Proceedings of the Standing Senate Committee on
Legal and Constitutional Affairs

Issue No. 63 - Evidence - May 30, 2019

OTTAWA, Thursday, May 30, 2019 (Afternoon meeting)

The Standing Senate Committee on Legal and Constitutional Affairs met this day at 2:06 p.m. to the subject matter of those elements contained in Division 17 of Part 4, and in Subdivisions B, C and D of Division 2 of Part 4 of Bill C-97, An Act to implement certain provisions of the budget tabled in Parliament on March 19, 2019 and other measures; and for the consideration of a draft report.

Senator Serge Joyal (Chair) in the chair.


The Chair: Honourable senators, welcome to our afternoon session on the budget implementation bill divisions that have been referred to this committee. I remind honourable senators that the first one deals with amendments to the Judges Act. It has essentially three additional positions within the judgeship of Canada under the Federal Judges Act, and it also deals with important sections of the Criminal Code in relation to money laundering.


I am very pleased to welcome Paul Saint-Denis this afternoon. Without meaning to describe you in a disparaging way, you are a veteran of the Standing Senate Committee on Legal and Constitutional Affairs. Veterans always have great credibility because of their many years of service. We are happy to see you once again this afternoon. You are accompanied by Adèle Berthiaume, Counsel at the Department of Justice.


I would also like to welcome Fraser Valentine, Director General, Refugee Affairs, Immigration, Refugees and Citizenship Canada.


We also welcome André Baril, Senior Director, Refugee Affairs. Good afternoon, Mr. Baril. You know the procedure, so I don’t have to explain it. Mr. Saint-Denis and Mr. Valentine, do you have an opening statement for the honourable senators?

Paul Saint-Denis, Senior Counsel, Department of Justice Canada: Thank you, Mr. Chair. At the risk of disappointing you, I have nothing to present to you. I will answer the questions that will be asked later.


Fraser Valentine, Director General, Refugee Affairs, Immigration, Refugees and Citizenship Canada: I have a few opening remarks.

The Chair: Then you will upstage Mr. Saint-Denis this afternoon. Go ahead.

Mr. Valentine: Thanks very much, Mr. Chair.

As you know, the world is experiencing an all-time high number of migrants, with an estimated 258 million people on the move, including economic migrants and more than 25 million refugees.

Canada has seen a significant increase in the number of asylum claims over the past two years, from both regular claims made inside Canada and from irregular migrants entering Canada between ports of entry at the Canada-U.S. border. In 2017, for instance, Canada received a total of 50,000 asylum claims, including approximately 21,000 interceptions of irregular migrants between ports of entry. In 2018, there were over 55,000 asylum claims, including approximately 19,500 interceptions.

In response to these sharp increases in asylum claims, Budget 2019 proposes to invest $1.18 billion over five years, and $55 million per year ongoing, to enhance the integrity of Canada’s borders and asylum system. These investments will support the government’s border enforcement strategy and will increase the asylum system’s capacity in order to provide timely protection to refugees and ensure that failed asylum claimants are removed faster.

This approach has three main pillars: first, to detect and discourage the misuse of the visa system by preventing travel to North America by individuals who may not be legitimate temporary visa applicants; second, to discourage irregular migration and manage arrivals at the border while ensuring the safety of Canadians; and third, to invest in the asylum system by processing more asylum claims faster and by removing those who do not need Canada’s protection.

I am here today to speak about the third pillar, to invest in a fast, fair and final asylum system.

These investments represent an increase in funding across the entire asylum system to process higher volumes of claims. Budget 2019 funding will allow us to, first, enable the Immigration and Refugee Board to make decisions on up to 50,000 asylum claims and 13,500 appeals by fiscal year 2020-21; second, as you have noted, Mr. Chair, to add three Federal Court judges through an amendment to the Federal Courts Act, which will increase the capacity and expedite judicial review hearings, and as you know, this amendment is contained in the Budget Implementation Act; and third, to process over 4,000 additional pre-removal risk assessment applications per year, which will support additional removals but could also result in an additional caseload for the Federal Court.

I would be happy to take any questions you might have on any of these proposed changes. Thank you.

The Chair: Thank you very much, Mr. Valentine.


I would therefore like to invite Senator Dupuis, deputy chair of the committee, to open the debate.

Senator Dupuis: My first question is for Mr. Saint-Denis, from the Department of Justice. When the minister appeared before the committee just recently, he was asked whether a gender-based analysis had been done. We were told that we would be provided with this information. Are you in a position to share it with us today? We also asked whether there had been an analysis of a “Charter statement,” a statement about the compliance of Bill C-97 with the Charter. There was some concern about whether such an analysis had been conducted for Subdivisions B and C of Division 2 of Part 4. Are you able to provide us with that information today?

Mr. Saint-Denis: Certainly, senator. We have conducted those two analyses on Charter compliance and on the gender and sex perspective; I know the department is preparing those documents for you.

The Chair: Would it be possible to get them relatively quickly? Under the mandate given to the committee by the House, we must report by June 6, a week from now. If we could have them in the next few days, this would be very useful information for the honourable senators on the committee.

Mr. Saint-Denis: Certainly.

The Chair: Thank you.

Senator Dupuis: I have a question for Mr. Valentine. In terms of the third pillar — invest in the asylum system for a fast, fair and final system — I am trying to understand the connection between the investments you have mentioned, which are intended to enable the immigration board to render more decisions, and to add three Federal Court judges. That’s not quite clear. I would like to understand. The Federal Court exercises judicial review in that sense. What is the connection between the two?


Mr. Valentine: Thank you for the question.

The investments that the Government of Canada is making that are proposed in Budget 2019 will increase the capacity of Canada’s current asylum system from its current funding of 26,000 claims per year to 50,000 claims per year.

When we do the work inside the department — and we work closely with our partners, including the Department of Justice — a series of assumptions are made about the increase in capacity to the asylum system and what that will mean at all points across the asylum program and for all organizations who are involved in the management of the program. That includes my department, IRCC; our colleagues at CBSA; the Immigration and Refugee Board and the Department of Justice.

Assumptions are made, as we go across that continuum, based on approval rates, refusal rates and cases that are abandoned and withdrawn. We provide those assumptions to our colleagues at the Department of Justice, and then they, in turn, make the determination about what they believe will be required to manage the volume that can be potentially expected at the Federal Court.


Senator Dupuis: You say that the increase in funding will be used to double the number of actual cases processed, from 25,000 to 50,000. Do you have any information — you may not have it today — but do you have any data on the number of judicial review applications processed to date compared to the 25,000 applications that are processed annually by the department?


Mr. Valentine: Yes, we can certainly provide that information to the committee. There are assumptions based on trend data and, in particular, with respect to leave rates that we can engage with our colleagues at the Department of Justice.


Senator Dupuis: Thank you.

Senator McIntyre: Thank you for your presentations. My question is for Mr. Saint-Denis and Ms. Berthiaume. Do you have any statistics on the number of criminal convictions for money laundering in the last five years? If so, how do those statistics compare to the number of times police have instead opted for provincial proceeds of crime forfeiture laws?

Mr. Saint-Denis: Yes, we have figures on the number of charges and convictions. Statistics Canada collects that sort of data. We also have statistics that were provided to one organization, the G7 Financial Action Task Force (FATF), when Canada was evaluated in terms of the measures to combat money laundering and terrorist financing in 1986, but those data are somewhat outdated. There may be a way to obtain more up-to-date data from Statistics Canada. We can try to obtain them. However, with respect to charges, indictments and convictions for money laundering offences are rare, in the sense that there are perhaps 150 to 200 cases per year. However, there is a related offence of possession of proceeds of crime. That’s the offence we see most often in cases involving the proceeds of crime. When, for example, individuals are charged with drug trafficking, they will often be charged with an offence of possession of proceeds of crime, as opposed to money laundering, for the simple reason that the offence of possession of proceeds of crime is easier to prove in court than the offence of money laundering.

The number of cases of offences involving the possession of property obtained by crime is approximately 1,000, as opposed to 150 or 200 money laundering offences. Civil forfeiture is a completely different matter. First, not all provinces have legislation for that type of procedure. Eight of the 10 provinces have legislation for it.

A province can initiate civil forfeiture without charges being laid. We can’t really compare that to the money laundering offence. In civil forfeiture proceedings, it must be proven that the property in question is related to some offence, not necessarily to a money laundering offence, but often to a fraud offence, or even more often to drug trafficking. In those cases, the level of evidence required is not beyond a reasonable doubt, but the preponderance of evidence. Therefore, civil evidence, not criminal evidence, is used to obtain the forfeiture of those assets.

Senator Carignan: I have a technical question that I asked yesterday, but the witnesses did not have the answer. Clause 114(1) of the bill states that paragraphs 3(b) and (c) of the Seized Property Management Act are replaced by the following:

(a.1) to authorize the Minister to provide consultative and other services to any person employed in the federal public administration or by a provincial or municipal authority in relation to the seizure, restraint, custody. . . 

What exactly does “and other services” mean?

Mr. Saint-Denis: This amendment is proposed by Public Works and Government Services Canada. It’s the part that deals with the management of property that is seized or confiscated. They want to provide advice or administer assets seized by the provinces. At that time, they would ask Public Works Canada to do it for them. I believe that’s what the reference to “and other services” means. It’s administrative management.

Senator Carignan: Is that what you believe or is that in fact the case?

Mr. Saint-Denis: You want to be sure —

Senator Carignan: I asked the question yesterday, and they told me that they did not have the answer. However, you answer, “I believe —”

Mr. Saint-Denis: I believe with a high degree of certainty.

Senator Carignan: There are different degrees of belief.

Mr. Saint-Denis: The degree of belief is similar to the concept of “beyond a reasonable doubt.”

Senator Dalphond: My question is more for Immigration, Refugees and Citizenship Canada. You have planned to add three Federal Court judges because you believe that the potential volume of judicial review proceedings will double. How many cases are subject to judicial review in the Federal Court each year? Second, in the suggested amendments, I see that there will be a new ineligibility criterion. Previously seeking asylum in another country would result in the file being summarily dismissed rather than dismissed during a judicial review process. Will that reduce the number of cases? Do you have any analyses or figures on that?

André Baril, Senior Director, Refugee Affairs, Immigration, Refugees and Citizenship Canada: Thank you, senator. I actually don’t know how many applications for judicial review are made through the asylum system right now. I can give you the figures based on the forecasts used to estimate the increased number of applications for judicial review. The board has two divisions responsible for refugee protection claims, one of which — the Refugee Protection Division — is responsible for decisions. About 3,000 decisions are expected at that level. Persons who cannot appeal will then apply for judicial review in the Federal Court. We are talking about 4,500 failed refugee claimants who will apply. For the pre-removal risk assessment program, approximately 500 failed claimants per year will apply for judicial review. Almost 300 claims are made on humanitarian and compassionate grounds to the Federal Court. This is reflected in our projections for judicial review. The system capacity will increase to approximately 8,500 cases per year in the Federal Court.

