nation obviously must provide is difficult. Can you talk to us about some of the challenges you have encountered and some of the oversight that you might have put in place to try and prevent some of the dangers?

Mr. de Kerchove: First, let me start by inviting you to Brussels. You are most welcome to come to Brussels.

It's really at the core of the debate in Brussels. I mention PNR, the planned EU passenger name record system. It is a sensitive file. The European Parliament stopped the file for some time before the Snowden leak, which led the European Parliament to be more and more suspicious about the need to collect more data.

The sensitivity toward privacy in Europe is quite high, but not in the same way in all the member states. If you look at the members of European Parliament, Germany and eastern part of Europe is probably even more sensitive because of the war and, after the war, the Soviet occupation. It is an issue and we have a lot of discussions with our American friends on this to try to better understand the scope of the NSA espionage and also to strike the right balance.

Shortly, we will reach an agreement with the Americans on an umbrella agreement to set common rules on data protection as a prerequisite to share more data. The point made often in European Parliament is that before rushing to collect more data like passenger name records and information on payments, we have an agreement with the U.S. on what is called the Terrorist Finance Tracking Program, which allows the U.S. Treasury to get access to messages related to cross-border payments. Before doing all this, the Europe Parliament would like to see member states sharing more data. They keep repeating that the unfortunate recent terrorist attack was not because of lack of data but more because of data that had not been shared enough or improper analysis of data that we had.

I think we need to do both, but we need to build better safeguards into the mechanism of data collection. I like what the Information and Privacy Commissioner of Ontario has developed, namely the concept of privacy by design. It's quite creative and it has inspired us a lot. Instead of having a black and white debate with the security people on one side and the privacy people on the other side, blaming each other, trying to sit together at a table and to build into the system from the early beginning the necessary safeguards to minimize the negative impact on privacy. Ms. Cavoukian from Ontario developed that interesting concept.

We are currently revisiting the basic legislation on data protection on the basis of proposals made by the commission because the previous legislation was adopted before the Internet, so there is a need to update it. It's not an easy exercise, but it is very much needed.

Yes, it is an issue; yes, it is difficult. Parliament does not make the life of the 28 ministers of the interior easy because they want to get PNR data and it's not done yet.

Finally, the European Court of Justice — and I invite you to read this decision as it is quite an important one — quashed legislation that we adopted after the London bombings to force Internet service providers and telecom operators to keep the records of all the traffic they provided for a period of up to two years. The Court of Justice considered that it was completely disproportionate that companies were obliged to keep the metadata. It is in fact metadata about innocent people.

There is a debate inside the European Parliament and inside the Court of Justice. By the way, there is another link with Canada and the agreement on PNR. The Canada-European Union Data Sharing Agreement has been sent to the Court of Justice to get an opinion as to whether the draft agreement is in line with the decision of the Court of Justice that I just mentioned on the need to have the necessity and proportionality test met in the proper way.

So you touch upon the key issue in Europe these days, in Brussels, which is precisely how to strike the right balance.

Senator Day: It's interesting. We see what is happening in the United States and the recent court action there, that maybe the Patriot Act didn't provide the authority for the metadata gathering, and now the recent bill through Congress. The Patriot Act has expired and they have a new piece of legislation that is less permissive. It seems like we overreact after a catastrophic event — 9/11, the Patriot Act — and then it takes a period of time to adjust. The system seems to take a while to find that balance. I think what you're describing is what is happening in the United States, in Europe and in Canada to a degree as well, and it's not easy to find that balance.

Mr. de Kerchove: You are right. I am in favour of collecting all the necessary and relevant data but to strike the right balance. If there is one value in my role, it is to try to keep counterterrorism high on the agenda, even if we don't have any terrorist attacks, so that we can have a smooth implementation of strategy and avoid what you just said, overreacting in the direct aftermath of an attack or, on the other hand, which may happen, and I have had this experience, counterterrorism fatigue, where because nothing happens, nobody cares any more, and you are not prepared. We have to avoid the two, and you are right that it's a challenge.

On the Patriot Act, as I understand, it was possible to adopt the legislation yesterday, but Rand Paul found the necessary procedural argument to postpone the debate. But in the coming days, the U.S. freedom act is likely to be adopted. I have not looked at all the details, but it tried to make it more balanced, keep the possibility to get access to metadata, because it is very important, but ask the companies to store the data and not the NSA, and find better protection like the possibility for a third party to be inside the court. There are many improvements. I think it goes in the right direction.

Senator White: I apologize for being late. My question will surround the engagement you've had with countries outside of the EU and whether or not you have seen some of the other countries come in and provide advice, such as Australia and New Zealand. If so, has it been helpful for you in formulating some of the opinions you have been speaking to?

Mr. de Kerchove: We are engaged with many countries. The top priority for assistance is the countries around the Mediterranean, because that's our direct backyard. We see the tragic events in the Mediterranean and the thousands of people who have died there. We know that Daesh is involved in trafficking human beings and are making a lot of money out of it, so that's the top priority. We need to have a dialogue with the Gulf countries and be a bit more engaged in the issue of Iraq and Syria.

We work with Australia, and probably a little less with New Zealand, but Australia is a member in what is called the GCTF, the Global Counterterrorism Forum, where Canada is a member as well. There are 29 countries in the GCTF. It's quite an interesting forum where we can share best practices and share our experiences.

The other one is of course the anti-ISIL coalition, where both the European Union and Australia — 50-plus countries — are very much engaged, especially in the five subgroups of the coalition, one of which is on the militarily side. Some of the member states are militarily engaged in Iraq — very few in Syria, but a lot in Iraq — on messaging, counter messaging, on the financing of Daesh, on humanitarian assistance and on foreign fighters. In both of these forums, the anti-ISIL coalition and the GCTF, we have extremely good cooperation with Australia and Canada.

Senator White: Thanks for that response.

What about EU policy in relation specifically to protection of young woman within high-risk communities? Have you developed a policy or directive that would assist other countries from a larger, more global perspective?

Mr. de Kerchove: I think we want to indeed work more with women in general, especially in the Arab world. It applies to Europe as well, because we know that especially mothers have a key role to play. I know that member states are trying to emphasize this role and help them more. If you look at the toll-free number set up by the French, I think they have had so far between 1,000 and 2,000 calls. It's very often, if not most of the time, women calling.

