THE STANDING SENATE COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS
EVIDENCE
OTTAWA, Thursday, May 18, 2023
The Standing Senate Committee on Legal and Constitutional Affairs met with videoconference this day at 11:31 a.m. [ET] to examine the subject matter of those elements contained in Divisions 30, 31, 34 and 39 of Part 4, and in Subdivision B of Division 3 of Part 4 of Bill C-47, An Act to implement certain provisions of the budget tabled in Parliament on March 28, 2023.
Senator Brent Cotter (Chair) in the chair.
[Translation]
The Chair: Good morning, honourable senators.
To start, I’d like to ask my fellow senators to introduce themselves.
[English]
Senator Batters: Senator Denise Batters, Saskatchewan.
Senator Pate: Kim Pate, Ontario, on the unceded, unsurrendered territory of Algonquin Anishinaabeg.
[Translation]
Senator Clement: Good morning. I am Bernadette Clement from Ontario.
[English]
Senator Klyne: Good morning and welcome. Marty Klyne, senator from Saskatchewan, Treaty 4 territory.
Senator Quinn: Jim Quinn, New Brunswick.
Senator Tannas: Scott Tannas, from Alberta.
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
The Chair: Brent Cotter, senator for Saskatchewan, Treaty 6 territory and the homeland of the Métis. I’m the Chair of the Standing Senate Committee on Legal and Constitutional Affairs. I would like to welcome you all.
Senators, today we continue our study of the subject matter of those elements contained in Divisions 30, 31, 34 and 39 of Part 4, and in Subdivision B of Division 3 of Part 4 of Bill C-47, the budget implementation act.
Today, we are welcoming the Honourable David Lametti, P.C., M.P., Minister of Justice and Attorney General of Canada. He is joined by a number of officials who will also stay for the second hour of our discussion to answer any questions we may have.
I think at this point, minister, I’ll take the liberty of introducing all of your official colleagues so we are aware of them as you need to call upon them to assist you in your dialogue with us.
First, we have from the Department of Justice Canada, Matthew Taylor, General Counsel and Director, Criminal Law Policy Section; Erin Cassidy, Counsel, Criminal Law Policy Section; and Jenifer Aitken, Assistant Deputy Minister, Central Agencies Portfolio.
From the Department of Finance Canada, we have Erin Hunt, Director General, Financial Crimes and Security Division; Charlene Davidson, Director, Financial Crimes Policy; Mark Radley, Acting Director, Consumer Affairs; and Tanjana Islam, Analyst.
From the Financial Transactions and Reports Analysis Centre of Canada, or FINTRAC, Annette Ryan, Deputy Director, Partnership, Policy and Analysis; and Karyne Merrick Moore, General Counsel.
I think each of you has a sign. When the opportunity for you to intervene and respond occurs, you might bring yourself and your sign to the table. We’ll kick somebody out to make sure you have a good spot.
Minister Lametti, the floor is yours for 10 minutes followed by questions and discussion with senators.
Hon. David Lametti, P.C., M.P., Minister of Justice and Attorney General of Canada: Thank you, Mr. Chair and committee members. I’m pleased to be joining you this morning on the traditional, unceded territory of the Algonquin Anishinaabeg people, together with my team, who you have introduced, to discuss the Budget 2023 implementation act.
Budget 2023 will ensure that Canadians can continue to count on their government to be there for them. With our made‑in‑Canada plan, Budget 2023 will ensure that Canadians have more money in their pockets to meet both the challenges of today and those of tomorrow while building a Canada that is more secure, more sustainable and more affordable for people from coast to coast to coast.
The act contains important provisions to make life more affordable for Canadians. We’re doing so in several ways. One of those ways is by cracking down on predatory lending. Too many Canadians are trapped by a vicious cycle of debt. That is why we are proposing to lower the criminal interest rate to 35% and to adjust the pay lending exemption to require payday lenders to charge no more than $14 per $100 borrowed.
I know this matter is something that has been advocated for by members of the Senate, including Senator Ringuette who I thank today for her important work on this issue.
I will come back to the matter of predatory lending later in my remarks.
The government is also taking significant steps to reinforce Canada’s anti-money laundering and anti-terrorist financing regime.
[Translation]
Money laundering and terrorist financing threaten the integrity of the Canadian economy and promote hate activities, whether it be terrorism or human trafficking. These criminal activities put our communities and their residents at greater risk.
In Budget 2023, our government committed to strengthening measures to detect and prosecute financial crimes. Bill C-47 contains amendments to implement those measures. The first amendment would establish a special warrant for the search and seizure of digital assets, which would be subject to forfeiture as proceeds of crime. Digital asset-based crime has grown significantly in recent years, especially as technology advances. In particular, crypto-currency is being used as a payment method in fraudulent schemes to launder drug money or buy illegal firearms.
Crypto-currency and other digital assets have distinct characteristics, so this special warrant would help those in law enforcement overcome some of the barriers they face when relying on legal authority that is ill-suited to the 21st century.
The special warrant is designed for today’s realities, making it possible to recover digital wallets and transfer suspicious crypto‑currency to a secure police force wallet. Digital assets seized under the warrant could be subject to a management order to ensure that they are preserved while the investigation is ongoing. This targeted measure is an initial step towards ensuring that the Criminal Code is well adapted to the realities of the times we live in.
The second amendment would add a series of offences to the provision in the Criminal Code authorizing the disclosure of tax information for the purposes of a criminal investigation. This would give police and investigators a meaningful tool to better identify wealth accumulation and determine how suspects are laundering money, including through corporate structures. This provision applies mainly to terrorism and organized crime offences.
However, it has become clear in recent years that other types of offences are associated with an increased risk of money laundering in Canada. The government is proposing that the disclosure of tax information be authorized for the following offences: fraud over $5,000, fraud involving a public market, extortion, corruption and foreign bribery, human trafficking, as well as the possession or laundering of property obtained in relation to any of the listed offences in the provision.