In terms of your second question on the ineligibility criteria in Division 16, these people will not have access to the Immigration and Refugee Board, but will be referred to the pre-removal risk assessment (PRRA) program. Failed claimants will then still be able to go to the Federal Court to apply for judicial review. However, when they go to the Federal Court, if they are in a removal process, they must apply for a stay.

Senator Dalphond: Thank you.


Senator Lankin: My question is with respect to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. I think it should be directed to you, Mr. Saint-Denis, but if not, please pass the question on. It does follow up on the answer that you just gave a few minutes ago.

As I understood it, you were talking about the fact — and used the example of drug trafficking — that it is sometimes hard to meet the evidentiary case for this act, but the possession of proceeds of crime might be an additional approach to take and that it might be easier to prove. The question had been about terrorist financing, so I’m assuming that’s the same. I think you said that or implied that. Is it more difficult in cases of terrorist financing to actually track down and get convictions on the money laundering aspect of it?

Mr. Saint-Denis: There are two such offences. They are stand-alone offences. They are not money laundering offences. They involve different activities, and usually different actors, if you wish. Some of the individuals who are implicated in terrorist financing may have been involved prior to the financing of a terrorist activity or may have been involved in a money laundering activity of some sort. As an example, perhaps someone related to the terrorist group would be involved in some fraud, robberies or trafficking and drugs, would take that money and then convert that money to something else. That conversion would normally be money laundering. And then they would take that money and then pass it on to someone who is involved in a terrorist activity. We are really talking about different kinds of activities here. Normally, if you prosecute someone for money laundering, the issue of terrorist financing will typically not come up, and the same is true vice-versa.

Senator Lankin: It is true that we’re aware of cases where at least the allegation that that’s what the proceeds were eventually used for have come up. Have there ever been convictions that you’re aware of it?

Mr. Saint-Denis: To my knowledge, it has not.

Senator Lankin: Thank you. That was helpful in terms of background.

I know nothing about virtual currencies. You read the articles and I get halfway through it and it’s just beyond me and my life experience. I understand the addition of this provision in this bill introduces the ability to look at virtual currencies. Am I correct? Explain what that is, that reference.

Mr. Saint-Denis: What we’re proposing in the Criminal Code, the offence of money laundering, is to add an additional mental element of recklessness. Presently, when one prosecutes an offence of money laundering, one of the elements that the Crown has to prove is either that the accused knew or believed that the property was derived from a criminal offence.

If you look at crypto-currency, crypto-currency may be one of the currencies or may be a medium by which proceeds will be converted and then moved and then reconverted back into money elsewhere. You can take a crypto-currency as simply another form of money. It has some benefits, such as usually anonymity. It becomes a little more difficult to prosecute because it’s hard to do investigations of crypto-currency because of this anonymity. You can think of it simply as an alternative form of money, and it could give rise to instances of money laundering.

I know in the U.S. there was a fairly big case, one of the first ones, dealing with something called Silk Road, which was sort of a Dark Web website, where there was a lot of money laundering going on. People were paying money in exchange to obtain some criminal act or some contraband or things of that nature.

Senator Lankin: I ask this question in light of the discussion we had with the minister and Justice officials yesterday when we were exploring the mental aspect of recklessness and what the test and threshold will be. I was actually quite comforted by the answers that we received on this.

This area of crypto-currency is fraught with many people being able to be drawn in and engaged, or whatever, without necessarily knowing that they are partaking in something, so the recklessness and the degree of mental engagement, or knowledge, or ought to have known, will be different case by case. I appreciate that the facts will derive from the determination.

Does the inclusion of the virtual currency reference here appear in other places in the Criminal Code? Is this something that’s getting updated on an ongoing basis in various areas? Was it not possible to pursue these things without this language? I have no objection to it; I’m just trying to understand why here and why now.

Mr. Saint-Denis: I’m sorry. I think I may have misunderstood your original question. You’re talking about an amendment that’s being made to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, I believe.

Senator Lankin: Okay.

Mr. Saint-Denis: That is really not my area. That’s FINTRAC, who I think will be appearing later on today.

Senator Lankin: Yes, fair enough. It was your earlier answer that drew me to ask this. I can await FINTRAC.

Mr. Saint-Denis: They will be able to give you the wherewithals of why they’ve added virtual currencies and so on.

Senator Lankin: It’s the intersection between the mental tests around recklessness and then this particular provision.

Mr. Saint-Denis: On that, I can tell you that the element of recklessness that we wish to add to the offence of money laundering will need to be proven beyond a reasonable doubt, like is the case for all mens rea offences. If crypto-currency is involved in the money laundering activity, it won’t change that. They will still need to prove all of the elements of the offence, including the mental element. If it happens to be recklessness, then they will have to demonstrate beyond a reasonable doubt that the individual had been reckless with respect to the property that he was dealing with.

Senator Lankin: Irrespective of the form of it?

Mr. Saint-Denis: Yes.


Senator Carignan: Thank you. In the briefing notes, I saw that a report was tabled in the House of Commons entitled Confronting Money Laundering and Terrorist Financing: Moving Canada Forward. The report’s recommendations include the following in recommendation No. 20:

The Committee recommends, in recognizing the difficulty prosecutors have in laying money-laundering charges due to the complexity of linking money laundering to predicate offences, that the Government of Canada:

bring forward Criminal Code and Privacy Act amendments in order to better facilitate money laundering investigations;

Unless I missed it, I do not see any amendments to the Privacy Act in the bill. Is the conceptual change to propose recklessness as opposed to wilful blindness the only change you are making in response to that recommendation, or does the bill have other amendments to the Criminal Code or the Privacy Act?

Mr. Saint-Denis: In this bill, the amendment about recklessness is the only one we are proposing.

Senator Carignan: Throughout the entire budget, throughout this massive omnibus bill, is the concept of recklessness the only response to the recommendation?

Mr. Saint-Denis: For that recommendation, yes. We may subsequently propose other amendments, such as the one raised or recommended in the report, but for the time being, the concept of recklessness is the only amendment we are proposing.

Senator Carignan: What were the amendments to the Privacy Act that the committee or the House of Commons wanted to bring to the attention of the government in particular?

Mr. Saint-Denis: I don’t know.

Senator Carignan: Could they possibly be related to trusts?

Mr. Saint-Denis: Again, I haven’t followed the debates or the discussions in this committee closely, so I can’t tell you whether it has anything to do with trusts or not. I just don’t know. Perhaps you could also ask our colleagues from FINTRAC about it. I can’t give you an answer.

The Chair: Mr. Saint-Denis, I would like to delve into this matter further because, since the whole issue of money laundering, tax evasion and tax havens has been the subject of debate in Canadian public opinion, all the stakeholders sort of have a common denominator. When we debated Bill C-45, we heard from officials from the Royal Canadian Mounted Police that, to prevent organized crime from too easily interfering with cannabis production and distribution structures, the key to effectiveness in combating money laundering and tax evasion would be to create a registry with the names of the beneficiaries of corporate structures that act as a screen for money laundering, giving it an appearance of respectability and legality. About two weeks ago, the C.D. Howe Institute stated that Canadian legislation is the weakest of the Western countries. As I mentioned earlier, the C.D. Howe Institute is not a left-wing activist group. They have both feet firmly planted in economic activity.

In their report, they proposed creating two registries: One with limited access, for use by revenue collection agencies and possibly police forces, and another that would be more general and accessible to the public, which would clearly contain information that would meet privacy objectives.

What is preventing the Department of Justice from asking Parliament to provide the necessary tools to public and police agencies that are responsible for enforcing the provisions of the Criminal Code, thereby enabling them to be much more effective than they are right now?

Mr. Saint-Denis: We partly addressed the issue of beneficial owners in last year’s budget implementation act, when we amended the Canada Business Corporations Act. Those corporations were then required to retain some information in their own files.

In this bill, we have again amended the Canada Business Corporations Act to provide peace officers with access to that information. That’s a first step towards addressing the issue with those corporations.

The government may look at creating a registry to determine what form it is going to take. However, I can’t tell you when that will happen, because I just don’t know.

That’s really not the responsibility of the Department of Justice, but rather of the Department of Innovation, which is responsible for the Canada Business Corporations Act. You have to be aware that we are talking about federal corporations. This only applies to those corporations. Several provinces have their own legislation for business corporations.

British Columbia has just introduced or passed legislation on the issue. The other provinces are currently reviewing their own legislation. All this was done after finance ministers met perhaps a year and a half ago, and they made the collective decision to do exactly what you are suggesting.

Even if everything may be moving too slowly for some people, we are still moving forward. The first step is to ensure that the corporations retain information that can be accessed by peace officers in the future.

The central registry is quite a complex issue, because it would mean that the provinces and the federal government have to agree to create the registry. In particular, there are issues with resources that need to be addressed before we can move forward. It’s a big project.

The Chair: However, the public is of the opinion that, in the end, people who defraud the system by hiding behind opaque corporate structures always end up getting away with it more easily than the honest taxpayers who file their tax returns and who, if they ever have the misfortune of owing $500 to the tax authorities, will have to pay that amount within 30 days, at the risk of paying penalties. There seem to be two types of justice: one for those who can afford to use corporate structures based on legal or accounting advice — people who already have ways to circumvent the law through organized crime — and one for those who are required to comply with the law.

In a society, people must be confident that the same justice measures apply to everyone. In this case, it seems that the Department of Justice or the Department of Finance is waiting for someone to make a move in Canada. You mentioned British Columbia. Why is the federal government not leading the way by amending its own Business Corporations Act to ensure a registry that is private and accessible only to law enforcement and for tax collection purposes? As for the other public registry, we would at least be confident that essential tools are available. We know what the essential tools are. Why wait so long when, in practice, we should move quickly, since we know that it is the most effective tool to confront money laundering and organized crime?

Mr. Saint-Denis: Those are some excellent questions, Mr. Chair. However, I am sure you will understand that I am really not the best person to answer those sorts of questions.

All I can tell you is that we took the first steps by making amendments to the Canada Business Corporations Act last year in the budget implementation act, in addition to the few amendments we are now proposing to this bill, to allow peace officers to have access to this information regarding federal corporations.

The Chair: I don’t want to take all the attention; I see time is running out and we have other witnesses. When we studied Bill C-45 around this table, we clearly identified ways to prevent organized crime from interfering with cannabis production permits and distribution. We were assured then that all the regulations would be in place. A month later, the CBC reported on documents used to hide the identity of organized crime members in cannabis production structures.