So yes, we need to do more, especially in the Arab world. I do agree. But I cannot be more specific than that.

The Chair: Colleagues, I'd like to ask a couple of questions. First of all, I want to go back to the Wahhabi teachings that have been spread around the world, primarily financed, as we all know, from interests in Saudi Arabia and the Middle East. Could you please elaborate a bit more in respect to what the European Union is doing to counter these extreme Wahhabi teachings that are obviously setting the belief system to have these young people do what they do?

Mr. de Kerchove: Well, I mentioned Africa where we see the rise of Wahhabism as a challenge, and that requires from us more assistance to the state at stake. If you look at Mauritania, Mali and Niger and remember the reaction after the publication of the Charlie Hebdo magazine after the Paris attack, churches were burned and people were killed in Niger, which was a very moderate country in the past, so we need to do more there. These countries are poor. They have to rely on outside financing, especially for education, and that applies to northern Nigeria, where you have the almajiri alternative education, and the whole of Africa. One way to address the problem in these countries is to first force the Quranic schools and the madrasas to enrich their curriculum and not just teach the Quran in Arabic, because that does not prepare a youngster to find a job. It's a bit simplistic, but to provide more development assistance to education and to promote public education. I see the first response of that sort as being an investment in education and have a dialogue with government to avoid that part of the population that is only trained in madrasas with a simplistic curriculum.

The other one I would say where we could have dialogue as well is on media, especially, as I mentioned before, Internet and satellite TV. Because in the Sahara or in the Horn of Africa, people have radio and TV, and they watch hundreds of different television shows, so we need to have this discussion with our colleagues in the Gulf. There are the impressive, charismatic preachers on these TVs. That would be the second challenge.

Third, in Europe, that's different. We discussed that before. I think training imams, providing the right environment so that they are better trained, and ensuring the development of a European Islam are three sets of policies we need to do more.

I do not want suggest that the EU is very much advanced on this. In terms of development, we are doing a lot. As you know, the EU and the member states together are providing more than 55 per cent of the world's assistance to third countries. Part of it is education, but probably we need to do more.

The Chair: You said that the three priorities of the European Union in the area of radicalization were the Internet, rehabilitation and the concern of radicalization in the prisons. But you never identified the beginning of the radicalization where the actual seed is planted, people to people, prior to getting to the Internet and these other various aspects that influence.

Are any of your membership countries taking a positive step forward to open a dialogue with the many Muslim communities within their countries and start discussing the consequences of these extreme Wahhabism doctrinaires, and perhaps others, that in some cases are being taught, to clearly state that some of these values aren't acceptable in their country and to bring these organizations and people together so that we can move forward and get the tolerance and peace we need for our futures?

Mr. de Kerchove: I see two difficulties. The first is, as I said, we don't want to embark on an ideological debate, so being conservative in your interpretation of Islam as such is not questionable. You may not like it, but as long as it does not lead to violence, it's private life and private beliefs. It's when the teaching is inconsistent with your values and legislation, of course. So freedom of thought, freedom of religion and freedom of expression are important, and the right to have one's beliefs, even conservative ones.

I see more and more member states engaged in that sort of discussion, France and the U.K. for sure. In the Netherlands there is a lot of discussion with the representatives of the Muslim religion. But more positive measures, as I've said, such as the development of a European Islam, will address this issue.

The Chair: Thank you, sir.

Senator Mitchell: You mentioned in your presentation that the Internet is a major incubator of radicalization. While that seems obvious, we heard a little questioning about whether it actually is the Internet or whether the Internet is a necessary or sufficient condition. It requires also personal relationships. There is some suggestion that those might be created over the Internet.

You're so adamant and firm about that, which is very interesting to me. What evidence do you have or how have you come to that conclusion so determinedly?

Mr. de Kerchove: You're right that the beliefs before were that no one could get radicalized only on the Internet and you would need some interaction with the physical world, but we've seen cases where teenagers were radicalized alone on the Internet.

The other belief before was that the radicalization process was a very long one and took months to reach the tipping point, while now we have teenagers leaving after two or three weeks. I saw some cases in France.

I don't suggest it's the Internet alone, but from everything I've read so far, it is playing a growing role. On the other hand, you may say that the terrorist attack in France was most of the time petty criminals who were radicalized in prison, not on the Internet, because they were interacting with an imam or self-proclaimed imam.

That's the convergent views of the Minister of Interior. We see how much Bernard Cazeneuve in France, Theresa May in the U.K. and Thomas de Maizière in Germany do to engage with the Internet companies, and the European Commission. This is a request of the front-liners, the main ones responsible for the fight against terrorism, i.e., the member states and the ministers of the interior.

That's the reason why the European Commission wants to set up a forum in the autumn, a public-private partnership with the Internet companies and with the member states to discuss all aspects that I mentioned before: a better monitoring of the Internet, a better removal of illegal content, a better counter messaging on the Internet, and the fourth element is the encryption challenges.

The companies are showing more concerns themselves. They are doing a lot, but when you look at Twitter, there are, as I understand, 500 million tweet exchanges a day; so it's out of the question for Twitter to even police their own services. It's not feasible. That's why we want to increase the number of referral units and to have people trained to detect illegal content.

A very impressive experience is the internal Internet referral unit of Scotland Yard. They have a team of people very well trained to distinguish between what is illegal and what is distasteful. Some sites or content, we may not like them, but they're not, as such, illegal. The companies have their own terms and conditions, and they decide themselves what they want to remove.

The experience of the Counter Terrorism Internet Referral Unit, or CTIRU, at Scotland Yard showed us when they refer illegal content to an Internet company, to Google, for instance, it is removed 93 per cent of the time. When you and I flag something because we don't like it, according to Google it's removed only 33 per cent of the time. Why? Because you and I may have different views on what is illegal, distasteful or ugly. We want to have more internal units doing that.

We will start working on this based on some studies, and I'm more than happy to send you references to studies that are available, which shows it plays a growing role. I don't suggest it's the only one, but when you see that Daesh has 45,000 Twitter accounts according to a study by Brookings, and when you see the sophistication of the media branch of Daesh, according to experts it took sometimes more than one day to film the beheading of either the Coptic in Libya or the pilot of the Syrian army because these people wanted a Hollywood-quality film, with the best lighting and angles, which shows they know what they're doing and that it has an impact on people. These people are not amateurs in terms of communication, so my view is we have to at least be as good as they are.