Also covered are the related offences of conspiracy, attempt to commit the listed offences and accessory after the fact, as is the case for existing offences. Although the disclosure of tax information raises important considerations regarding Canadians’ privacy, the provision contains strong safeguards such as prior judicial authorization.
I think we’ve struck the right balance between the need to investigate criminal activity and the need to protect privacy.
I also want to highlight that, in its final report, British Columbia’s Cullen commission recommended operational measures for law enforcement, to make it easier to investigate money laundering and recover proceeds of crime. I think the proposed reforms to the Criminal Code are consistent with the implementation of those important recommendations.
Now, I would like to turn to the government’s commitment in Budget 2023 to amend the Criminal Code to crack down on predatory lending. These practices can target some of the most vulnerable people in Canada. Under section 347 of the Criminal Code, it is an offence to enter into an agreement to receive interest at a criminal rate. Section 347 was initially intended to target loansharking and its ties to organized crime.
Parliament was of the view that establishing a fixed interest rate of 60% made it easier to prove the offence. Despite that objective, the offence now applies to a range of loans in Canada.
Bill C-47 proposes to replace the current rate with a 35% annual percentage rate. This rate is consistent with the province of Quebec and was supported by consumer advocacy groups consulted by Finance Canada in the lead-up to these changes being proposed. As I said, section 347 currently has a very broad application, including in the case of agreements that were never meant to be captured such as bridge financing.
Accordingly, Bill C-47 proposes a regulatory power to exclude legitimate loan agreements. This measure will address long‑standing concerns of the business community.
In addition, Bill C-47 proposes to strengthen Criminal Code provisions governing payday loans. Payday loans are generally short-term loans for small amounts, but the interest is calculated in such a way that the interest rate charged can easily contravene section 347.
ln 2007, the Criminal Code was amended to exempt payday loans from the criminal interest rate provisions in cases where a province or territory enacts legislation regulating the industry, has set a maximum cost of borrowing, and where the loan is offered by a licensed vendor.
The proposed amendments in Bill C-47 would better protect borrowers, by adjusting the Criminal Code exemption for payday loans and making it possible to set the limit on the total cost of borrowing by regulation.
In conclusion, I want to say how much I appreciate the opportunity to discuss these important issues with the committee. I look forward to answering your questions. Thank you.
[English]
The Chair: Thank you very much, minister.
Senator Simons: I have a question. Interested though I am in money laundering, terrorism and organized crime, I had a question about something that this committee was discussing a couple of weeks ago, and those are the privacy provisions that are in the act to deal with political parties. Is that something we can discuss here with you?
Mr. Lametti: I can probably answer in a very general way, but I think those questions are better directed to my colleagues.
Senator Simons: All right. Well, then I will ask a different question to deal with the testimony we heard last night about mail. Is that something that —
Mr. Lametti: About the Gorman case and mail, Canada Post, search and — yes, go right ahead.
Senator Simons: We heard from witnesses last night who work in law enforcement who were concerned that there are still provisions specific to postal inspectors that don’t allow the police to do the investigative work that they need to. We also heard from a lawyer who has worked in this area who is concerned that privacy that is particular to mail could be eroded.
Can you tell us how you have tried to strike a balance here in the parts of the budget that deal with allowing for the searching of parcels versus the searching of letters?
Mr. Lametti: Thank you for that question, Senator Simons. It’s an important one. We have not changed the position on searching mail, which is prohibited under Canadian law. I know that Senator Dalphond, I believe, has a private member’s bill that wants to create a reasonable standard in that regard. But for the time being, we have not done that. What we have done is create the same standard for packages across the board, and we have tried to give it a Charter compliance standard across the board.
So reasonable grounds to suspect, which is the standard that would have applied for packages going through the mail, will now also apply to packages that have been sent by courier and using courier services. We have tried to give it some consistency. We have tried to bring it within the standards of the Charter. We have not changed anything with respect to the mail, and that is in partial response to the Gorman decision.
I don’t know if you want to add anything, Mr. Taylor.
Matthew Taylor, General Counsel and Director, Criminal Law Policy Section, Department of Justice Canada: As the minister has said, the amendments to the Canada Post Corporation Act, which are the responsibility of the minister, Public Works really does respond to that Gorman decision by including a clear standard that is recognized in law, the reasonable suspicion standard, to be able to fulfill their regulatory functions to assess whether items that have been shipped are considered non-mailable matter.
My understanding from colleagues is that the approach that is being legislated does not change the way that inspectors are operating currently insofar as inspectors are already conducting inspections of mail on the reasonable grounds to believe standard. So they are employing a higher standard, and the legislation would provide another clear standard by which they could fulfill their functions.
Senator Simons: It is an interesting thing, with technological change, that your reasonable grounds to suspect can now be that you have done a test on the outside of the package or envelope — you don’t just have reasonable grounds to suspect; you have near 100% certainty there is something contraband in the package. It leads to an interesting philosophical question. At what point does the technology overtake our understanding of civil rights law?
Mr. Lametti: I hope, in a general way, the technology will supplement the kinds of balances that we have tried to sustain — the right to privacy and other Charter-protected rights — versus wanting to enable forces that are meant to protect us, such as border agents and police, to do their work effectively. I hope. I am an optimist, but I hope those considerations will remain the same, notwithstanding the technology, and that we’ll exercise whatever powers technology gives us within that framework.
Senator Simons: Thank you very much.
Senator Batters: Many questions today, minister, on such a wide-ranging number of provisions, especially from you, on this bill. One of the things that we haven’t even heard from witnesses about — I think we’ll hear from them later today — is this Division 3, Subdivision B, regarding digital assets, including virtual currency. This part of your government’s 430‑page budget implementation act will expressly allow for searching for digital assets with a computer program, plus allows for seizure, detention and return of those assets. It also allows you, as the Attorney General, to ask for tax information from the Canada Revenue Agency, or CRA, for a list of crimes.