You will understand that, when the Department of Justice appears again before us to ask us to approve provisions that would restrict the ability of the public to prevent money laundering, we have to wonder what is preventing the government from taking action and who is benefiting from the crime, so to speak.

Senator Carignan will probably ask you more questions about this, but that is certainly what the majority of senators have heard and reiterated on a number of occasions with respect to this bill.

Senator Carignan: My question was sort of along the same lines. I know that banks must now report to the Canada Revenue Agency on their activities in tax havens. However, only the Canada Revenue Agency has that information, which is not public.

Have you considered making it public?

Mr. Saint-Denis: When it is said that the Department of Justice is capable of doing certain things, that is true. It is important to understand that, as far as the Department of National Revenue is concerned, the management of banks and the information they have, none of that is our responsibility. It is the responsibility of the Department of Finance or the Department of National Revenue.

Senator Carignan: I hear your answer, but you are amending the Criminal Code in the budget implementation act. How can we not ask questions?

Mr. Saint-Denis: That is an excellent question, but I am here to answer questions about the amendments to the Criminal Code. I can try to help you understand what’s going on outside, but if I can’t, I can’t.


The Chair: I will conclude with a question to Mr. Valentine.

At the top of page 4 of your presentation, you state, “enable the Immigration and Refugee Board to make decisions on up to 50,000 asylum claims and 13,500 appeals by fiscal year 2020-21.” How many of those 50,000 asylum claims deal with the backlog, and what’s the size of the backlog? You don’t mention anything about that, and it is a major issue with the refugee claim system, as I understand it.

Mr. Valentine: Thanks very much for the question, Mr. Chair.

The current size of the backlog at the first-level decision at the Immigration and Refugee Board currently stands at 77,000 claims, and the wait time right now for a decision is about two years from the point that a person makes an application.

As the chair of the Immigration and Refugee Board said earlier to a parliamentary committee, the investments that are being made through Budget 2019 will allow the Immigration and Refugee Board to ramp up, in the first fiscal year, to process 40,000 claims a year, and then in the second year to ramp up to 50,000 claims a year. That investment will enable the board to manage the size of the intake that is currently coming into the Immigration and Refugee Board. In those first two calendar years, it will not do very much to reduce the current size of that backlog because of the intake that we are projecting will continue to come in, based on claimants.

The Chair: In other words, we’re going to keep pushing the stone that we have carried for many years. We will continue to push it ahead of us. The increase in the budget and the increase in additional resources will not be sufficient to normalize the rate flow and the capacity of the system to deal with it in a two-year period?

Mr. Valentine: If we continue to receive between 50,000 and 55,000, or larger, numbers of claims per year, then the size of the backlog will continue to stay at its current rate and could potentially increase. That said, the Immigration and Refugee Board has taken a number of efficiency measures. They’ve moved to expedite processing by using shorter hearings and paper-based processings, which have brought a number of efficiencies. They are getting through more cases than they were, for instance, a year ago. If we are successful in reducing the number of claims that are coming through into the country — for instance, year to date in this calendar year, irregular claims, that is, those individuals who are crossing between ports of entry, are down by 49 per cent. If we can bring that number down, then that will allow the Immigration and Refugee Board to process more of the existing inventory.

The Chair: To catch up with the backlog.

Mr. Valentine: That’s right. But certainly it is a multi-year project.

The Chair: I think it will be very important for senators to keep that in account when making recommendations to the chamber on the disposition of the budget.

Unless there are other questions from honourable senators, I would like to thank you.

Mr. Saint-Denis, keep the message that my colleagues and I have been voicing around the table in your department, because I think it’s one you will hear a lot about if there are no actions that come forward at a reasonable point in time. Thank you for having made yourself available.

Senator Frum: I can’t help but ask, when you say the process is being fast-tracked, the refugee process, can you tell us how that’s being accomplished? What steps are being changed?

Mr. Valentine: At the Immigration and Refugee Board in particular? The chair of the Immigration and Refugee Board has launched a task force that he’s charged to address the existing inventory. They’re taking a number of measures by, for instance, grouping similar kinds of cases to a single decision maker. They’re actually targeting and triaging cases so that a decision maker who can build particular expertise by a particular part of the world, for instance, can process more cases faster. That’s one example of how they’ve been able to introduce some efficiencies. We’ve been told by the chair and colleagues at the Immigration and Refugee Board that, by that measure and by other measures, they’ve increased their efficiency in the past 18 months or so by about 30 per cent.

The Chair: Another question, senator? This touches an issue that is, as you know, of great importance for every senator around this table.

Senator Batters: I wanted to ask a quick one on that. For the Immigration and Refugee Board, we had heard previously that, in the last three and a half years, there’s quite a backlog of appointments to the Immigration and Refugee Board. What is the current vacancy number for the Immigration and Refugee Board right now?

Mr. Valentine: I can provide that number to the committee. They’ve made great progress in filling the vacancies. In particular, there were a number of vacancies at the Refugee Appeal Division, which, of course, increases the size of the inventory because decisions can’t be made. There was a great effort on the part of the government and the minister to fill those vacancies to ensure production stays at the highest level. We can certainly provide the committee with the most recent vacancy rates for both levels.

Senator Batters: Yes, I’d like to know that. Thank you.

Mr. Baril: If I can add, it’s important to note that there are four divisions at the Immigration and Refugee Board. Two of them, the Refugee Protection Division and the Immigration Division, are public servants, not Governor-in-Council appointees. The Refugee Appeal Division Immigration Appeal Divisionare appointees. We can provide you the number for those two divisions.

Senator Batters: Yes, because I had heard that, in general for government appointments, there was an extreme backlog of vacancies. I remember hearing in particular that the IRB was one of them. Thank you.

Senator Frum: Obviously, the concern is that if you have a streamlined process, it’s not as robust perhaps as the previous process. It may be more efficient and it may be better, but that would be the concern. Do you have any sense of any measurement in terms of the acceptance and refusal rates now that you have the streamlined process? Has it changed at all?

Mr. Valentine: I want to make sure I understand your question, senator. Is this with respect to the new ineligibility provision that is being introduced in the Budget Implementation Act or just the acceptance rates at the Immigration and Refugee Board?

Senator Frum: Yes. I want to go back to this process that you’re talking about to reduce the backlog.

Mr. Valentine: The chair has also moved to an approach that is proportionally processing the claims based on those claimants who are presenting at a regular port of entry versus those claimants who are coming into Canada irregularly or between ports of entry.

The current aggregate acceptance rate at the Immigration and Refugee Board in 2018 for those individuals who have crossed irregularly stands at 49 per cent. The rate overall is about 10 to 15 per cent higher than that.

To our knowledge, it’s not having an impact certainly with respect to the quality of the decisions that are being made, and certainly not the independence of the decision makers in making those decisions in terms of those efficiency measures.

Senator Frum: Thank you.

The Chair: Thank you very much, Mr. Saint-Denis, Ms. Berthiaume, Mr. Baril and Mr. Valentine. I’m sure we will have other opportunities to continue our discussion on this because it is a problem that is permanent in the system. It’s systemic, as one would say, as much as money laundering and tax evasion are systemic problems in Canada that we have not yet succeeded in digesting and streamlining our legislation to address permanently and to find a permanent solution.


Honourable senators, we will therefore begin our second session this afternoon.


We have the honour of receiving Superintendent Mark Flynn, Director General, Financial Crime and Cybercrime, Federal Policing Criminal Operations, Royal Canadian Mounted Police and Assistant Commissioner Eric Slinn, Federal Policing Criminal Operations, Royal Canadian Mounted Police.

Honourable gentlemen, you know, of course, the purpose of our meeting this afternoon. It’s about money laundering and the proceeds of crime — whitewashing, tax evasion, fiscal paradise, tax havens, everything that you will understand is a concern of the majority of Canadians and raises a very negative reaction for Canadians who discover more about that situation every day. The floor is yours. After that, we will have a free exchange around the table.

Eric Slinn, Assistant Commissioner, Federal Policing Criminal Operations, Royal Canadian Mounted Police: Thank you, Mr. Chair. Hopefully the last names Slinn and Flynn don’t throw you too far off. We will try to keep ourselves straight.

Senator Joyal: They are famous twin brothers in a movie, as you know.

Mr. Slinn: Thank you, Mr. Chair. It’s a pleasure to appear as part of the review of Bill C-97, the Government of Canada’s Budget Implementation Act.


Joining me today is Chief Superintendent Mark Flynn, Director General, Financial Crime and Cybercrime, Federal Policing Criminal Operations, Royal Canadian Mounted Police.


I understand that you invited me here today to talk about particular clauses in the bill that pertain to money laundering, including proposals on virtual currencies, FINTRAC reporting and disclosures, and amendments to the Seized Property Management Act. I cannot speak directly to all of these proposals, as they are not within my responsibility, but these clauses contain many measures that will help to augment investigations and improve intelligence collection and analysis.

Budget 2019 also announced the creation of the money laundering action, coordination and enforcement team, which is intended to bolster our ability to generate and collect intelligence and provide the best possible information to investigative teams across the country. This collaborative effort will help the RCMP and our law enforcement partners to focus enforcement efforts on the most serious threats to Canada’s economy.

Further, Budget 2019 outlined the inclusion of a recklessness component to the money laundering provision in the Criminal Code. This will provide a new avenue for the RCMP to investigate professional money launderers, in which their link to the predicate offence is often purposely masked.

You are likely wondering, “What is a predicate offence?” With respect to money laundering, the predicate is the offence from which the funds being laundered were derived. For example, if the money being laundered was derived from the sale of drugs, a drug trafficking offence would be the predicate offence.

Essentially, the recklessness component will make it clear that law enforcement and prosecutors can use the activities of the professional money launderer, such as moving proceeds of crime with the sole purpose of disguising its origins, to demonstrate that they are complicit in the money laundering activity, even if they claim no knowledge of the predicate offence.

It’s important to note this will not eliminate the burden of proving that the money was derived from the proceeds of crime, but it will help when investigating and prosecuting professional money launderers who actively avoid knowledge of the origin of the funds they are laundering.

It is expected that this will not only assist the investigative process but will also improve the government’s ability to prosecute money laundering by providing a new tool for prosecutors to target professional money launderers, whose link to the predicate offence is often tenuous.

The recklessness component will also bring Canada more in line with its international partners, allowing for improved coordination and a better ability to target these professionals money launderers who are operating across borders on a global scale.