The Chair: Thank you very much, Mr. de Kerchove. You have been very informative and you've been very generous with your time. We went over by 10 minutes, and I really appreciate that. We'd like to thank you very much for taking time out of your busy schedule.

Colleagues, we continue our look at terrorist threats to Canada. Joining us for our second panel of the day, from the Canada Revenue Agency, are Ms. Cathy Hawara, Director General, Charities Directorate; and Mr. Alastair Bland, Director, Review and Analysis Division, Charities Directorate.

Ms. Hawara and Mr. Bland, welcome back to the committee. I understand you have an opening statement.


Cathy Hawara, Director General, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency: Thank you for the invitation to appear before you today.


We're here to discuss how the CRA supports the government's efforts to combat terrorist financing. The CRA's responsibilities in this area are threefold. First, as the federal regulator of charities, the CRA protects the charity registration system from terrorist abuse. Second, it participates in the sharing of information with national security partners, as authorized by legislation, in support of the detection and suppression of terrorist financing activities at the domestic level. And third, it assists Canada in meeting its international commitments related to countering terrorist financing. I will address each area in more detail.


There are currently over 86,000 registered charities in Canada. Canada's tax incentives for charities are among the most generous in the world. In 2012, registered charities issued donation tax receipts for more than $14 billion. This constitutes foregone revenue of approximately $2.8 billion federally and provincial/territorial foregone revenue of $1 billion.


In its role as regulator, the Charities Directorate ensures that all registered charities meet the legislative requirements for obtaining and maintaining charitable registration. In addition to protecting the tax base, this regulatory role ensures that charitable registration benefits only those organizations that are exclusively charitable. It also ensures that charitable funds and services reach intended, legitimate beneficiaries. The Charities Directorate does this through a balanced program of education, service and responsible enforcement.

As I mentioned when I appeared before this committee on May 25, and I think it's worth reiterating, the risk of terrorist exploitation of the non-profit and charitable sector has been recognized by the international community since the late 1990s. Since that time the CRA has taken steps to protect the charity registration system in Canada from being abused by individuals or groups with links to terrorists.

With the passage of the Anti-terrorism Act in 2001, the CRA became a partner in the government's anti-money laundering and anti-terrorist financing regime. The Charities Directorate formally established the Review and Analysis Division in 2003 to deliver the CRA's mandate under the Anti-terrorism Act.

Canada's charity registration system has been in place since 1967, and the requirements for registration are longstanding. While these requirements have evolved over time, the CRA's efforts to combat terrorist financing have not imposed any additional legal obligation. The obligations already in place as part of the requirements of charitable registration also work to protect charities from terrorist abuse. For example, charities must keep adequate books and records and maintain direction and control over the use of their resources, whether operating in Canada or abroad.

Unlike the Charities Directorate's general functions, the Review and Analysis Division focuses specifically on protecting the integrity of the charity registration system against the threat of terrorism. This is an administrative role that does not include criminal investigations.

The Review and Analysis Division's operational activities consist of four key roles: applications, leads, audits and monitoring, and information sharing.

The division reviews all applications for registration as a charity to determine the presence and extent of terrorist financing risks. Approximately 1 per cent of applications are deemed to be of high risk and undergo a detailed review by the division. Depending on the findings of the detailed review, the CRA may deny registration.

The division also receives and processes leads related to the national security of Canada. These come from a variety of external sources, including the media, classified intelligence and the public. In addition, leads are developed internally through our review of interrelated files and annual reporting by charities.

The division audits registered charities based on the potential risk of terrorist financing abuse that is posed to the charitable sector and Canadian society as a whole. This is done using a risk-based approach.

In conducting its work, the division ensures that its assessment of the risk does not disrupt or discourage legitimate charitable activities. The complexity involved in maintaining this balance requires a team of subject-matter experts with a range of experience in national security issues, terrorist financing, geopolitics and charity law.

Information sharing is vital to the division's operations and occurs across all its functions. As I mentioned during my previous appearance, the CRA, through the Review and Analysis Division, has the authority under current legislation to share certain information related to charities with the RCMP, CSIS and FINTRAC when it is relevant to their respective national security mandates. In turn, information from national security partners is used in assessing the level of risk posed by applicant organizations or registered charities.


Due to the global nature of terrorist financing, the CRA's efforts at home can have significant impacts internationally. The division's knowledge and expertise when it comes to protecting the charity registration system from terrorist abuse has allowed Canada to emerge as a leader in this particular area within the international community.


The CRA plays a role in fulfilling Canada's international commitments to fight terrorist financing. This is done, among other things, through compliance with international standards set by the Financial Action Task Force, the FATF. While Finance Canada coordinates Canada's relationship with the FATF, it relies on other government departments and agencies as subject-matter experts to participate in FATF meetings and projects.

Most notably, the CRA co-led an FATF typologies project which involved analyzing case studies from a number of countries to identify vulnerability and risk within the non-profit and charitable sector. The resulting report, entitled Risk of Terrorist Abuse in Non-Profit Organisations, was published by the FATF in June 2014. The CRA is currently co-leading a review of the FATF best practices paper, Combating the Abuse of Non-Profit Organisations, which will aid countries in responding more effectively to terrorist financing abuse in the charitable sector. In Canada's case, the CRA will use the best practices paper to enhance the measures already taken to educate charities about the risks associated with terrorist financing.


In conclusion, the CRA contributes to the government's efforts to combat terrorist financing by protecting the charity registration system in Canada from the abuse of terrorist financing. It prevents organizations with links to terrorism from being registered and revokes the registration of those that are, preventing them from abusing and taking advantage of Canada's generous charitable tax incentives.


We would be pleased to answer any questions the members of the committee may have.

The Chair: I would like to start with a clarification for the record, Ms. Hawara. I believe this question was put to you the last time you appeared.

As you know, we're in the process of debating Bill C-51, which brings in a number of legislative measures that also affect your agency as well as other departments within the Government of Canada. The question of privacy has come up and, of course, the question of privacy for individual taxpayers and their information that you have responsibility for.