Given what we saw last year in Ottawa with the trucker convoy and how things proceeded with a lot of controversy on that, why are there such a wide-ranging — not only this part, but then we have these parts with regard to the Canada Post matter about shipping, potentially, for fentanyl dealers. We have the criminal interest rate item. I think it would be much better if we could look at these types of things in a substantially elongated method of studying these at the Legal Committee rather than a really short time frame to study and a minimal chance to amend in a budget implementation act. Why do these kinds of things in that, specifically about the digital assets issue?
Mr. Lametti: This is a bill brought forward by the Minister of Finance, so maybe with respect to inclusion. They are important financial matters. That particular part of the question is probably better directed at her.
What I can say is these kinds of powers were called for explicitly in the Cullen Commission report out of British Columbia, which studied money laundering very carefully.
The increased access to tax information, the new seizure power for digital assets — again, we want to give our law enforcement agencies the tools they need while balancing that against the rights of individuals.
The other thing I would add is that this is very different from the Emergencies Act. The kind of powers that were used during the Emergencies Act with respect to crypto-currencies or digital assets were temporary measures that were meant to be temporary. Here you have to go to a judge. You need prior authorization from a judge for a warrant, which is a very standard safety valve mechanism that we use with warrants in our criminal justice system. It has worked well, and I think there is no reason to think it will not work well here.
Senator Batters: We’ll see when we have more information. It is difficult to have a full way to study and assess it without that.
Let me go on to another area. Yesterday, we heard about the Canada Post issue. Police that we heard from yesterday have said that criminals exploit an antiquated legal loophole that bars them from searching packages sent through Canada Post, but that limitation does not exist for private courier services like FedEx, UPS and even Purolator, which is owned by Canada Post.
The Canadian Association of Chiefs of Police passed a resolution in 2015 about this, and the Canadian Civil Liberties Association said in 2019 that it is time to close this loophole, yet the government is only addressing the issue now in 2023 and only in part. Maintaining the restriction on letters will certainly preserve Canada Post as potentially the preferred shipping method for criminals. Private courier companies don’t have this restriction on letters.
We heard from Michael Rowe of the Canadian Association of Chiefs of Police, who said:
. . . including the ability in all amendments moving forward for police or postal inspectors to be able to search both packages and letters would have a significant impact on community safety across Canada and the ability of law enforcement, both postal inspectors and police, to be able to investigate crimes where Canada Post is being used to traffic contraband.
Minister, does it concern you that with the exclusion of letters that you have allowed for here, rather than including the type of measures that the private member’s bill from Senator Dalphond puts forward, that a Crown corporation will remain the shipper of choice for fentanyl dealers?
Mr. Lametti: We certainly have addressed the response — I don’t want to say the fallout — to the Gorman decision in Newfoundland. There is a uniform standard now for the search of packages that come through Canada Post and they can be looked at. It is Charter compliant under reasonable grounds to suspect, which is a standard that is well-known in law.
With respect to mail, that’s a larger question. I agree with you, senator, that it is an important question. I’m open to looking at that moving forward. I do agree that it hasn’t been dealt with here; that’s true. As we have said, there is a private member’s bill from one of your colleagues that proposes to look at that, but it is something that I’m open to looking at.
Senator Batters: Why not just include it now? If you are going to proceed in that way, why not include that particular part?
Mr. Lametti: It is a larger issue, as you have rightly stated in the framing of your remarks. It is important not only to law enforcement, but also important to the protection of human rights and rights to privacy under the Charter. It is a little trickier than a package, so it needs more work.
[Translation]
Senator Dalphond: Thank you, minister, for meeting with us again. It’s always very much appreciated. My line of questioning will be similar to that of my fellow senators, especially Senator Batters. She just asked you something I’m even more interested in.
Why use a budget implementation bill to amend the Canada Post Corporation Act, when the amendment being made to that act has no financial implications? Did you decide to do that in order to quietly address the Supreme Court of Newfoundland and Labrador’s decision in Gorman?
This approach makes it impossible for both the House of Commons and the Senate to carry out a thorough examination of the Canada Post Corporation Act as it relates to seizure and, in particular, the fact that inspectors don’t have the authority to open letters. Customs officers at the same letter processing station as postal officers — I visited them in Saint-Laurent — have the power to open letters sent to Montreal from Boston or New York. However, their Canadian counterparts, inspectors — a total of 27 for the entire country, by the way — do not have that power. They don’t have the authority to open a letter sent from Montreal to Trois-Rivières or Toronto or, more importantly, to Nunavik or Nunavut for the purposes of delivering fentanyl.
People are dying. I don’t understand why that isn’t allowed, when it’s something the Canadian Association of Chiefs of Police and the Association of Manitoba Chiefs have been calling for. The English-language equivalent of the magazine L’actualité did a story on it a few years back. It’s common knowledge that Canada Post is the preferred method for shipping fentanyl in Canada. People are dying. Remote communities are suffering, but nothing is being done. You could have told us today that inspectors now have the authority to open letters if they have reasonable grounds to believe they don’t contain illegal material. Not all envelopes have a return address, as if by chance. The equipment does all the sorting, so detection is immediate. I don’t understand why nothing is being done.
Mr. Lametti: As usual, it’s really hard to disagree with you.
My pragmatic answer is this. First, as I told Senator Batters, the decision to include this measure in the budget bill was made by the minister responsible. This is a very important issue, so I understand your concern. I’m open to the idea of giving it the consideration it deserves, because there are very important factors that have to be balanced. As you pointed out, however, this is something that has to be dealt with. There are better ways to address this, and I’m very open to exploring them. I fully appreciate the issue and how important it is.
Senator Dalphond: Your commitment is duly noted.
Mr. Lametti: As always, I will do my best.
Senator Dalphond: I know.
[English]
Senator Pate: Thank you for joining us, minister, and all of your officials. You announced in Budget 2023 the intention to lower the criminal interest rate. You also talked about launching consultations to lower it further in terms of really addressing the root issues of what gave rise to the concern about payday loans. We are already hearing that those who are engaged in these predatory acts and these predatory companies are now switching to high interest instalment loans instead of conventional payday loans.