The improvements to Canada’s anti-money laundering regime proposed in Bill C-97 will absolutely help the RCMP and Canadian law enforcement to combat money laundering, but I would be remiss if I did not point to the complexity of money laundering investigations and the collective effort needed to be successful. To put things simply, combatting this issue in Canada is not solely a problem for law enforcement and the RCMP — it’s a collective effort and a shared responsibility. All partners and stakeholders need to be mobilized and equipped with the necessary tools and capacity. It also means expanding our work with non-traditional partners and players, including banks, the real estate sector, lawyers, luxury car dealers and other reporting entities. They are all a part of the solution.

Ensuring that the anti-money laundering regime has the necessary tools and resources to identify, track, collect and share intelligence, while respecting Canada’s privacy legislation and the Charter, will help to bolster Canada’s defences against money laundering.

While important steps are being taken to augment Canada’s ability to combat money laundering, such as the recklessness clause proposed in Bill C-97 and the recent amendments to the Canada Business and Corporations Act with respect to beneficial ownership, many challenges persist in the investigation and prosecution of money laundering in Canada. We need to continue to be vigilant, to adapt and evolve, ensuring that we keep pace with the continually changing modes of money laundering.

While amendments to the CBCA are proposed to compel federally incorporated businesses to maintain a list of their beneficial owners, there is no such requirement for provincially incorporated businesses. And, of course, the information that comes out of any such system is only as good as the information that goes into that system. Ensuring that any such information is accurate presents a significant challenge.

Also, given that lawyers are not subject to the PCMLTFA when financial transactions are processed through their offices or trust accounts, law enforcement has a very limited ability to effectively follow the money as a result of the solicitor-client privilege.

Further complicating the money laundering issue is the fact that money laundering, which has traditionally been conducted on a cash basis, is now moving into the cyber realm. Professional money launderers are now using electronic transfers, virtual currencies and encryption methods. This highlights the changing face of money laundering into a technical sphere that becomes even more challenging to track and untangle.

Within the RCMP, we are working to modernize and transform the workforce to meet these types of challenges today and in the future. We are developing strategies to increase the complement of civilian specialists with the requisite skills, such as forensic accountants and digital forensic technicians, to bolster and improve our response to complex money laundering investigations.

We are also ensuring that the RCMP’s federal policing program is focused on the most serious threats to Canadians and Canada’s economic integrity. A component of the new investments in cyber enforcement, announced in Budget 2018, will help to bolster federal policing investigations that have a significant cyber component, including money laundering.

Finally, we are working with our Government of Canada and British Columbia counterparts to address the issues outlined in the German report. While these issues are not revelations for us, their inclusion in this public report does highlight the growing concern over money laundering in Canada and speaks to the prioritization of this issue within federal policing.

The RCMP is often the pointy end of the spear, but none of our actions can be done in isolation. A horizontal approach to attacking this issue is required, whereby banks, car dealers, real estate brokers and lawyers work collaboratively to protect our economy and our citizens.


Thank you for the opportunity to speak to you today. I would be happy to answer any questions you may have.


The Chair: Thank you so much.

To open this debate, Senator Carignan.


Senator Carignan: Thank you, Mr. Slinn and Mr. Flynn. Aren’t you angry or frustrated with the situation? We have seen the reports. The C.D. Howe Institute says you can’t even see 99.9 per cent of the money that is laundered. The other day, I was amusing myself doing research on the Internet and I found the website of a company based in Dubai that invited people around the world to invest in tax havens; there was a list of countries well known for their passive attitude towards tax havens, and I saw Canada on the list. All this is the result of a system where companies and trusts are used to hide the real owners. We are not taking sufficient measures to combat money laundering.

Seriously, do you think that the amendment on recklessness versus wilful blindness will be the tool enabling you to recover the 99.9 per cent that slips right under your noses? Are there any other tools or resources you might need? You mentioned car dealers, lawyers, accountants, tax experts. They are the ones who create the trusts and models. Can you tell us what your needs are, needs that are not in the bill and that we lawmakers could give you?


Mr. Slinn: In answer to your first question, am I angry? I’m disappointed. I think the narrative in Canada, in some sense of the word, points to law enforcement as perhaps not meeting its responsibilities to protecting the economic integrity of Canadians. While we do have a responsibility there, quite frankly, if law enforcement is the last bastion of hope in the fight against money laundering, we’re in trouble in this country. We have a significant role to play in protecting that economic integrity. However, we work with the tools that Parliament and government provide us, and there are some new tools being proposed here that we believe are a step in the right direction. Could there be more? I think we need to take the first step with what we have and see how those work.

We recognize, as the RCMP, that we need to balance the rights of Canadian citizens, their privacy and their Charter rights. Obviously, we would probably like much more latitude, but we also recognize the rule of law in this country and that important recognition of privacy and Charter rights.

So we think this is a good start. Is it the panacea? We don’t know. I do the comparison to Y2K. We prepared for Y2K and we thought this great problem was going to come, and it wasn’t an event. Putting it in context in terms of money laundering, we’re being given some more tools, such as beneficial ownership and recklessness, and I’m optimistic that is a step in the right direction. Is it enough? We will see.


Senator Carignan: How much would you say, in billions of dollars? A few months or a few years ago, the RCMP was said to put it between $5 billion and $15 billion. However, the International Monetary Fund gives a figure that is much higher. For Canada, they would put it between $40 billion and $100 billion. That is the figure that Mr. Meunier, now retired from FINTRAC, quoted. The C.D. Howe Institute quoted it as well. How much would you say at present? Do you still put the figure between $5 billion and $10 billion, or does it come closer to $50 billion or $100 billion?


Mr. Slinn: Honestly, I don’t know. I have seen figures, you’re right, from $5 billion to $100 billion. I think Professor Maloney recently came out in a B.C. study with an estimate of $46 billion. I really don’t know. I don’t think we have a good grasp on it. Maybe it’s because of the reporting mechanisms or the underground economy.

The drug economy is very robust. We see it in the opioids. Now we are seeing it unfold in methamphetamines, which are starting to take this country. Organized crime sees opportunities. Canada is often a transshipment point for drugs. We know many drugs get transshipped through Canada to Australia. There are opportunities for organized crime, and they will look for those opportunities to make money. They will deal in cash.

It’s the same question that you might pose, “How many drugs do we think we’re interdicting in methamphetamine and cocaine?” We only know what we know, unfortunately, and our estimates are, I think, purely speculative. I would say the same in that same realm with money laundering. I don’t know that we have an absolutely good grasp on what that might be.

Senator McIntyre: Thank you for your presentation. There is no question that money laundering is a big problem in Canada. It affects all Canadians. There is no question — in my mind, anyway — that professional money launderers will continue to structure their criminal operations and most probably will find ways to circumvent being reckless as to the awareness of the criminality of the funds they receive. The addition of the criminal element of recklessness is a good step forward. Now, that said, gentlemen, what other jurisdictions, if any, make use of the standard of recklessness in the criminal charge of money laundering?

Mr. Slinn: I’ll pass that one on to my colleague.

Mark Flynn, Superintendent, Director General, Financial Cybercrime, Federal Policing Criminal Operations, Royal Canadian Mounted Police: I don’t know with the specific word “recklessness,” but the principle around that marked departure from the norm in handling that in several of our meetings with what we refer to as the Five Eyes, I would say the majority of those other countries do have that principle, to one extent or another, in their legislation or in the interpretation of their legislation. But I couldn’t tell you exactly which ones and to nuance it to a clearer definition of the word “recklessness.”

Senator McIntyre: Do you know if these jurisdictions are deemed to be more successful at securing convictions for this charge?

Mr. Flynn: Yes, many of them are. If you review the FATF reports, you will see that many of the other countries do have greater success than Canada’s results under FATF review.

Senator McIntyre: They are ahead of us in this way?

Mr. Flynn: In some ways, yes.

Senator Dalphond: Along the same line as my colleagues, on the money laundering issue, we don’t know how many billions are involved, but we know it does exist. It’s a cancer within the system. We were told yesterday there has been no charge, no accusation laid, for money laundering under the current legislation, so we have to wonder. Were there investigations conducted or inquiries made? If so, why did these inquiries not lead up to charges?

Mr. Slinn: I can tell you right now that there are upwards of 40 investigations that the RCMP has ongoing that touch on money laundering, either directly or touching on it.

The role of the police and the RCMP is to collect the evidence. We collect that evidence around the elements of the offence, and our duty is to present that to the Crown. The Crown will assess that evidence, and as you well know, in some provinces there is pre-charge approval, as there is in B.C. It’s a discussion between the police and ultimately the decision of the Crown to determine whether there is a reasonable likelihood of conviction or there are problems with the particular case. I think that’s a better question asked to them.

Having said that, our responsibility is to collect that evidence in obviously a judicious fashion and do a thorough investigation. Sometimes there are challenges with those investigations, but ultimately, the decision on whether a charge goes forward or we go to trial is one for the Crown. It’s not for the police.

Senator Dalphond: I have worked on some files where I saw the police is informed of the Crown officer’s decision to pursue charges or not, and they have an explanation, which is normally provided via a short form. When you present these files and no charges are laid, is it because it would be too difficult, according to legal requirement of the law, to get a conviction, and therefore, this recklessness amendment is something that the Crown will have to consider and will open up cases for charges?

Mr. Slinn: Correct. When recklessness comes in, as we do with all investigations and all criminal charges, we are taught from the moment we go to depot that you go right to the elements of the offence and you collect evidence as around the elements of the offence.

In the majority of cases of money laundering, those are probably mostly project-based investigations, so that would involve multiple police officers. In those instances, generally speaking, there is an advisory Crown provided at an early juncture of the investigation. They are working with us along the way and providing advice. But there are instances, you’re quite right, where at the end, when we believe, the police, that is, that there is sufficient evidence for a charge and we bring that, ultimately that decision is left for the Crown. They don’t keep us in isolation as to why they are not going forward. It may be unreasonable likelihood of conviction, or there may be a problem with the evidence or some Charter issue in there that we just can’t sustain, or an operational sensitivity. The RCMP often work with international partners, and we take receipt of sometimes some sensitive information that partners will not be able to agree to share, and that may impact whether we go forward.

Senator Dalphond: Were you told that the mens rea element, if I may use the technical word, was the problem most of the time or some of the times?

Mr. Flynn: In the money laundering and proceeds of crime investigative area, the link to the predicate offence and the knowledge of the predicate offence is often a challenge that affects the reasonable likelihood of a successful prosecution, so we do hear that frequently. To characterize it as most of the time or the majority of the time, it’s difficult to do that because there are a large number of elements that lead to that final conclusion of the lack of a reasonable likelihood of successful conviction. But it happens frequently enough that from my chair, where I sit in Ottawa in the governance role over the program, I hear that frequently.