The question that I would like to put to you, and to clarify once again, is under what terms and conditions are you going to be vested with in respect to being able to call upon someone's personal tax information if there is a question of national security and one's name is brought up for the purposes of being examined? Can you clarify for the record exactly how it works? There is misinformation out there that this makes Canadian taxpayers' information available to any department, virtually with no safeguards.

Ms. Hawara: Thank you for the question, Mr. Chair.

As I said in my previous appearance, the protection of confidential taxpayer information is of utmost importance to the CRA. It goes to the core of our self-assessment system, and we take that responsibility very seriously.

If Bill C-51 becomes law, two separate thresholds would need to be met before information could legally be shared. The first threshold is under the Income Tax Act, and it requires that we have reasonable grounds to suspect that the information would be relevant to an investigation of a threat to the security of Canada under the CSIS Act or to an investigation of a terrorism offence under the Criminal Code. So the information would have to be relevant to either of those two types of investigations.

If that is the case, then we would have to consider the second threshold, which is laid out in the proposed security of Canada information sharing act, which requires that the information also be relevant to the responsibilities of the organization receiving or requesting the information.

Those two thresholds must be met before the information can legally be shared. Even if the thresholds are met, the Canada Revenue Agency maintains its discretion over the information it has collected and decides what and how it will share in all circumstances.

The Chair: Thank you. I think that clarifies it for the record.

Senator Day: Could we have a clarification of the last point? I think is important for us to understand how you maintain control after it's given up.

Ms. Hawara: Yes, of course. Thank you for the question.

We currently use caveats in terms of the information sharing we are allowed to do today, and that would continue. The caveat would lay out the circumstances under which it could be shared again or beyond, but I believe in all cases we require our partners to come back to us and ask permission.

Senator Day: Bill C-51 says that the 17 agencies that get information from another agency can pass that on to a third agency. How do you circumvent that in law?

Ms. Hawara: It is subject to the existing use of caveats, is my understanding of the legislation. So we would continue to use the caveats we use today in terms of what can be done with the information when shared, and that would be under the new authorities.

Senator Mitchell: Ms. Hawara, there is no question about the force of your presentation and about the sincerity with which you have presented it. I don't question that in any way, but I also know that there are many people in the CRA and many people making individual decisions, and they can be exuberant or they can be misplaced; they can misunderstand and they can make mistakes. They are human beings. That's why we have external bodies in some cases that review.

Who reviews what you share when you share information? How have you done that? Who reviews the application of the caveats? Who does that from an objective, outside point of view so that we can be assured that, as good as the people are at the CRA, they're not making a mistake without realizing they're making a mistake?

Ms. Hawara: We don't have an oversight body like CSIS does. There is no equivalent of SIRC in the context of the CRA.

My understanding is that the institutions that would provide oversight to government operations generally absolutely continue to have oversight over our work — the Privacy Commissioner, the Auditor General.

I don't believe that there has been a review of this particular function, but there has been a relatively recent Auditor General review of the Charities program. In 2010, the then Auditor General's team came in and did a review of the program. That is the answer to the question.

Senator Mitchell: So it comes down to the Privacy Commissioner and the Auditor General, and the Auditor General last reviewed you five years ago. Do you have any idea how many years before he reviews you again?

Ms. Hawara: I am not privy to that kind of information.

Senator Mitchell: Of course not.

My point is that it's not happening every year, and the Privacy Commissioner doesn't review you even every year. So a lot can happen to MaherArar in five years if information is inappropriately shared, and nobody is checking on a regular basis, to the best of your knowledge.

Ms. Hawara: These decisions are taken at a senior level within my organization. We have a team that is trained to conduct in-depth analysis of every single disclosure. This is currently not under the new authorities, but presumably it would be a similar model. Currently under our authorities to share, every disclosure is looked at individually. The analysis is conducted and documented, and we ensure that only appropriate information is shared, as we are authorized to do, and each disclosure is signed off at the director level. We have built quite a bit of expertise in the last number of years since we've had these authorities in place.

Senator White: I have a follow-up question. It's one question split into two so I can get them in.

What jeopardy is there for an employee who unlawfully shares information, from CRA's perspective? Firing, criminally charged, civilly sued?

Ms. Hawara: There are very specific provisions in our code of conduct. It would certainly be misconduct to inappropriately share taxpayer information. There may be aggravating or mitigating factors. Certainly if it was done knowingly, that would be an aggravating factor and would be of the highest order of misconduct. I don't know all the sanctions off the top of my head, but certainly dismissal is attached to the more serious types of misconduct. We have a range of 1 to 5 by which they are categorized. Sharing taxpayer information is a very serious misconduct on the part of an employee.

Senator White: As part of that same question, hundreds of thousands, millions of taxpayers' information goes through your organization annually. How many people are disciplined annually?

Ms. Hawara: I'm sorry; I don't have the answer to that question.

Senator White: Not so many that you would remember, really?

Ms. Hawara: Matters relating to discipline and that relate to individual employees are actually kept quite confidential, so I would not be privy to that kind of information that spans the whole of the organization. Certainly our HR branch would have more of that data. I can speak for my own organization, and no one has been dismissed from the Charities Directorate for that particular reason.

Senator White: How often has the Privacy Commissioner come into your organization to investigate breaches of privacy?

Ms. Hawara: I'm not sure I have the answer to that question either.

Senator White: Have you seen him?

Ms. Hawara: No, I have not seen the Privacy Commissioner.

Senator Mitchell: It dawns on me that there is huge risk in some clandestine operation setting up a charity in Canada, presenting it to the CRA for authorization and therefore subjecting itself to all kinds of technical, intense review. Why would a charity that is going to send money to a clandestine operation somewhere in the Middle East do that? Why would they subject themselves to that? Why wouldn't they just raise money?

Ms. Hawara: I'm not sure that I can necessarily speak to why they would or would not, from a tactical perspective. Certainly being registered in Canada gives them the cloak of legitimacy. There's a CRA number attached to them and they have the authority to then issue tax receipts. That is a very attractive proposition, I would say, probably the top reason for why, in general, organizations would want to be registered with CRA, so they can issue tax receipts. So that does facilitate fundraising.