I’m curious about who you have been able to consult with, what results of those consultations were and what you see as the next steps. One of the challenges, of course, is that we also need to address the fact that our chartered banks don’t meet the needs of many of the folks who have to resort to these predatory companies. I’m very interested in where things are going with that.
Mr. Lametti: Thank you, senator. I will turn to one of our experts.
Mark Radley, Acting Director, Consumer Affairs, Department of Finance Canada: Thank you for your question. My name is Mark Radley, Acting Director of Consumer Affairs at the Department of Finance.
I think you noted that some of these lenders are moving towards instalment loans. That is the reason why the criminal rate of interest is being proposed to be lowered to 35%, as well as introducing the cap on payday lending to $14 per $100. The consultations that have been proposed in Budget 2023 are not yet under way, but the government does plan to initiate those consultations in the medium term.
We’re in the midst of implementing Budget 2023 right now, those actions that have been announced, after which we’ll be proceeding to consulting on whether to lower the criminal rate of interest further as well as lowering the cap on payday lending.
Senator Pate: It’s still something in the offing then. Are there ways for individuals or organizations who might be listening to get involved? I can think of many of the anti-poverty organizations, many of whom have been in touch with us recently because of the disability benefit, who may be very interested in feeding into that process. What would be the process for groups and individuals to make contact? Would it be through you?
Mr. Radley: In short, yes. They would be very able to contact me. We have undertaken some targeted consultations. Some consumer groups and poverty groups have submitted submissions in the past, and we have had continued conversations with them.
Senator Pate: Would those be available to the public? Is there a way for folks to access that information?
Mr. Radley: At this point, there are no plans to publish those submissions, but some of these groups have made their submissions public on their own websites.
Senator Pate: What would you recommend? I’m particularly interested in this area, as are Senator Ringuette and many others. How would we get access to the information so that we could maybe facilitate or assist the process?
Mr. Radley: Are you asking about the submissions in particular?
Senator Pate: I am asking about the submissions, who you’re consulting with, what the next steps are.
Mr. Radley: We can certainly look into what we can share with you.
Senator Pate: Thank you very much.
Senator Klyne: Again, welcome, minister and your colleagues.
This is somewhat along the lines of previous questions here, but in the “letter” definition regulations in relation to the Canada Post Corporation Act, a letter is defined as weighing up to 500 grams. As we know, 500 grams of fentanyl is worth $30,000 and can kill 250,000 people. How important is it for inspectors to be able to intercept letters?
I ask this in the essence of time. The number of deaths occurring due to fentanyl is very disturbing. I know you want to do things in a practical, reasonable process. You had mentioned that there will be a time when something reasonable and practical can be done, but I’m not sure, hard or easier, that time is on our side.
To carry on with the question in that context, how important is it for inspectors to be able to intercept letters, as well as parcels, like at customs? Should subsection 41(1) of the Canada Post Corporation Act be amended to allow inspectors to open letters, in addition to parcels, a power held by customs since 2017? Furthermore, we heard from the Canadian Association of Chiefs of Police that they would support and recommend an amendment to that section, as well as the suggested amendment to subsection 40(3) of the Canada Post Corporation Act to allow police searches with warrants, such as private couriers, currently prevented by the act.
I would be remiss if I didn’t mention that perhaps Senate Bill S-256, the proposed Canadian postal safety act, would authorize police to intercept contraband with warrants, as with private couriers, like FedEx. Again, should we be seizing these opportunities for amendments given the sense of urgency with all these deaths?
You say the time may come for a reasonable process. Are these potential amendments something you could discuss with your cabinet colleagues for consideration at the House of Commons Finance Committee?
Mr. Lametti: Thank you, senator. Again, I appreciate the depth of your concern. I share those concerns as well as a general desire to make sure that our legitimate systems of communication aren’t being used for illegal purposes, especially one as tragic as trafficking fentanyl.
I’m happy to undertake to speak with my colleague Minister Jaczek, who has the responsibility for Canada Post, as well as with other colleagues — the Minister of Public Safety and the Minister of Finance — to try to advance this discussion. I share your belief in the importance of it, and I also appreciate the merits of Senate Bill S-256.
Senator Klyne: Thank you.
Senator Quinn: Thank you, minister, for being here. I will go back to the payday loan question. First, I think it’s a great step that we’ve gone from 60 to 35 on the first step, but on payday loans, I understand that we will have a regulatory regime — an amendment — that will change it to $14 per $100. But the annual percentage rate on $14 per $100 is still a very high rate, 300% or whatever. That’s a very high rate. I’m wondering why.
That does target, as my colleague referenced, vulnerable Canadians mostly. Why wouldn’t we consider having a consistent application of the criminal rate? I’m at a loss as to why we’re not better protecting those most vulnerable.
Mr. Lametti: Thank you, senator. I can give you a general answer, and then I would perhaps turn it over again to Mr. Radley or Mr. Taylor.
The general answer is those payday loans are capped at a smaller amount, $1,500. While it is true that the total interest rate ends up being higher, it is meant for a smaller amount of money. But we have heard, and my colleagues can elaborate on this, there is a sad necessity for a lot of the payday loan operations to make these kinds of monies available. There is a higher risk involved. However, again, I appreciate your concern. Part of the plan of the government, moving forward, is to work with provinces in order to try to coordinate and bring that loan rate down.
Senator Quinn: Because it’s the most vulnerable Canadians, I understand the limit of $1,500, but the accrued interest on $1,500 could be a deal-breaker in the day-to-day life of that individual and the family. It may mean the difference between going to get groceries or not. Shouldn’t they be better protected?
Mr. Lametti: That’s a fair point. The opposite is also true if they don’t have access to that money. There’s a balance there. If they don’t have immediate access to that money, they also don’t get food. It’s a lousy situation; it’s a true dilemma. Neither option is good. We’re picking, in this case, the least worst option.