Senator Dalphond: So if we have this amendment carried, I guess, in a few years, you will be reporting that charges were finally made?

Mr. Flynn: We do lay charges today. You would have heard of project Collecteur, which was a very large operation in Ontario and Quebec. There are successful investigations being carried out across the country in money laundering. We do have successful in it, but we do have our challenges. Clearly, with the results that we’re having, there are improvements that are necessary, and we hope that any amendment put forward that gives us another tool will lead to a higher degree of success.

Senator Dalphond: Thank you.

Mr. Slinn: If I could, if there is one thing organizationally perhaps we have to do better, other than do more significant money laundering cases, is we do not, in typical Canadian fashion perhaps, toot our horn. We contribute significant evidence, information and intelligence to Five Eyes partners that involves money laundering disruptions outside this country. To that end, often they are not publicized. There are times when the RCMP probably could publicize those, but we choose not to. In typical Canadian fashion, we just contribute.

I think it’s important for this committee to know, and it has been a characterized a little bit that the RCMP isn’t doing enough. Well, we are doing a significant amount. Can we do better? Absolutely. But there is a lot of good work being done by our employees. They feel a little bit down trodden. I suppose you may raise E-Pirate, as that’s been in the news. I can’t go into much around that, but I can tell you that our employees were extremely disappointed that did not go ahead. There were nights, weekends, away from families, working holidays, overtime — almost burnt out trying to collect the evidence on that case. So I really wanted to put that marker down. Our employees are very passionate about doing this, and they welcome any new tools that they get.

Senator Kutcher: Thank you very much, gentlemen, for your testimony and the work that you do.

With the addition of the recklessness criteria, in your opinion, how much will it help assist in investigation and prosecution? More specifically, what do you expect will be the rate of change in successful prosecutions because of that?

Mr. Flynn: That’s a very difficult thing to predict. I wish I could, but I cannot.

Senator Kutcher: I won’t hold you to the number.

Mr. Flynn: Going back to my earlier statement that the link to the predicate offence and the fact that we do see what I will characterize as transnational organized crime groups that provide advice to people that work within those networks to be blind to and don’t ask questions about where the money is coming from and the offences that it is related to, it’s a problem for us. So, again, any tool that helps adjust the ability of our investigators to obtain the necessary evidence to bring a case to a prosecutor for prosecution is going to help us. Criminals will adapt to that. We’ll have to continually analyze how they adapt to it, and that is impossible to predict.

Senator Kutcher: If I ask in a slightly different way: Given your historical knowledge of the cases that have come forward but have not been successful, if this had been a tool available to you at that time, what proportion of those cases do you think may have been successful?

Mr. Flynn: I haven’t done that statistical analysis, but I can say that I believe it will provide a benefit for us that is worth having.

Senator Kutcher: Thank you.

Senator Boniface: Thank you very much for being here. Thank you also for the work you do. I know these are complex files.

I’m interested in sort of following up on the discussion around recklessness. Were there other options that you considered that would have given you a little more room in terms of the wording that were dismissed or had to be disregarded because it butted you up against the Charter and other things? I’m just wondering about the range that you were able to consider.

Mr. Slinn: Personally I would sure like to see reverse onus, but that might be a bridge too far.

Senator Boniface: That’s exactly where I was going.

The Chair: Up to the bill, C-75 that recognizes the reverse onus for a certain amount of crime. When there is violence with the intimate partner. I mean, there are cases for higher objectives that are acceptable in a free and democratic society. I don’t want to answer for you, of course —

Senator Pate: But you did it well.

Mr. Slinn: I jokingly said that, but I think it is a bridge too far. I don’t know that perhaps Canadians are ready for that, although that exists in other jurisdictions, the U.K., specifically. But then I don’t know how successful the U.K. really has been with that authority. Have they made a significant dent in money laundering? I don’t know. Mark, do you have additional operational context on that? Not much help to you beyond that. Sorry.

Senator Boniface: Perhaps it’s something we can explore in another session.

The Chair: Venture to propose something, senator. We’ll listen to it.

Senator Lankin: I have two questions. The first is again dealing with the issue of recklessness. I’m thinking particularly of organizations, so I’m thinking of how industries — the real estate industry and the casino industry — will become educated and aware of what their responsibilities are different from today. My experience with the gaming industry is as a board member of the Ontario Lottery and Gaming Corporation for a number of years. We followed the German report all the way through, and we certainly looked to see what was happening in the directly operated provincial casinos but, of course, there are private operators, and now more of them. There is an incentive, obviously, to the bottom line to turn a blind eye. This potentially is a really important tool, I can see, in that industry, but I can see in others as well. Does the RCMP intend to play a role in reaching out to these industries to make them aware of and understand what these obligations are? I know you do that in a lot of other cases. I am wondering if you have plans around that. That’s my first question.

Mr. Slinn: Thank you for that question.

We haven’t exactly turned our minds to that. However, we see our role as not only enforcement in anything we do. It’s prevention and educating partners about the challenges we face and about their obligations.

I touched on it at the beginning. If we are to combat money laundering successfully, we need a shared responsibility. The banks need to recognize their responsibility and not look away when they see this. We heard of stories in Vancouver where people were paying their municipal taxes coming in with bags of twenties. We need to educate Canadians that that’s wrong, and I’m a little bit stunned that we have to. There’s something wrong with that.

However, I can use a similar example where people will say, “You put my pool in the backyard. How much is it for cash, and how much is it if I have to pay you with a cheque and there’s a record?” Unfortunately, that goes on. It’s the same comparison, I would say, in the money laundering business, except there are professional money launderers who know how to get around things and will do things.

That’s a long-winded explanation that we see prevention as a key responsibility of ours, as well as educating those people who are vulnerable in industries like real estate, casinos, luxury car dealers and even furniture stores.

Senator Lankin: Here’s my second question. I asked a question earlier of Mr. Saint-Denis from Justice. It was the wrong place to ask the question, and it was not a well-articulated question. I’m asking you this from a law enforcement perspective. I have a particular interest in the terrorism file and, if appropriate, I’ll have a chance with FINTRAC. I appreciate the role that money laundering could play in terms of financing terrorism. Mr. Saint-Denis said he wasn’t aware of any cases where there had been a conviction. I don’t know if there are any cases where there’s been an attempt at prosecuting or where charges have been laid. Do you have any insight into this in the past? It’s not now particularly about the amendment to that financial act around adding a virtual currency, but to me there is an excess with the Criminal Code change of recklessness and this, as well, potentially. I might be making that up. I don’t know. What’s the history? What’s the record on this? Do we see any potential further opportunities for yourself, CSIS and others to pursue this more aggressively?

Mr. Slinn: Candidly, we haven’t had much success in terrorist financing from an investigative standpoint. I’m not talking from a prosecution standpoint. I can’t recall the prosecution. We’ve had some files, but certainly not to the same magnitude of organized crime or money laundering-type things. They’ve been very infrequent. I don’t know the reason why.

Senator Lankin: I might be very much off-base in terms of my thinking here, but I used to live and work in Toronto and followed the events around the Sri Lankan community and the intimidation of members of that community by representatives of the Tamil Tigers. That’s not exactly money laundering, but it was terrorist financing, presumably. Is that a case that’s on point here or not?

Mr. Slinn: I’ve never really given it a lot of thought. I would say probably not, just because of all the circumstances. I’m familiar with that, but not from a terrorist financing perspective. It’s not to say that wasn’t going on within that community or wasn’t tied to that community.

Mr. Flynn: Terrorist financing is an area that is investigated and governed within the RCMP under our national security area, so it is a different group than us that looks after that.

Senator Lankin: Thank you.

Senator Kutcher: Maybe you won’t be able to answer this question, but the fentanyl crisis, which is a huge public health problem and a major issue in British Columbia, but also increasingly elsewhere in Canada, is thought to be linked to money laundering from specific countries. Would you say that this bill, with the addition of the recklessness criterion, may actually have a beneficial public health effect?

Mr. Flynn: The proceeds of money laundering crimes feed criminal organizations and enables them to expand their networks and cause more harm. Fentanyl and other drugs are causing significant public health issues. Anything that curtails the activities of organized crime groups and prevents them from expanding and furthering their criminal enterprises absolutely will have an impact on the public health consequences of the crimes they are committing. To what extent, I could not say. I can’t say what other groups may fill in around them. But anything we can do to have an impact on these organized crime groups has to have some impact on the public health issues that stem from it.

Mr. Slinn: What we see in the fentanyl situation is that organized crime is behind it, but we also see one-off vendors, and that’s where the money laundering occurs and the virtual currency problems. The fentanyl trafficking phenomenon in Canada, at the smaller level — not bringing in large amounts of precursors, but the individuals who are making small amounts — is relying on virtual currency, which is another difficult way to track money and untangle. It involves total anonymity. It’s difficult to see who’s behind that virtual currency. But make no mistake: organized crime, whether it be the Hells Angels, traditional organized crime or Asian organized crime, is making money off fentanyl and they are killing our citizens.

The Chair: I have two questions.

I was wondering if the regulation in Canada in terms of cash transactions is up to date with what’s going on in other countries, especially European countries. For instance, in France, a French citizen is allowed a transaction only up to 1,000 euros in cash, and for foreigners, it’s 10,000 euros. In other words, if you’re a French citizen, you cannot pay anything more in cash than what is valued at 1,000 euros, which is not a large amount of money. And if you go to the bank to deposit cash more than 5,000 euros, they will ask you where the money came from, and they have to keep that in a registry. Considering those living with that in France, I was wondering, when I compare that to Canada, whether the system is too lax to address this issue of money laundering. Do you care to comment on that, Mr. Flynn?

Mr. Flynn: Cash is an anonymous way of moving money so that it is not being tracked. Large duffel bags or hockey bags of cash being carried into money services bureaus, dropped on the counter and then transferred electronically somewhere else are all issues for us. We are hoping the recklessness element of the proposed legislation will have an impact on that. If I look around the room and see the number of nods when we talk about hockey bags of cash being brought into a business on a regular basis, I think it clearly indicates this is a marked departure from what is considered normal and acceptable behaviour, particularly when it shows up in the back of a Chevy Pinto instead of an armoured car. Virtual currency, again, is a way of moving money anonymously.

As far as commenting on whether we’re up to date, there are many jurisdictions that are similar to us. There are other jurisdictions that have very tight controls around the movement of cash or any type of commodity, whether you consider virtual currency a commodity or not. We are not those countries. We obviously leave it up to parliamentarians to determine the right threshold and the right restrictions that are put in place on Canadian citizens, and then we, as law enforcement, will enforce the law that is put in place for us to enable us to do our job.