Senator Mitchell: Because Senator White asked three questions, I'd like to ask another one. It won't be long at all, but it does follow up from what he asked, and that is the idea that, yes, there would be sanctions if you did something inappropriate, knowingly and illegally. But is it not the case — and I think it is; this is a leading question — that in Bill C-51 it's very explicit that if somebody gives up information in good faith that they should not have given up, they are not subject to any liability whatsoever?

Ms. Hawara: I was referring to the CRA's own code of conduct, and it is misconduct to reveal, disclose taxpayer information. I don't have that in front of me, so I can't provide you with the specific quotes from it, but certainly even unknowingly, there are still consequences.

Senator Mitchell: Which bill takes precedence, yours or C-51? Bill C-51 is very explicit.

Ms. Hawara: I think they are two separate things. From our perspective as the employer, how we would handle a particular employee who had disclosed taxpayer information willingly or unwillingly, knowingly or unknowingly, would be handled from the employer's point of view. The code of conduct is part of our terms and conditions of employment, so we would have to do the analysis from a labour relations and labour law perspective.

The provisions of Bill C-51 with respect to that particular issue don't come to mind for me at this moment. I would have to look at them more carefully to see what the analysis would be there.

Senator Stewart Olsen: Thank you for being here.

I have an informational question. Do you know how many charities in the last five years have lost their status for terror-related activities?

Ms. Hawara: I have the statistics as of 2008. Since 2008, we found that eight organizations have been a risk for terrorist financing and we ultimately decided to revoke the organizations' charitable status.

Senator Stewart Olsen: Could you provide the committee with a list, please?

Ms. Hawara: Yes, of course.

The Chair: Is all that information public?

Ms. Hawara: Yes.

The Chair: Do you send out a communication to the public when that takes place?

Ms. Hawara: Certain information can be made available to the public with respect to charities, and revocation is one of those instances. The Income Tax Act allows us to share the letters which lay out the grounds on which we relied to revoke or sanction the charitable organization. On our website, you can pull up all the charities that have been revoked and letters are made available upon request. We can certainly provide that list.

Senator Stewart Olsen: Thank you very much.

Senator Day: Following Senator White's example, I have five questions.

The Chair: As the chair, I have given a little more latitude than normal, but I want to let everyone know that I am going to revert back to where we were before.

Senator Day: I think you have a point you want to make, but I'll get my question in before he loses patience.

You cancelled a registration because you felt there was a risk. That's not proving anything. Did I understand that correctly?

Ms. Hawara: That's the point of clarification my colleague suggested I should make. We are on the same wavelength, or you are anyway and now I am.

It's important to take a step back and remember that there are a number of rules that govern how charities should operate in any circumstances, whether in Canada or abroad. When we're auditing a charity or looking at the activities of a charity and we can rely on whether or not they were operating in compliance with those rules, in most instances we are able to rely on public information and on information from their own books and records. That allows us to deal with our concerns about a charity from a terrorist financing perspective in a much more direct, quick and transparent way. We may have identified some risks, and those risks might be enough. For example, a charity has to maintain direction and control over its assets. A charity in Canada cannot simply give its money away, whether to a terrorist organization or to someone connected to a terrorist organization, or to a legitimate American or European organization. It can't simply give its money away.

When Mr. Bland's team is looking at these organizations, the first question is this: Are they even respecting the basic rules that apply to all charities? In most instances, we identify difficulties or non-compliance issues with the basic rules. So we don't need to go a step further. This is not a criminal investigation on our part. We don't have to prove mens rea or intention. We are a regulator. There are very strict rules regarding how charities operate and we enforce those rules. That allows us to carry out our duties in a transparent way. There is administrative fairness and due process for charities throughout the course of our interactions with them. We express our concerns to them and they have an opportunity to respond.

The Chair: Mr. Bland, do you have anything further to add?

Alastair Bland, Director, Review and Analysis Division, Charities Directorate, Legislative Policy and Regulatory Affairs Branch, Canada Revenue Agency: I'm a little concerned about providing a list because, as Ms. Hawara mentioned, we don't have a criminal mandate. We are not out to prove terrorist financing, which is a criminal offence. We will focus on the rules in place and articulate to the organization how they are or are not compliant with those rules.

Often we raise concerns about connections to terrorism, but our administrative role in this is to look at the rules under the Income Tax Act. If there is egregious non-compliance with those rules, then revocation is one of the tools we have at hand.

Because we don't have to go to mens rea, it's not possible for us to know whether an organization is doing this on purpose with full intent and understanding or they are simply being abused, whether it's willful blindness or naïveté on their part. To be effective and to stop the unacceptable behaviour, we have an administrative role to play. With the organizations that we look at and audit, we identify an unacceptable risk and go in and do our audit functions. However, at the end of the day it's not necessarily fair to identify those organizations as being involved in a criminal act of terrorist financing. That's the concern I have about labelling them at this time. We do our best to articulate the terrorist financing connections, but sometimes we focus strictly on the rules themselves and don't raise the terrorist financing issue.

Senator Stewart Olsen: Regarding your comments on the list, that's fine. Would we be fine with those charities that have had their status revoked?

The Chair: Let's put it this way. Since 2008, have there only been eight charities where their status has been revoked, or how long is this list?

Ms. Hawara: There is a longer list of charities that are revoked for cause or after an audit. On average, we end up revoking between 25 and 40 charities every year as a result of an audit. It's a subset of that group.

Senator Stewart Olsen: You said the letters that you send are public.

The Chair: Could you please send us the letters that have been sent to those eight organizations and make them available to us?

Ms. Hawara: Would it be possible, chair, to send you the list where the terrorist financing concerns were explicitly detailed in the letter?

The Chair: How many letters are we going to get?

Ms. Hawara: I'm not sure. It will be less than eight but probably more than five.

Mr. Bland: To give you an idea, you've already heard testimony, and I won't name the organization —

The Chair: You don't have to.

Mr. Bland: The actual reason that this particular organization was revoked was because they failed to conduct any substantive charitable activity during the three years under audit, so we revoked them.

Another organization, which I think will be surprised to learn that they were the subject of a "terrorist financing concern," lost their registration for failing to maintain adequate books and records, providing funds to non-qualified donees outside of Canada, and issuing donation receipts not in accordance with the act.

There are some — I don't have the numbers on top of my head, but it is probably around half of them — where we will identify a very specific concern, outline the organizations that we believe they are in partnership with and why we believe those organizations are connected with terrorism.