Mr. Taylor: The minister has hit on the policy rationale. For a bit of context, when the exemption regime was created in the Criminal Code for payday loans, that was very much the issue at the heart of the debate: How do you bring greater regulatory oversight over an industry that we know disproportionally impacts vulnerable people in Canada?
We looked at facilitating greater regulatory oversight at the provincial level through provincial consumer protection laws, payday lending legislation and, on the other hand, not eliminating access to credit entirely for that group. As the minister said, it’s not an easy policy area.
Senator Tannas: Thank you for being here, minister. I wanted to get your advice with respect to the size of the omnibus bill. I’m looking at page 30 of the 2015 Liberal platform, from the year you got elected, where you called omnibus bills undemocratic and interfering with the work of Parliament. You pledged that you would not do it. Now I think you’re eclipsing prior records of prior governments.
It is a problem. There are a number of items in this particular budget which — as we’ve heard from officers of Parliament, experts and members — deserve more scrutiny and probably should be a bill.
We’ll probably hear, as we turn our minds to this, that budget bills are confidence bills, et cetera.
Do you believe that we should be constrained in a 400‑odd‑page omnibus bill if we see something that has nothing to do with money, that we might be able to do our job and improve upon it through an amendment? Would you find that to be something that could be drawn all the way back to confidence, in your expertise?
Mr. Lametti: Thank you, senator. I usually say with a smile that the only person to whom I give legal opinions is the Prime Minister and the cabinet.
Certainly, in an ideal world, I share your belief that bills ought to be as short as they can be and I share your skepticism towards omnibus bills. There is a balance in terms of trying to get important measures done. There is at least a tie to finances in all of these, or at least that’s the coherent thread or the string that runs through them.
But I certainly hear your concern. I’m not sure a statutory obligation or statutory bar is the solution, but I do think we all need to be more sensitized to the amount of scrutiny that is possible in a single bill versus an omnibus bill.
Senator Clement: Good morning, everyone. Thank you for being here.
I fully endorse the questions concerning Division 34 and I’d like to add my name to the list of people who want more information in the follow-up that was outlined by your colleague Mr. Radley.
My question is for you, minister. It’s on Division 31, the Royal Style and Titles Act and the removal of the “Defender of the Faith.”
I’ve noted, as most of us have, an evolution in terms of the relationship between Canadians and the monarchy. People are open about their complicated relationships with the monarchy. I wondered how you came to do this, and what conversations you had with Canadians to get to this point. What’s the plan going forward? It did strike people when this came up and there were lots of conversations about it — maybe not around this table, but in Canadian society.
Mr. Lametti: Thank you, senator. To be perfectly honest, that wasn’t in the purview of my responsibilities for this particular bill. I believe it falls to the Minister of Canadian Heritage, working with the Deputy Prime Minister and the Prime Minister with respect to that.
What I can say is that it’s an active debate, both here in Canada and in the U.K., obviously, and it’s something that King Charles himself has turned his mind to with respect to how he wishes to be represented.
I won’t give a private opinion. You’ll forgive me for that, I hope. But it is a question better placed to Minister Rodriguez.
Senator Clement: It’s before the Legal Committee and I thought I’d engage, but that’s fine. I accept your answer. Thank you.
The Chair: I have a couple of questions, Minister Lametti. The first one is more of an overarching question.
Interestingly enough, in this bill, you have been responsive, I think in a timely way, to the issues around digital currencies, cutting-edge developments and the like. This really is a question or comment about letters. My sense — without having ever looked into it seriously — is that we have been attentive to access to packages because that’s commonly the way contraband has moved, and with letters, you can’t get a bottle of alcohol in a letter or a kilogram of cocaine or whatever. But that world has moved as well. I’m suggesting to you that — not so much on the specifics of let’s amend and stick a word into the bill — we haven’t been attentive enough to that change in society where now you can move contraband in much smaller ways, and very dangerous contraband.
It’s more a statement of inviting you to capture the modern world in that field in the same way that you’ve captured it in the digital currency world. Maybe a comment, and then I have a question.
Mr. Lametti: Thank you, Mr. Chair. I share that concern. I certainly agree with the sentiment that you’ve expressed about modernizing our procedures and making sure we catch current practice, and I’ve engaged to speak with my colleagues about that, I’ve engaged Senator Klyne that I would do that and I will do that.
The Chair: It was a way of asking the question without celebrating Senator Dalphond’s work yet again.
My second is, I think, a question. In many respects, your government has been moving meaningfully, for example, take the issue around criminal interest rate and the like, addressing communities of interest that are vulnerable. We’ve talked a bit about payday loans. One of the approaches is to try to see ways by which people can live lives that don’t require them to access payday loans, kind of solve the problem at the front end than the last end. There are various initiatives by your government to address vulnerable people, but there doesn’t seem to me, at least, to be a kind of an integrated strategy across the government. It feels like let’s do a disability benefit, let’s deal with the criminal interest rate.
Is there an overarching strategy that one can see and articulate that links these pieces of the puzzle together in a more horizontal approach by government?
Mr. Lametti: Certainly there have been policy discussions. I won’t recount things that are discussed at cabinet, obviously. But certainly, at a policy level, in public discussions we’ve had as a party and as a government, we have talked about things like a guarantee income or a universal basic income.
You have just dealt, I believe, with Bill C-22, which is a fantastic piece of legislation, which I support wholeheartedly — again, a disabled benefit. We have done great work with respect to child poverty and we have reduced that immensely with the child benefit that we brought in 2015.
It is true that the strategy is piece by piece. It is also valid to say why not a larger, more global strategy that doesn’t create gaps. I think that certainly is an interesting comment. Those kinds of discussions are being had. But I can say, and as you’ve noted, that for the time being the strategy is one that is step by step addressing different disadvantaged groups.
The Chair: Thank you. We have a bit of time for a second round, perhaps three minutes each.