The Chair: That leads to my last question for you: When I read in the paper the results and conclusion of the investigation in B.C., I was happy to see that finally, somewhere, someone was taking this issue very seriously. My second reaction was to deplore this that investigation was not launched nationally by the Canadian government, and especially through the responsibility of the RCMP and the other federal agencies that have a stake in this issue. Why is it not the appropriate time to launch such an investigation nationally so that the awareness and the conclusions will finally convince the government that they have to move much faster and much stronger to fight money laundering and tax evasion?

Mr. Slinn: For clarification, are you talking about an actual investigation? Are you talking about the German report?

The Chair: I’m talking about the German report.

Mr. Slinn: Thanks. I thought maybe you were talking about a specific investigation. I was going to say —

The Chair: Not at all.

Mr. Slinn: In fairness, it goes back to my original comment that we don’t perhaps toot our horn as well as we should, because there have been money laundering investigations going on over the past number of years. We do work in an integrated fashion with our other law enforcement agencies, such as the CBSA, the CRA, the U.S. or Five Eyes law enforcement partners. It’s just we don’t come out into a public venue and toot that horn and say, “This big takedown in Houston, Texas, was the result of the RCMP.”

I will give you a quick example that was in the news yesterday that maybe some of you saw. An individual by the name of Vincent Ramos, who owned Phantom Secure in Richmond, was providing not money but a service — encrypted BlackBerrys — to numerous criminal organizations. The FBI ended up arresting him, proffering evidence, et cetera. However, the RCMP contributed significantly to that. It’s not in the public realm, and perhaps it should have been. But as a result of that, he was found guilty and sentenced to nine years — and $80 million in assets.

One point that needs to be strongly made here is that money laundering is a service. It’s very important for law enforcement to attack the proceeds of crime. Money laundering is just a service to say, “I will launder your money so that you can have it in your bank account and you can buy that nice boat, that cottage — all of these other gold chains and everything else.” Law enforcement needs to do a better job of seizing those proceeds of crime, because that’s where you hurt them. You hurt the people who provide the service, but it’s those ill-gotten gains that need to be attacked.

So to answer your question, in summary, we do work in an integrative fashion. Could we work better? Absolutely. This is where the government has come up with funding for the ACE teams, which is a proof of concept where we’ll work in a more integrated fashion and see where we can improve intelligence sharing to identify significant threats to Canadians.

I will add that there’s the Five Eyes Law Enforcement Group, which has five subgroups. One of them is a money laundering working group, where all the Five Eyes agencies come together and identify significant global threats. We are working on global threats that touch Canada, the U.S., the U.K., New Zealand and Australia. It’s just not something that is often in the public. We don’t talk about our operations, but it’s going on. And while the takedown may not take place in Canada, there are implications to our economy. There are people from Canada involved. These are significant global money launderers. This stuff is going on. It’s just not as well publicized as perhaps we should make it.

The Chair: Maybe, gentlemen, the time has come to review your communications strategy and to increase the profile you have among Canadians. You are national symbols; you know that. I think Canada is the only country in the world where you go into a tourist shop, buy an RCMP agent or whatever materials, and keep it at home as a symbol of the country. I don’t know of many more countries around the world where you can do that, because of the integrity and the reputation of the institution that you represent. Canadians trust you to make sure they continue to be free and do their usual activities in the trust that you are there to maintain the law.

I’m privileged, on behalf of all my colleagues around the table, to thank you. Always feel free to come and see us. As Senators Carignan, Batters and Kutcher have mentioned, come to us to explain what you might need as additional tools to ensure you maintain law and order in our country, sir. Thank you so much, Mr. Slinn.

Senator Batters: I couldn’t let that pass without a shout-out to Regina, my hometown, and the home of the RCMP.

The Chair: Thank you, senator. Thank you, Superintendent Flynn. Thank you so much, Mr. Slinn, for making yourself available this afternoon.


This afternoon, I am very pleased to welcome the officials from FINTRAC. I am going to use the English acronym because it is the most common and easily identified, but it is CANAFE in French, the Centre d’analyse des opérations et déclarations financières du Canada. I am pleased to welcome Luc Beaudry, Assistant Director; Joane Leroux, Assistant Director, Regional Operations; and Dan Lambert, Assistant Director, Intelligence Sector. Do you want to make a brief introductory statement, Mr. Beaudry?

Luc Beaudry, Assistant Director, Collaboration, Development and Research, Financial Transactions and Reports Analysis Centre of Canada: Yes, please, Mr. Chair. I have a short statement.


Thank you for inviting us to speak with you today regarding your study of elements of the Budget Implementation Act, 2019.


With me today are Dan Lambert, Assistant Director, Intelligence Sector and Joane Leroux, Assistant Director, Regional Operations.


I want to take a few minutes this afternoon to describe FINTRAC’s key mandate and the role we play in helping to protect Canadians and the integrity of Canada’s financial system. I will also briefly touch on the proposed amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act that are meant to strengthen FINTRAC’s ability to ensure compliance with the act and to provide actionable financial intelligence in support of investigations by Canada’s police, law enforcement and national security agencies.


FINTRAC was established in 2000 pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in order to deter, prevent and detect money laundering and the financing of terrorist activities. Under the act, FINTRAC, the police, law enforcement and national security organizations, and thousands of businesses across the country all play a role in creating a hostile environment for those seeking to take advantage of our financial system or to threaten the security of Canadians. Our act imposes obligations on financial institutions, casinos, financial service companies and other businesses that are subject to the act. Those obligations include establishing a compliance program, verifying the identity of clients, monitoring business relationships, keeping documents, and declaring certain kinds of particular financial operations to FINTRAC, including suspicious declarations.

Recognizing that the international effectiveness of Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime depends on the timely communication of high-quality reports of financial transactions by those companies, FINTRAC uses a complete, risk-based compliance program to ensure that businesses are fulfilling their obligations.

Each year, we conduct hundreds of compliance examinations across the country. We publish policy interpretations and we answer thousands of requests for information in order to facilitate and ensure compliance with the act. Thanks to those efforts and to the ever-growing commitment of Canadian business, FINTRAC received around 25 million reports of financial transactions last year, an increase of about 30 per cent in the last five years.


With this information, the centre leverages its unique expertise and knowledge to produce actionable financial intelligence for Canada’s police, law enforcement and national security agencies. Our financial intelligence disclosures have increased year over year, nearly doubling over the past five years. I would like to emphasize that safeguarding this information and the privacy of Canadians is an overarching consideration in all aspects of our operations.

Turning to the 2019 federal budget proposals, I would like to underline the example of virtual currencies that has been highlighted today. The proposed legislation that you have in front of you would enable the government to advance additional regulatory proposals to improve oversight of modern financial practices related to virtual currencies, foreign money service businesses and prepaid products.


The proposed amendments will also make Revenu Québec and the Competition Bureau new recipients of FINTRAC’s financial information. Last year, the centre provided more than 2,200 separate communications of actionable financial intelligence in support of investigations by police, law enforcement, and national security agencies.


The proposed amendments would also modify the timing and discretion of the director of FINTRAC to make public certain information related to an administrative money penalty. These changes would further enhance the openness and transparency of FINTRAC’s administrative monetary penalties program and improve our ability to address non-compliance.

In conclusion, Canada’s Minister of Finance and the Department of Finance Canada are responsible for the legislative, regulatory and policy dimensions of Canada’s anti-money laundering and anti-terrorist financing regime. However, from an operational perspective, we can say that the proposed amendments to the act that you have in front of you will strengthen our ability to ensure compliance with the act and provide actionable financial intelligence in support of money laundering and terrorist activity financing investigations.


Thank you, Mr. Chair. We are available to answer questions.

The Chair: Thank you very much, Mr. Beaudry,

Senator Carignan: Perhaps you can answer a question I asked the police officers earlier. In your view, how many billions of dollars are involved in the money-laundering market, which is currently underground?

Mr. Beaudry: I would like to answer that question with more precision, but I believe that no country has managed to answer it. Estimates already exist in the literature. The most often cited calculation method is the one used by the United Nations Office on Drugs and Crime (UNODC). It states that about 3 per cent to 5 per cent of a country’s GDP is located in the criminal economy. For Canada, that would be $40 billion to $100 billion.

Senator Carignan: Those are the figures I had earlier.

Mr. Beaudry: Can it be confirmed definitively? No. These are clandestine activities with effects that are very difficult to measure. These estimates are reviewed regularly and I have seen nothing credible enough to open them to question.

Senator Carignan: Why is Canada not yet on the European Union’s list of high-risk countries in terms of money laundering? The list, published in February 2019, has about 23 countries on it. The criteria include those to do with the lack of oversight, particularly in terms of setting up shell companies, opaque structures and systems used to conceal the real beneficiaries of an operation. We have practically nothing here. How is it that Canada is not on the list? Is it because our diplomats are so effective?

Mr. Beaudry: No, I don’t think so. Our diplomats are very effective overseas. The main problem in money laundering is really the secrecy around the issue. There are tax secrets, bank secrets, corporate secrets. The countries that encourage practices like that are those that find themselves on the European Union’s blacklist.

In Canada’s case, I think that we all recognize that we still have a way to go. Some measures are already in place. Can we improve the effectiveness of those measures? Always. As for the beneficiaries of record, we believe that the proposals will lift the veil from corporate secrecy. That is a step in the right direction. Is it enough? Criminals who launder money will probably adjust quite quickly.

Senator Carignan: My impression is that there is no political will to come to grips with it. It is as if we are always reacting, particularly with the European Commission, which is “pushing” it a lot.

Each time the councils of ministers meet and the European Commission decides that enough is enough, they will “push” some more. This is one of the things that the European Commission uses to specifically identify a method of combatting money laundering.

The European Commission does some “pushing” and then Canada decides to move and make some amendments about electronic currency. It seems that there is no political will and that Canada is being “towed along.”

Mr. Beaudry: With digital currency, the amendment proposed in the bill will allow the government to impose regulatory sanctions that would get us to the same level as, if not ahead of, a lot of countries. At the FATF, the Financial Action Task Force on money laundering, Canada is one of the most forward-thinking countries in terms of virtual currency. Canada is seen as a leader. A lot of countries, including countries in the European Union, have a lot of difficulty in properly identifying and regulating the activity, because it is very fluid. The business model is constantly changing. So, adapting regulations to all the business models remains a considerable challenge. I am not sure that we can say that Canada is being “towed along” by the European Union. In some issues, Canada is perhaps not as quick as other countries. However, in other issues, such as virtual currency, I believe that Canada need not be ashamed of what we are doing.

Senator Carignan: When they say that Canada is vulnerable to a practice called “snow washing,” is there any reality to that description?