The Chair: I would like to follow up on this because I think it is very important. We are not here to put you on the witness stand, so to speak. We are here to just get information that the public should know and that we need for the purposes of concluding our report on terrorism.

If there are eight organizations that have some suspicion of being involved directly or indirectly in terrorism financing, where does that information go within the intelligence community and the enforcement community? Then I would ask who decides if it should go through the court process? Do you want to follow me through on that?

Ms. Hawara: If we do decide to revoke, or even before then, there are opportunities for us to share information with our partners. The decision to share is made within the Review and Analysis Division. Currently we have three partners with whom we can share: CSIS, the RCMP and FINTRAC. The information generally will go to the RCMP and CSIS, and then it is up to them to carry out their legislative mandate and to use the information that we provide them.

It's important to draw a distinction between the work we do and why we do it and the work that our partners do and why they do it. It would be highly inappropriate for us to do our work in order to directly further a criminal investigation. There are different standards that need to be respected in both types of work. However, there is valuable information that we can share and we do share for their purposes. It is beyond our authority to determine what they will do beyond that.

The Chair: Basically you provide the information, and then another agency will make a decision on whether or not they proceed with that information.

Ms. Hawara: Yes.

The Chair: Obviously it's not going very far down the tracks, as far as I can make out, but we will discuss that at another time.


Senator Dagenais: We need to take a closer look at the role that teaching institutions, colleges and universities, play in recruitment. Quebec ran into some problems with Adil Charkaoui's group, which rented out space from CEGEPs.

Do you have any records where foreign funds have possible ties to such institutions and where the money is going towards religious teaching programs in schools, among others? Does your mandate include looking into the types of funding used by religious teaching programs in colleges and universities? If not, who is responsible for monitoring that to make sure that foreign money isn't being used to promote extremist ideologies?

I realize it's a rather long question, but it's about colleges and universities, specifically. We've seen about 10 such cases in Quebec.

Ms. Hawara: Let me start by saying that our mandate revolves around registered charities. If the schools, colleges and universities are registered, then they fall within our mandate. If not, our work does not extend to them.

Generally speaking, charities, including academic or teaching institutions, have to adhere to certain rules in carrying out their activities. Those activities have to be charitable in nature.

A definition describing the activities deemed charitable in connection with the advancement of education has been established by the Supreme Court. Our role extends to that as well. We see to it that organizations like the ones you mentioned engage in activities of a charitable nature. When that is not the case, we have the authority to intervene, primarily by imposing penalties and sanctions and, in extreme cases, revoking the organization's registration.

So we do play a role and we always adopt an education-based approach. If we can deal with the situation using measures that are less harsh and avoid imposing sanctions or revoking an organization's registration, we do, but we are responsible for all activities carried out by registered charities.

As far as foreign funding is concerned, there aren't really any rules in place preventing registered charities from accepting foreign funds, except as outlined in the legislation that came into force a year or two ago. I'm going to have to explain it in English.


Registered charities cannot receive funds from state sponsors of terrorism, and there are two currently: Iran and Syria.


That's currently the only exception when it comes to foreign funds. But, in their annual returns, charities are required to provide certain pieces of information about foreign donations and more detailed information on donations above $10,000. That information is, however, confidential and is used only by us. It isn't available to the public.

So that is a source of information that comes directly from the charities. And, through partnerships with other agencies, we have access to other information. I hope that gives you an idea as to the regulatory framework governing the activities of teaching institutions receiving foreign funds.

Senator Dagenais: Thank you very much, Ms. Hawara.


Senator Beyak: Thank you for a very clear presentation. I think you have allayed a lot of fears to date.

Can you tell me if there are consequences for a member of a board that has been delisted or found to be in breach of anything not complying with your rules, especially those who have served on boards that are related to terrorists funding?

Ms. Hawara: Thank you for the question.

New sets of rules have recently been introduced in the Income Tax Act, what we call our ineligible individual provisions. There are a number of different categories of ineligible individuals, but to focus in on your question, if an individual was a member of the board or controlled or managed a charity at a time when the charity committed a serious breach of the act, which this would be if there were concerns around terrorist financing, and that led to the revocation of the charity, that person becomes an ineligible individual. The CRA then has the discretion to either refuse to register or revoke another organization with whom this individual might be involved.

It is not director liability in the sense that you might have been thinking, but there is consequence in terms of that person being able to set up another charity or continue to be involved with another charity where we have concerns that the other charity might be at risk.

The status lasts for five years, so that person would be an ineligible individual for five years. These are relatively recent provisions of the Income Tax Act.

The Chair: Do you have a list of individuals that have been identified? If you do, is it identified to the public that those particular individuals have breached the various legislative measures?

Ms. Hawara: No. We would have no authority to reveal that under the Income Tax Act.

The Chair: Let's get this straight. Right now, if I am running a terrorism organization through the charities laws and you find that I have breached my fiduciary responsibilities, you revoke the licence, and the only real consequence to me is that I can't start another charity for the next five years; is that right?

Ms. Hawara: That is how the provisions were drafted. There is opportunity for us to share information with our partners. As well, directors are listed on our website, so you can see who is on the board of any organization today, and that would include organizations that were previously revoked.

The Chair: I wanted to get clear what the consequences are, if any, right now.

Senator Beyak: I was going to ask if you would be able to refer those names to CSIS, to the RCMP.

Ms. Hawara: Yes, we can. I was responding in a public context. There is no public list of ineligible individuals, but certainly that is information we can share with our partners for their action.

Senator Ngo: Can you tell us approximately how much money is coming into Canada from Saudi Arabia or Middle Eastern countries for religious and educational purposes?

Ms. Hawara: We have some information, but it is not detailed. It is not that granular. In fact, we're looking at the annual return now to see if more precision should be brought to that kind of reporting by charities. I don't have a specific answer to your question, unfortunately.

Senator Ngo: Then my second question is irrelevant, because that is why I'm asking you to give me the breakdown.

The Chair: Perhaps you could inform the committee when you will have this granular information, or will it be less granular? When will you have this overview done and be able to provide us with the information?

Ms. Hawara: We have a project that's going on right now to modernize our IT systems and introduce online filing for charities. At the same time, we're reviewing the annual report they have to file to see whether the questions can be improved, because we know that charities are having difficulty responding.