Senator Batters: Minister, on criminal interest rates, going back to that, banks can provide bridging financing like bridge mortgages, which are short-term loans that can help people purchase a home, but could have rates that might exceed your new criminal interest rate under this act.
Minister, when I asked the Department of Finance officials about that, Mr. Radley confirmed that bridge loans could be considered for an exemption under the upcoming regulations. I find it concerning that we’re being asked to pass this change in a budget implementation act which will no doubt be passed within a few weeks, as is normally the case, yet a significant number of bridge mortgages could be impacted and we won’t know whether they will be getting an exemption to this new Criminal Code provision until after the budget implementation bill is passed when cabinet makes a decision then.
Why wouldn’t this section which deals with a very important issue be tabled as a separate government bill so that the necessary parliamentary committees have time to study it properly and make any necessary amendments?
Mr. Lametti: Thank you, senator. I think I’ve answered the last part of the question, which is why not a separate bill. I certainly share the concern about how much goes into a budget implementation bill. That being said, that was not my decision, and I have to trust my colleagues in that regard, and I do.
The particular concern you raise is a good one. The point of the regulatory exemption is precisely to allow those kinds of high-risk transactions where the parties have a certain capacity or knowledge so they’re not vulnerable in any way. You mentioned the bridge financing, a perfect example. My understanding is that regulatory exemption is meant to capture that and the regulations will be published. There will be a consultation period that will allow people to comment on the proposed regulations. That will be subject to the usual kinds of parliamentary scrutiny that we have with respect to regulations.
Senator Pate: With respect to Senator Cotter, he didn’t mention that there is actually another bill that would look at a more overarching mechanism, so we welcome your input on that as well.
I notice that the Law Commission has some new commissioners who are due to start their job within the next month, which is very soon. I’m wondering if you have provided any requests for them to look at two areas that I think intersect as they do with this bill, which is the area of criminal law overview and tax policy. It seems to me a perfect body to be looking at potentially overhauling both of those areas of the law. Is there any indication that might be in the offing?
Mr. Lametti: We will take note of your two suggestions. I have had one formal meeting with the incoming president, Professor Shauna Van Praagh. We have discussed generally how she wants to proceed in terms of identifying what her priorities would be, as well as the priorities of working with the two named commissioners. I have given her a few things that I hope she may want to think about, but I’m certainly willing to add your suggestions to the list. This will be an open and evolving relationship with the President of the Law Commission that I hope that a number of people across government will have.
Senator Dalphond: I promise that this time it’s not about Canada Post. It’s about crypto-currency and all these things. We have to adjust to the use of it, and Senator Cotter also made the comment that we have to adjust to the new reality. The world is changing.
These new tools will be provided for police to get judicial authorization for search and seizure of, for example, immaterial assets including crypto-currencies. We know it’s working not with the name put on the account, so it’s difficult to find out who is behind this and that.
Is it contemplated that the RCMP would be provided additional resources and technology in order to be on top of this type of investigation? I assume the local police won’t be able to do it.
Mr. Lametti: Again, it’s probably a question better addressed to my colleague, the Minister of Public Safety, who is responsible for the RCMP. In general, we hope that the RCMP will be a cutting-edge force and we hope it will have cutting‑edge tools — legal as well as technological — in order to conduct the kinds of investigations it needs to conduct and track the kinds of activity it needs to track. My sense is that we, as a government, will be open to providing the RCMP with the resources, intellectual and physical, that it needs in order to accomplish this task.
Senator Simons: I have elections on the brain because I am from Alberta. Can I come back and ask the officials about that part later? I will ask you about criminal interest rates.
I’m really pleased that you recognize the work that our colleague Senator Ringuette has done on this file over many years. I’m curious to know — once these provisions are put in place, obviously it will make it illegal to advertise loans at those rates of interest. People will just stop doing that. But in terms of enforcement, to what extent will enforcement of these provisions be focused on the large companies, the payday loan companies and the predatory lenders who put their signs on the street versus people who are making more private loans, the sorts that are on television police shows enforced with baseball bats?
Mr. Lametti: My hope is that we try to enforce it across the board. This is something that largely falls to police forces as well as provinces and territories with respect to prosecution of these crimes. I hope that they can work across the board because each element that you’ve identified is important.
Senator Simons: The concern is when you’re talking about big corporations, they have an indemnity that comes with being a company in a way that a guy with a baseball bat does not, but they’re each exploiting people in their moments of economic vulnerability.
Mr. Lametti: That is very true. I don’t disagree with a word of that, senator.
Senator Klyne: Minister, this is with regard to Division 39 of Part 4, amending the Canada Elections Act. In a 2022 decision, the B.C. Office of the Information and Privacy Commissioner found that the province’s privacy law applies to federal political parties. How would you respond to the speculation or suggestion that the budget implementation act’s proposed amendment to the Canada Elections Act is simply a way to circumvent the B.C. decision to a potential risk associated around the protection of Canadians’ personal information?
Mr. Lametti: I am in no way a party to that decision. It’s the political party, the federal Liberal Party, that is working through the courts. As a government, I have no position on that. I can do an undertaking, speak to my colleagues who are more directly involved and come back to you.
Senator Clement: I have a follow-up in terms of your response to Senator Pate around the Law Commission. That is very encouraging movement. You said that you were having conversations about priorities that you would see. What would those be in terms of how you see the work of the commission coming up?
Mr. Lametti: Again, if you don’t mind, it was a first conversation, and it really had more the air of brainstorming and possibilities than anything concrete.
There is the possibility to refer work to the Law Commission and refer specific questions to the Law Commission in the act. To be honest, I would hope that the Law Commission, the president and the commissioners will take on their own challenges and areas of interest, and that there will be a symbiosis in the kind of thinking that goes into inspiring the work of the Law Commission.
Obviously, what I can say generally with respect to what I brought up is that it reflects priorities in my mandate letter, such as reconciliation, access to justice, ensuring a fair criminal justice system and fighting systemic racism within that system, but there are many possibilities.
[Translation]
Senator Clement: That’s encouraging. Thank you.