Mr. Beaudry: I think that saying that there is no money laundering in Canada is putting one’s head in the sand. Canada is an open economy.

We have a strong and secure banking system and almost instantaneous access to the American financial system and to the American dollar. Those are very attractive prospects for criminals. Canada is an attractive country for those who launder money. It is the very essence of our system because we have a strong financial system. If you invest your money in Canada, you are sure to recover it.

Other countries have weaker governance and a financial system that is not as strong as Canada’s. There is just as much money laundering, but it is much more risky to invest one’s money. The challenge for Canada is to build effective fortifications while ensuing that the economy continues to flourish. It is a matter of balance. We do not want the fortifications to be too high because we do not want to choke off competitiveness in the financial sector. That is a jewel in the Canadian economy’s crown. Canadians also have expectations of privacy. Canadians are rightly concerned about the degree of money laundering. Finding the best approach is a matter of balance.

Senator McIntyre: Thank you for your presentation, Mr. Beaudry. As you know, a panel of experts on money laundering, established by the Government of British Columbia, began its study in September 2018 and published a damning report entitled Preventing Money Laundering in Real Estate on May 9. Your organization appeared before that expert panel. I also understand that, when the expert panel asked you to provide reports on suspect transactions by country and by province, you admitted that it was impossible to provide them. Could you tell us why, and why you do not have reports like that in your possession? How are you going to rectify the situation and arrange to provide those reports, which are so important for the future?

Mr. Beaudry: Thank you for the question. Yes, FINTRAC did indeed participate in the expert panel established by the Government of British Columbia. We answered a number of their questions. We provided them with a lot of data. We have been in regular contact with the panel staff and the members of the panel. We were asked to provide data about some financial transactions at a macroeconomic level for the purposes of clarification. FINTRAC did not share those reports, because they contain personal information on Canadians. At that macroeconomic level, however, we did share with them certain details about the flow of money that we have observed.

With the type of reports that the panel asked us to provide, particularly the statements of dubious transactions, the panel was looking for a level of detail in the reports that it was quite difficult for us to achieve, especially in the timelines required. To clarify, the reports we receive from financial institutions, particularly the reports on dubious transactions, can contain a lot of detail. So getting the level of detail that the panel was asking for would have taken a huge amount of effort on the part of our staff. It was also a manual effort. Thousands of reports had to be consulted in order to get to the level of detail that was being asked for.

This is not machine-readable information. That really was the challenge we faced at that time. It did not prevent us from sharing a lot of information with the panel, but, in terms of the data gathered by province, we could not provide such detailed information.

Senator McIntyre: Let me give you the English version of what the panel said, and I quote:


The panel noted that “Canada is the only country whose intelligence agency for money laundering lacked such capability.”


Those are quite strong words from the panel. We have a lot of work to do in Canada.

Mr. Beaudry: Canada is one of the only countries with access to a number of these transaction reports. With reports on major cash transactions, like declarations of international electronic money transfers, very few financial intelligence agencies have access to that information. Very few financial intelligence agencies receive reports dealing with suspicious transactions that FINTRAC receives.

Senator McIntyre: I understand that the banks are subject to anti-money-laundering oversight, but the specialized lenders making real estate loans are not. Could you tell us why and how we can fix that?

Mr. Beaudry: That problem was identified in the House of Commons report on money laundering last year. In its response, the government recognized that the problem exists. So, to our knowledge, the issue is still being studied by the Department of Finance. The problem has been made very clear in British Columbia. I believe that the challenge around the question will be to properly define the practice. The matter is still under consideration.


Senator Pate: Thank you to all of you.

I’m interested that the FINTRAC 2016 report talked about the link between human trafficking and money laundering, and I understand that FINTRAC also launched Project Protect in 2016 which is, as I understand it, a public-private sector partnership that targets human trafficking in the sex trade by focusing on money laundering and beneficial ownership in terms of those aspects of the crime. I’m just curious how you see or what the effect of the amendments will be in Division 4 in terms of the accessibility to beneficial ownership and what kind of links you’re making with provinces and territories given that the legislation is federal and there are many provincially and territorially incorporated entities that could be engaging in certainly money laundering through human trafficking, and the fact that because it’s a resource, it gets used over and over again, unlike the drug trade or arms trade that is also there. So the implications, and if there is anything you see that you think the committee might recommend to strengthen that area?

Dan Lambert, Assistant Director, Intelligence Sector, Financial Transactions and Reports Analysis Centre of Canada: Thank you very much for the question.

You’re correct in your assessment of Project Protect in relation to human trafficking. It’s a success story that FINTRAC and law enforcement across Canada have had that has been looked at around the world and emulated because of the success that has occurred in relation to following the money in relation to human trafficking. We set out a number of indicators that we shared with banks and money service businesses, the reporting entities and so forth, which allowed them to provide better reporting to us and us to provide better intelligence to law enforcement, both nationally and also internationally.

I think the aspect of beneficial ownership though, and what is being provided here, goes a little bit further than in human trafficking. Human trafficking a lot of times has to do with the individuals who are trafficking the women, sometimes the women or individuals themselves and so forth, as opposed to some of the aspects of beneficial ownership we are talking about in this legislation which lends itself much more to our ability to track money in relation to larger fraud cases.

Senator Pate: However, what we know is that — and certainly internationally — some of the most lucrative and complex human trafficking and sex trafficking cases involve beneficial ownership, individuals who are professionals operating who invest in numbered companies and benefit from the trafficking in particularly women and girls, but also others. So how do you see working at that issue?

Mr. Lambert: Without question, in terms of the cases, there are some larger international cases we have been recognized with, exactly for that aspect. It allows to us follow the money when we’re working with other FIUs around the world. Within Canada, being able to look at beneficial ownership where individuals may be hiding their money under numbered companies — again, these are large international organizations and so forth — would lend itself to human trafficking without question, and would also lend itself to drug trafficking, the work being done with the PPP, with fentanyl, Project GUARDIAN as well. Those are two aspects. It’s the information we would be able to have access to understand who the beneficial owners are, but it’s also about following the money around the world when you’re talking about these larger organizations.

Senator Pate: Are there any recommendations that might be helpful from this committee to strengthen that area?

Mr. Beaudry: I think you’re raising a very good example. In the broader context, the main benefit of the beneficial ownership initiative is to bring greater transparency over that kind of corporate structure. I think that’s what we need to bring. We need to bring transparency to corporate structure. In Canada, provinces play a large role. The majority of legal persons are registered in provinces. It’s a provincial matter, so encouraging provinces to take that route, I think, would be a great step forward. The government is committed to cooperate with the provinces. We heard that Ministers of Finance across the country agreed to work to obtain that objective.

Bringing transparency over corporate secrecy, bringing transparency over banking secrecy, over tax secrecy, I think that’s the key to combatting money laundering in every country. There is nothing money launderers hate more than shedding light on their activities. They hate that. So that’s really the objective we should aim for. What can bring to light? Because the essence of money laundering is to hide.

Thank you for your question.

Joane Leroux, Assistant Director, Regional Operations, Financial Transactions and Reports Analysis Centre of Canada: In terms of the regulatory, which is in my sphere of work, we issued a publication in July of 2018 especially for that. The reporting entities, like the banks, have the regulatory obligation now to collect beneficial ownership. When they open an account, there are certain criteria, so they have to identify beneficial ownership and keep a record and do the risk assessment. There is a lot of other regulatory obligation that comes with it. It’s in light for that, to really know who is behind the transaction. This is something from their side, on the reporting entity, that they are looking for, because we asked them to validate beneficial ownership. So where can they validate and have the information available to them? Speaking on behalf of the reporting entity, not so much FINTRAC, although it is a requirement for us, but for them, it’s where to get the information to make sure it’s accurate and on time to meet the regulatory obligations.

Senator Pate: Thank you very much.


Senator Carignan: I want to go back to one of the answers you gave when I was asking you questions earlier. You said that a balance must be found between protecting privacy and seeking out crime, someone laundering money, for example. I agree with you, but is there a balance at the moment? Basically, 99.9 per cent of the cases are not discovered. We are talking about an amount between $40 billion and $100 billion in money laundering, according to what you say. Practically no charges are laid. If there is a balance, it tips in the criminals’ favour. You have talked about increasing the transparency in all corporate structures, trusts included. Will we be able to reestablish some balance between a search for evidence with which to catch criminals and some openness to the protection of privacy?

Mr. Beaudry: You have hit the nail on the head. It is difficult to be against your argument. But just in order to illustrate the complexity of the problem, the fight against money-laundering takes several forms. It is a crime on a global scale, one can say. To tackle it, a number of parts of the law have to come together. There is commercial law, criminal law, and all kinds of instruments that can be used to fight money laundering. A number of agencies are tackling it, according to the jurisdictions that the government gives them. For example, earlier, you heard from the RCMP, which is responsible for conducting criminal investigations and gathering evidence, and then presenting it to prosecutors. I will not try to teach you about the law. Our role is detection. We detect and we communicate what we detect, the results of our analysis, to the police, to the RCMP and to other partners. From those results, the police may be able to gather evidence. In reference to the very one-sided balance you mentioned, if you take it all from the first stage, the detection, to a criminal trial, you can see that things are not working holistically. That is what the FATC, the Financial Action Task Force, recognized in Canada. There was a report on Canada that was quite critical in a number of aspects. Other studies, however, have recognized that Canada is in a very good position and is demonstrating leadership in some areas. There are still challenges to meet; we have before us some proposals designed to move us forward. Personally, I strongly believe that the proposal on beneficiaries of record is an excellent step forward. That was one of the major criticisms of Canada from the FATC, that, in terms of transparency, the company registry is far from ideal. Will that reestablish the balance? I sincerely hope so, but I feel that the remedy is much wider. You heard earlier about the proposals to change the Criminal Code. We hope that that will be of assistance to our colleagues in the police.

There is no single solution; this really complex problem we are facing requires a number of solutions.

The Chair: Along the same lines, Mr. Beaudry, given that Canada is not an exemplary country in these essential matters, we are led to conclude, as Senator Carignan mentioned, that the system is actually exploited almost at will by criminals. Would it not be appropriate to hold a national inquiry on the operability of the system as a whole, in order to identify the weakest points? This would be essential to Canada becoming an exemplary country, rather than lagging behind the European Union, the United Kingdom and United States.

Mr. Beaudry: With all respect, Mr. Chair, I have no point of view on holding a national commission of inquiry into the matter.

British Columbia has announced a commission of inquiry.

The Chair: In British Columbia maybe, but that inquiry will not be done by the Government of Canada. I have the greatest admiration for the Government of British Columbia in taking this initiative, but Canada has a government, a federal government. Of course, we all recognize that a province can act according to its responsibilities, which are very significant. At least, we can see that, in British Columbia, there is a political will, a will that seems to be quite lacking in Canada as a whole.