Part of our challenge is we're not sure, in some cases, that the data they are self-reporting is accurate. Also, the way the form is laid out now, it doesn't get into the level of specificity in terms of the question that was posed. It's still at least two or three years away.

The Chair: Two or three years?

Ms. Hawara: Yes, unfortunately.

The Chair: I don't know about anyone else, but it would seem to me that we should know who these charities are and who is receiving money.

Ms. Hawara: We do have that information, Mr. Chair. Maybe I should take a step back.

Charities, if they receive foreign donations or donations from non-resident Canadians, individuals who are not residents of Canada, they must disclose details of that if the gift is over $10,000. What we ask them to disclose currently is the name of the entity that provided the gift, the amount they provided and whether it came from a government, an organization or an individual. That's the level of information we have.

The question posed to me was the kind of funding that is coming in specifically for religious or educational purposes.

I should clarify. About three years ago, we did make one change to the form. If foreign funding is coming in for political activities, there we actually do have the level of detail you're looking for, but it's only in relation to political activities.

We know that's not ideal. We want to be able to collect better information, and we're looking at that actively now.

Senator Ngo: According to you, up to now, you don't have control of the funds coming into Canada for educational or religious purposes.

Ms. Hawara: There are no restrictions on the money that can come in unless the funding comes from state sponsors of terrorism. Currently we have total numbers of the monies coming into Canada, and we have lists of entities that are providing these donations.

Senator Ngo: Everyone knows Saudi Arabia and some of the Middle Eastern countries, so if you see that there are contributions or donations from those countries, do you share that information with CSIS or FINTRAC?

Mr. Bland: We do look. We have access to some of the information. Sometimes it's difficult to understand exactly where the money is coming from.

One of the risks to the sector is abuse of programming, much of what you were discussing with the previous speaker in terms of radicalization. In our examinations, we'll have a look at the appropriateness of activities and whether those activities are supporting the charitable objectives. If they're not, then we will deal with that.

In terms of money coming in from outside, we're always looking to ensure that the money is being used for appropriate programming in Canada.

Yes, where there are concerns, we have the authority to share that information with the RCMP, CSIS and FINTRAC.

The Chair: You indicated that you do have some concerns similar to what has been expressed around this table in respect to the monies coming in from, primarily, interests in Saudi Arabia and maybe other countries, and you referenced looking at various organizations to see if they're meeting their charitable objectives. In that statement, how long will that take you to come to some resolution, one way or the other, in respect to reviewing that money coming in and ensuring it's being used in the manner it's being said it will be used for? Is this still a two-or three-year program from the point of view of being able to identify if money is being misused and to take the appropriate action?

Mr. Bland: This is the ongoing work we've been doing for a number of years now in terms of our evaluation of organizations, where we've identified some risk indicators to see whether they should be registered in the first place and organizations where concerns have been identified. We're also looking at existing organizations and trying to make a decision whether or not they should continue to be registered. These are exactly the types of terrorist financing risks.

We spent a bit of time today talking about what we would call false representation or sham organizations, but there are a number of other risks in the sector: diversion of funds from directors or diversion of funds after a program has been delivered; abuse of programming; support for recruitment; and affiliation to a terrorist organization. These were the top five risks to organizations and their connection to terrorist financing.

In the course of our evaluations, we look at all of these. Because we don't get into mens rea, it's difficult for us to determine whether it was actually a false representation or a sham or someone that had been abused. We focus our attention on diversion of funds and abuse of programming. It would be fair to say they would be the majority of the files that we deal with.

Senator Ngo: Can you confirm if CRA approved of former Libyan dictator Moammar Gadhafi to fund university programs such as the one at University of Western Ontario in London, as well as other centres?

Ms. Hawara: I'm not sure we have information that we can share in this forum at this time in answer to that particular question.

Senator Ngo: If not, you can relay your written response to the chair of the committee.

But I would like to have confirmation from the CRA because we would like to know if Gadhafi has funded those programs to Ontario universities and other centres and who controlled it, who monitored such spending, if they funded the universities. And you know the funding that goes there? Who controls the spending? Is it the university? Do you monitor that spending from the university?

Ms. Hawara: I think it's difficult to answer a specific question about specific charities. I am mindful of the confidentiality provisions at this point. I wouldn't mind having an opportunity to go back and look at the question to see what can be shared with the committee, if that would be acceptable to the chair.

The Chair: That would be acceptable. If money is approved from foreign sources to a charitable organization for the purposes of educational pursuits, say to a university, the question is who monitors to ensure that the money is spent in the appropriate manner they said it would be?

Ms. Hawara: Generally speaking, whatever the source of funding, charities have to follow the rules. They have to carry out their own activities or fund other qualified donees, and they have to carry out activities that further charitable purposes. Those are primarily the basic rules.

Our role is to oversee that. We have an audit program that allows us to do that. We can't be in every charity every year, unfortunately — or fortunately — so we have to rely on a risk-based approach to determine which organizations we will look at more closely at any given point.

A registered charity has obligations under the Income Tax Act and must abide by them, and our role as regulator is to ensure that the charity continues to meet the requirements of registration.

Senator Day: You're right where I would like you to be in your mind right now, Ms. Hawara, where you talk about a risk-based approach. In your comments, you talked about the Review and Analysis Division doing an audit of registered charities, and you say this is done through a risk-based approach. Can you be a little more specific and tell us what's involved in a risk-based approach? What are some of the factors that you decided are important?

Ms. Hawara: Quite a bit of work has gone into identifying some of the criteria or some of the risk indicators that would cause us to believe that there is a higher level of risk with a particular organization. In fact, under the leadership of Mr. Bland, quite a bit of work was done on a project to identify the vulnerabilities in the charitable sector. At a very high level, two really key factors that have an impact on the vulnerability of a particular charity were the nature of the activities it carries on and its proximity to a terrorist threat either here or abroad. Those were the organizations at highest risk.

More specifically, we found through the analysis of a number of case studies that the organizations that provide service-type activities — health care, education, welfare, et cetera — in close proximity to a terrorist threat were at higher risk of abuse by terrorist financing.

So it's not all charities; it's specific types of charities. And there are a number of other risk factors we would look at.

Senator Day: Could you clarify "in close proximity to a terrorist threat"? What are we talking about?