[English]
The Chair: Minister, let me take this committee, for example. Partly generated by you and causing you to visit us as often as you do, we examine a lot of justice legislation, which minimizes our opportunity to conduct our own studies on topics that are of interest and would engage us if we had the time.
Is there a mechanism by which this committee or the Senate can share what it thinks ought to be priorities for investigation and consideration by the Law Commission? Are you sympathetic to those points of view being shared with the commission leadership?
Mr. Lametti: I’m certainly sympathetic. I don’t believe there’s a formal mechanism in the law, but I also don’t believe that a good Law Commission will reject good ideas wherever they may come from. I would encourage you to think through what you think or what you see priorities for a Law Commission would be. I suspect that Professor Van Praagh would welcome them with open arms.
The Chair: Thanks. I think it’s fair to say that you bring lots of those ideas to us in your visits.
At this point, I’d like to extend my thanks, Minister Lametti, for joining us for this period of time. Do you have a small intervention you’d like to make?
Mr. Lametti: We don’t get compliments very often, but I want to thank all of you for the questions. This was a presentation that was somewhat out of my comfort zone in various places, but you have stuck to the agenda and I really appreciate that very much. Thank you.
The Chair: You’re welcome. It was probably our mistake. Let me continue by extending my thanks. It’s much appreciated, the regularity of your visits with us, the information and the way in which you inform us on aspects of our interests and concerns about legislation, including this. Again, thank you to your officials, who we will continue our dialogue with. Thank you again, minister.
Colleagues, we are continuing our consideration of Bill C-47, and we are joined by a number of officials from the Government of Canada to respond to questions and engage in discussion. In this section, since we will not always know who we should be asking the questions to, Mr. Taylor and Mr. Radley maybe you could direct them to the most useful responders to our questions.
Senator Tannas: I wanted to return to the discussion around the criminal interest rate. I was the friendly critic on one iteration of Senator Ringuette’s bill. The number in Quebec was the number that people were focused on as being the number we should translate. The issue is that the number in Quebec has certain exemptions around fees that the criminal interest rate does not contemplate. For instance, one of the examples was if I’m a Royal Bank Visa cardholder and I put my card in an ATM and it charges me five bucks, and then I’m subject to 24% annual interest, but I pay it all off in a month, so really it is only 2% interest. All in, if you take it with the fee and annualize it, even though you paid it off in a month, you are offside. Quebec has that safety in their regulations.
Do you have sufficient flexibility with the wording here and how you build the regulations to make sure that that simple, innocent transaction does not wind up putting the President of the Royal Bank in jail?
Mr. Taylor: It’s a very good question. You will likely know, having worked on these issues previously, the Criminal Code does have a definition of “interest,” and it includes, as you said, many things, late fees, et cetera. The bill doesn’t propose to address these in any way. So you are right to the extent that those additional fees are factored in. It may well be on a case-by-case basis that certain agreements or arrangements would contravene the criminal interest rate provision in the code.
Senator Tannas: So you will not be able to deal with that in regulations? The financial institutions will just simply have to prevent that practice from happening?
Mr. Taylor: It is contemplated that the regulation-making power would provide an opportunity to carve out from those provisions certain arrangements or agreements.
Senator Tannas: Again, I would encourage you, if the rationale was picking the Quebec rate, make sure you follow all aspects of the Quebec rate or we could capture what are low‑cost — extremely low-cost — payday loans that you are giving yourself through your Visa card, and we don’t want to do that. Thank you, and I trust you will have a look at that.
The Chair: The President of the Royal Bank is probably much relieved by that conversation.
Senator Simons: As I said, I have elections on the brain because I’m from Alberta. We have privacy regulations that regulate governments, Crown corporations and private companies for the exchange of our personal information, and over the last 10 years, we have built up quite a rigorous and functional regime of those protections. The budget implementation act intends to make sure that federal political parties do not have to follow any of those rules. I’m the understudy for this committee, so I wasn’t here the day that the Privacy Commissioner was here, but there have been serious concerns raised that these exemptions will allow federal parties to mine and use personal data in ways that are very concerning to citizens, but which I would argue more than just an individual person feeling that their privacy is invaded, this could engender a whole distrust of the democratic process and make people far less inclined to volunteer, to donate, to sign a petition or to do anything that may leave them open to further exploitation by political parties.
I’m struggling to understand why this exemption exists in the act.
Jenifer Aitken, Assistant Deputy Minister, Central Agencies Portfolio, Department of Justice Canada: Maybe I can try to at least start a response to that important question. The budget announced that the purpose of the amendment was to provide consistent rules across Canada for federal political parties, but beyond that, I’m sorry that we don’t have an expert here on that, and we would have to undertake to provide you with more information.
Senator Simons: The consistency is to have no rules. The consistency is to allow every party to set its own rules, whatever those rules are. I don’t see how that promotes consistency, to let every party make it up.
Ms. Aitken: I understand the question, and certainly the idea is that because provinces are different, there needs to be something across the board for federal parties, but we’ll follow up on it.
Senator Pate: I’m interested in one of the ways in which you plan to get at Bitcoin. I notice there is a clause in here that talks about the ability to conduct investigations and issue warrants. Then I’m struck by the comments — certainly it was in the media — of lawyers who are expert in this area and the comments of people who trade in Bitcoin. I’m trying to be careful with the language because it’s not an area where I have any comprehension; let me be clear.
It seems, at least according to Matthew Burgoyne, a lawyer based in Calgary, that there is virtually no way to contain this. How do you see this evolving? What are the intersections here between the financial reporting, the regulatory schemes and the criminal law? Because it strikes me it will be a pretty high standard to try to meet. If it’s as slippery as it’s being described in these media accounts, it sounds to me like it could take a lot of money, or Bitcoin or whatever, to pursue this and then have virtually no results in terms of holding anyone accountable or retrieving —
Erin Cassidy, Counsel, Criminal Law Policy Section, Department of Justice Canada: Thank you. That is a very good point you have raised. One thing to keep in mind is that the proposed amendment is a narrowly tailored means by which law enforcement can apply to a court for judicial authorization to seize crypto-currency that is believed to be proceeds of crime.