At the end of the day, that is basically the issue. As my colleague Senator McIntyre mentioned earlier, everyone applauded last week when we read in the paper that, finally, a province is taking the bull by the horns, as the RCMP officers said just now.

The impression is that, each year, a little touch is added here and there, but there is no holistic vision of the entire system, as you said, that would let us say that the government is taking leadership. The impression is that the system is lacking it.

I have the greatest respect for what you are doing at FINTRAC, even if the House of Commons report recommends that your mandate be broadened along the same lines as the agency doing similar work in the United States. Your mandate could even be reviewed, and made broader and more specific to our times. Perhaps, next year, there will be other provisions in the budget to address another little aspect, but we do not see the overall vision that could convince us that the Government of Canada is taking the bull by the horns.

That is what our system is lacking, in my opinion, and we can see it in the parade of witnesses before us, in the House of Commons report, and in the comments from international agencies, at the United Nations, in Europe, or elsewhere. We are realizing that Canada is not an example. We have good points, of course — we do not have to beat ourselves up unnecessarily — but, for the system as a whole, there is no political will in terms of leadership. In my opinion, that becomes clear when we take a detailed look at the way in which the various agencies function. Sadly, they are just hanging in there. They all probably have mandates and responsibilities. However, there is no political will to face up to the basic problem. The result is the one we see, that 99 per cent of the money slips through the cracks, ends up elsewhere and avoids both tax and the justice system. Something is not right with the system.

Mr. Beaudry: As I told you earlier, I believe that we at FINTRAC are ready to cooperate with the authorities and we will do so. We have always done so, even though the legislation imposes strict conditions on us in terms of sharing information. We hold a lot of personal information on Canadians, but that has never prevented us from cooperating with Parliament, with a commission of inquiry, or even with the two reports from British Columbia. I do not believe that it will be different in the future.

The Chair: Thank you.


Thank you so much for your participation this afternoon. We appreciate that you have made yourself available.


Mr. Beaudry, Mr. Lambert and Ms. Leroux, thank you very much for making yourselves available this afternoon. It will certainly be useful for our deliberations and the reports that we have to table in the Senate.

My thanks to you all.


I would like, senators, to ask you to stay at your seats for a couple of more minutes. We will have to discuss generally the consideration of a draft report on which point we would want to insist in terms of reporting those two sections of the budget implementation act to the Senate.

Do you accept that we stay in public or do we move in camera to discuss the general orientation of the report? I’m looking around the table for instructions. We’ll stay in public?

Senator McIntyre: In public.

The Chair: Thank you, honourable senator. As I mentioned earlier on, we are under instructions from the Senate to report next week on those two provisions of the budget. I would like to open the floor to general observations so that we can instruct our analysts to prepare a draft that we would circulate at steering and among concerned senators to be sure that we’re in a position to report next week. I’m seeking wisdom from the floor. Unless you want me to draft the —


Senator Carignan: Mr. Chair, I feel that we have all observed the same thing, and it is not really contrary to the proposed amendments. I am not sure that there will be a lot of amendments to this topic anyway. Some have talked about a step in the right direction, but it is a really small step. It is a step in the right direction, but it says nothing about the length of our stride. One thing is certain: The bill is very incomplete in terms of an overall vision of the matter. Clearly, it will not address a problem that is much broader or the challenge that we have to meet.

Senator Dalphond: I agree with Senator Carignan. I feel that it is a step forward and redefining the offence with this definition of “recklessness” will perhaps finally allow more proceedings to be brought to a conclusion. However, I feel that we have heard from witnesses that there is a lack of coordination and effort. Sustained effort is required and we are not seeing it yet. We should make an observation in our report. Personally, I have no amendments for the proposed text, but I would suggest that we include an observation stating quite strongly that we are concerned with the proliferation of these illegal operations. It is difficult to quantify the scope of them, but, according to some experts, they might reach $40 billion, $50 billion or $100 billion. We should urge the government to quickly come to grips with the problem and provide Canada with tools to deal with the situation that are comparable to those found elsewhere in the world.


The Chair: We certainly do not have the conviction that Canada is developing the best practices. The best practices are developed somewhere else and we try to catch up after the fact. That’s the impression I got.


Senator Carignan: This is what we see with the OECD, the European Commission, everywhere. We do not feel the will to take the lead in the fight against this problem, even though we are one of the places where the need is greatest. Basically, we are proud of our banking system because it is robust. Now we are finding that that is almost an inconvenience, because those committing the offences tell themselves that Canada is an ideal place to invest their money. As a situation, it is a bit incongruous, but we are seeing its perverse effect.


Senator Lankin: I agree with my two colleagues and the comments that have been made. I will say that I think some incremental measures that have been made in previous budget implementation bills that we’ve seen and this one all continue to walk in the right direction. We might feel compelled as a country to start running, however. I don’t see that coming together.

What is not legislated but is important are some of the initiatives. The reference that the RCMP made to the ACE team, so that’s Action, Coordination and Enforcement, which brings together CBSA, CSIS, FINTRAC, CRA probably, all the players around the table, is a huge step in breaking down the silo barriers to —

The Chair: The silo approach.

Senator Lankin: — information sharing and identifying barriers to more prosecution and identifying gaps which allows potential additional legislative measures to come forward.

Having said that, the problem is escalating faster than our responses are able to keep up. So I’m not critical of the measures; I’m anxious to see us have a more fulsome and broad understanding of gap analysis and action plan. I think a number of colleagues can speak to that when there is the time.

I’m also cognizant that there are discussions that have gone on at Banking Committee. There are discussions that go on around human trafficking that comes in a different place here. There are the corporate beneficial ownership discussions, and we’ve had bits of pieces of that and there’s more here. I feel that there’s a need for a concentrated look. That doesn’t say how we respond on this bill in any way and whether there’s a call on the government to do something. But when I think of the work of a number of senators, and certainly Senator Downe is notable, and yourself, chair, and others, there’s the potential for the Senate to do something here in the new Parliament that I think could be a valuable contribution to this issue. I just put that on the table.

I am happy with a report that just goes through and that accepts these measures and reports them back to the house with this committee’s support or endorsement. I don’t know how we want to fashion that. But I think the bigger issue is something that we should collectively find a way to dig down on this because I think there’s a lot of will around the chamber to do the work.

The Chair: I think there’s consensus on that. I am looking at Senator Pate and the reference to the human trafficking that is contained in the reality of money laundering. It is a very important element that we should also be highlighting in the report.


Senator McIntyre: I echo my colleagues’ comments, and I quite agree with them. I would just like to add that I believe we should invite the federal government to follow in the footsteps of British Columbia, which began its study in September 2018 and then, on May 9, published a damning report entitled Combatting Money Laundering in B.C. Real Estate.

The Chair: It could probably be done quite quickly. It didn’t even take them a year to come up with a substantial report.

Senator McIntyre: I am pleased that British Columbia had the courage to move forward, and as you said earlier, to take the bull by the horns. We should tell the federal government that it is now their turn.

Senator Carignan: It is even more important because, if things are done only in British Columbia, especially in Vancouver and Victoria, the criminals will move.

The Chair: They will go elsewhere, of course, to Toronto or Calgary.

Senator Carignan: Or Montreal.

The Chair: Or even Saskatchewan.

Senator McIntyre: We need a vision.

Senator Carignan: Or Regina.


The Chair: I feel there is — Senator Batters?

Senator Batters: It’s not on this point.

The Chair: I wanted to touch, of course, on the issue of immigration also, because it’s a second aspect of the section that has been referred to us.

Are there any other comments on that section of the division, which is essentially money laundering? I think that our analysts have the essential elements. It’s not a bill — I mean it’s a bill, but we’re not recommending, of course, at this stage, amendments to this. That’s not the objective of this study. But we will do a draft and circulate it at steering and with the critics of the bill to be sure that it reflects fairly the exchange of views around the table.

Can I open the second one, which is about the immigration? I’m looking on that side before I venture to propose —

Senator Batters: I just have a general question. For a budget implementation act, there’s probably just a sponsor, a critic, a general one rather than for each particular — is that right?

The Chair: Yes.

Senator Batters: Do you know who the sponsor is of this bill?

The Chair: Normally it’s government legislation coming from the budget, so it should be Senator Harder.

Senator Batters: No. Senator Pratte was a previous sponsor of a budget implementation act.

The Chair: I’m not sure that he is at this time.

Senator Batters: Senator Boehm.

The Chair: Senator Dean.

Senator Lankin: Senator Boehm, not Dean.

The Chair: Yes, Senator Boehm. I was thinking of Senator Dean, who has been the sponsor of Bill C-45.

On the issue of immigration, may I look on that side. Senator Frum, it’s an issue that’s been important to you. From what you heard and from what you know of the proposal in the act, it just increased the number of justices, but there’s a reality behind it that we, of course, have touched on today. Are there any comments you suggest we add to that section of the act?

Senator Frum: They referenced the 50,000 person backlog, so we might make a comment that we have concerns about that.

The Chair: Around that issue.

Senator Frum: Yes.

Senator Batters: I’m curious to see what their number is about the vacancies. They had a lot of sunshine to say about that, but that’s not what I recall being included in recent articles.

The Chair: What I have heard is they increased the number of civil servants dealing with a certain level of the requests, but in terms of the appointed commissioner, that’s where, in fact, there is a discrepancy, as much as I heard myself.

Senator Dalphond: I guess maybe we should make an observation about the fact that what they’re going to do is have more GIC appointees to look at the appeal boards and commissions, and there will be three more judges, but the backlog won’t disappear. They are going to be able to deal with 50,000 cases a year instead of the 25 or 24 it is now, but it doesn’t solve the problem of the backlog. I guess we should have an observation that it’s a good step forward but the next step should be to process the backlog, because it takes years and years before they come to the end of the pile.

The Chair: And that is in the context also that the number of requests doesn’t increase.

Senator Dalphond: Yes. This is assuming —

The Chair: The backlog will continue to inflate. I think we should certainly mention that.

Are there any other comments in relation to that? Honourable senators, I will propose that the Subcommittee on Agenda and Procedure be empowered to approve the final version of the observations to the report, taking into account considerations of today’s discussion.

Hon. Senators: Agreed.

The Chair: Agreed, honourable senators? So that’s the only authorization I need to get from you. We’ll make sure the report reflects fairly the opinions that have been expressed around this table this afternoon. Thank you so much for having made yourselves available, honourable senators, so we can answer the instructions we received from the Senate to report on those divisions of the budget implementation bill.

(The committee adjourned.)