Ms. Hawara: There are regions of the world —

Senator Day: Geographical proximity.

Ms. Hawara: Geographical. But there could be regions in Canada where they are more active or close to a community that —

Senator Day: Without naming any of the communities.

Ms. Hawara: No. The typologies report that I referred to in my opening remarks was made public and is now informing a best practices paper that the FATF is working on and that we are co-leading. It will provide more guidance both to regulators and governments, but also to the sector itself, in terms of how to protect itself, given these inherent vulnerabilities.

Senator Day: I would like to follow up on this, but I'm going to switch to another question that I think fits in with the discussion we had earlier about improving the computers and the information technology you have.

I have in front of me a copy of the 2013 Office of the Privacy Commissioner's audit of the Canada Revenue Agency, and there is a very interesting and almost disturbing comment in one of the bullets towards the end of this summary. It says:

Inappropriate accesses to thousands of taxpayers' files have gone undetected over an extended period of time.

You're familiar with that, I'm sure.

The bullet before that says:

The effectiveness of the Agency's controls to detect and prevent inappropriate employee access and use of taxpayer information is limited by its lack of an automated tool to identify and flag potentially inappropriate accesses and by certain gaps in the collection of audit trail information for CRA computer systems.

Is this the same computer system you said may take two years to implement?

Ms. Hawara: No. Very specifically I was referring to an announcement in the budget in 2014 that would see an investment of $23 million over five years specifically for the Charities Directorate's systems. We have a system that houses all of the data that charities report to us on an annual basis, and most of that data is then displayed publicly on the CRA website. It's that one in particular that I was referring to.

At the same time as we are modernizing that database, we are going to introduce electronic services; so an online application functions and online filing of the annual return.

I apologize. I don't have that report in front of me. The report specifically refers to systems and accesses of other agencies. The CRA has taken steps since then. We have appointed a chief privacy officer. I know that a number of changes are happening in the agency writ large as opposed to specifically with respect to the Charities Directorate. Today I'm not able to provide more information about what the chief privacy officer and her team are doing now, but if you were interested in learning more I'm sure more could be provided.

Senator Day: Just reassure us that you're working on this updated and highlighted need for improved computer systems.

Ms. Hawara: Absolutely. The CRA takes this very seriously, and the first step was appointing a chief privacy officer. There is a work plan in place.

Senator Beyak: You answered my questions about revoking the charities and the board members.

Senator Ngo raised another issue with universities. If you found, during your audit, that there was money coming into a university or educational institution, would you be able to refer that over to CSIS or the RCMP for investigation under their foreign influence of money mandate?

Ms. Hawara: To the extent that the organization is a registered charity, the purpose for which the money has come in really doesn't have an impact. If we have concerns that the charity is not using the money in a way that is charitable, we can take the necessary steps, including sharing information, if that is the appropriate step.

The Chair: Colleagues, we're close to the end of our time, so I would like to follow up with a couple of questions.

You mentioned that you had just completed a study of monies coming in for the purpose of political activities and that it was complete. I would ask that you table that information, if you could.

Ms. Hawara: It's not a study, per se. What we did is we added additional questions in the annual information return to get more information about foreign funding coming in for political activities. We have the first full year of data available to us now, the data from 2013, and we can certainly provide the information that we have received from charities with respect to that particular issue.

The Chair: Do you have a number for us today?

Ms. Hawara: It's a small number, only about 500 or so. This is a ballpark number. Only about 500 charities report conducting political activities, and it is a much smaller number who report having received funding for political activities from sources outside Canada. It's a very small number, but we can get that readily to the committee.

The Chair: When you talk about numbers, do you mean in dollar form or the number of charities?

Ms. Hawara: Number of charities. I don't know the total number, but we can certainly get that.

The Chair: Could you get that to us sooner rather than later?

Ms. Hawara: Yes.

The Chair: I have a follow-up question going back to the directors of these charities who, as far as I can make out, there are very few consequences in terms of personal liability; at least it appears that way on the surface. In your involvement with other countries, is that the status quo for other countries as well? Do you know if the directors of charitable organizations in the United States or the United Kingdom have personal liability if they don't do what they've set out to do?

Ms. Hawara: I don't think I can provide an answer in terms of what our colleagues across the world do or the jurisdictions with which we work the closest. I believe that there is no director liability, but I'm not 100 per cent sure.

Criminal liability, though, when a criminal offence has taken place, it is up to the law enforcement agencies to determine whether that threshold has been met and whether it should be pursued.

From our perspective, from the Charities Directorate's or the CRA's perspective, our authorities are laid out in the Income Tax Act. We have our ineligible individuals provision, so we know that those individuals cannot continue to work with other registered charities, but there is no liability imposed under the Income Tax Act. I can't really speak to criminal matters, though.

Senator Mitchell: If I could just follow up, I assume that part of the thrust of the chair's question would be to see how much money comes from international sources to environmental groups that then use it for political lobbying. You would be able to look at that because the environmental group would be a charity, but of course there are many foreign-owned, multinational companies that use foreign money to lobby government on policy as well, but they wouldn't fall under the net. They wouldn't be charities, but they would still get a tax deduction for the money they spent on lobbying. We would only get a skewed view if we just looked at what the Charities Directorate gives us of that kind of information.

Ms. Hawara: The only information I have is with respect to registered charities.

Senator Mitchell: We'll get a skewed view.

The Chair: I think the question for us today is the money that it has been alleged is coming into this country. We've been told privately by some people within the intelligence service that millions of dollars are coming into this country. Whether it's true or not, we want to find out and I'm sure you want to find out how it's being used and what it's being used for. So I think it's a very legitimate question for the public and for all agencies in the government to find out exactly what's going on.

I would ask that you try to speed up your review. A year is a long time. Two years seems like a really long time, and three years is a really, really long time. I wanted to put that in context, and I'm sure you feel the same way. We're hoping you have some news for us within perhaps a year as to where the progress is.

I want to say thank you very much. I know you have been under the gun for a few minutes. It has been very informative. We very much appreciate your coming in. We understand how serious this is, and that's why we're having this public conversation so not only the public is made aware of what is going on but all government agencies also understand how important this is.

Colleagues, I will excuse our witnesses and we will continue this committee in camera. Thank you very much.

(The committee continued in camera.)

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