There is a lot more to be done in the area of crypto-currencies and other digital assets. I know that my colleagues at Finance Canada, the legal services unit, can certainly speak to some of the efforts being undertaken on the regulatory side of things. That would be distinct from this specific investigatory power that is being put in place.
On the criminal law power side, we are continuing to look at other measures that need to be put in place to better respond to the use of crypto-currencies and other digital assets in criminal activities. It’s certainly a challenging and evolving space. That is why we started with this one particular provision that addressed a need that was clearly identified. We are continuing at this time to look at the other measures that need to be put in place. Thank you.
Senator Pate: Thank you.
Annette Ryan, Deputy Director, Partnership Policy and Analysis, Financial Transactions and Reports Analysis Centre of Canada: The Financial Transactions and Reports Analysis Centre of Canada, known as FINTRAC, is Canada’s anti-money laundering agency.
If helpful for context, I would offer to the committee that FINTRAC is both a regulator of Canadian businesses covered by our act as well as a financial intelligence unit that passes on appropriate information to law enforcement and other agencies.
In the space of virtual currencies, as we would say, since 2020, we have required that dealers in virtual currency register with FINTRAC. That requires them to do record-keeping, have oversight mechanisms for how they conduct their businesses, reporting to FINTRAC for a range of financial transactions as well as making suspicious transaction reports that speak more to transactions that would meet reasonable grounds criteria.
From that aspect of the regime, we, in turn, analyze these records and pass them along to law enforcement, in particular the RCMP as it’s relevant to their work.
Senator Pate: Can you give me an idea of how many investigations there would be in — I don’t know if I should say in the course of a month or a year? How many would result in charges? How many would result in convictions?
Ms. Ryan: I wouldn’t have those statistics with me today, senator. We have received a number of these suspicious transaction reports, in particular from virtual currency dealers. We have passed them along to law enforcement. They can include quite a range of crimes, including human trafficking, for example. FINTRAC, it’s important to note, is not an investigative body. Questions on the aspect of laying charges and their links to virtual currency, I would respectfully defer to other organizations, like the RCMP.
Senator Pate: So it would be the RCMP tracking how many they received from you?
Ms. Ryan: Specifically the question of how many charges were laid and so on, that would be more their space, for sure.
Senator Pate: If it is possible — in writing is fine — can we just have a sense of how many of those referrals get made to the RCMP? That would be very helpful.
Ms. Ryan: We can certainly look at what is available, senator.
Senator Pate: I would be interested, if it’s possible, to divvy up — I’m sure you have some disaggregated data about this: What is crypto-currency? What are some of the other issues we have been looking at as well?
Ms. Ryan: Let me check and get back, senator. We also have to respect certain provisions in terms of confidentiality.
The Chair: Maybe this is a question for Ms. Cassidy or Mr. Taylor, building on that. Is that kind of information in relation to charges and prosecutions available through your offices? Is there information you could share with the committee along those lines?
Ms. Cassidy: Thank you for the question. In terms of charges, different provinces approach charges differently. We would be able to look at what the RCMP has done, and then we would need to liaise with provinces with regard to data at the provincial level.
In terms of prosecutions, similarly, the lead would be at the federal level, the Public Prosecution Service of Canada, and then the different provincial attorneys general. We can certainly see what we could provide on that front.
The Chair: Mr. Taylor wants to intervene, but before he does, I would say that this is the kind of information that I would think you would want to know in order to have an idea of how effective your regime is, including the tool kit that’s coming available to you through this legislation.
Mr. Taylor: Thank you for the question. To supplement what Ms. Cassidy said, we do have a relationship with the Canadian Centre for Justice Statistics, as I think most of you would be aware of. They are the agency responsible for collecting national crime statistics for Canada. We can undertake to provide to you data that they might have on these issues vis-à-vis charges and prosecutions. They are two different data sets. The one limitation that I anticipate finding is that the data won’t necessarily be disaggregated in the way that Senator Pate would like, in terms of whether we are talking about Bitcoin or some other type of crypto-currency. Certainly, we will happily provide what we can.
Senator Klyne: In Budget 2023, the government proposes to strengthen Canada’s anti-money laundering and anti-terrorist financing framework. How might the amendments in Subdivision B of Division 3 respond to those goals? In particular, could you please elaborate on how digital assets have facilitated or risk facilitating money laundering and terrorist financing?
Ms. Cassidy: Yes, absolutely. In terms of the role that digital assets such as crypto-currency can play in criminal activities, what we hear from our operational agencies is that crypto‑currencies because of their — I’m not going to say this correctly — partially anonymous, somewhat anonymous nature, they can be used and are being used to launder properties. I’ll take a hypothetical example of cash from drug trafficking could be converted into crypto-currencies, moved through different types of crypto-currencies to help conceal that property and the illicit source of that property and then eventually converted again into legal tender. In that sense, there are ways in which it is attractive for persons involved in money laundering to make use of crypto-currency.
Another example that we certainly hear about is in cases of fraud and extortion, so ransomware where people will be told to make a payment in crypto-currency. Again, this can be an easier way of attempting to conceal the origins of that property.
But at the end of the day, the goal is usually to convert it back into legal tender. Does that answer the question?
Senator Klyne: Yes, thank you. I have another question. Is $10,000 where the sight line for — $10,000 or more for FINTRAC?
Ms. Ryan: Typically for many of our mandatory reports $10,000 is the threshold. Suspicious transaction reports do not attract a threshold and neither do terrorist property reports.
Senator Klyne: Just throw that over the fence to the RCMP.
Ms. Ryan: When we have done our due diligence.
Senator Klyne: The other question I had: Could someone please describe how the framework proposed by the amendments in Subdivision B of Division 3 compares with the approach of other jurisdictions concerning the search for and seizure of digital assets?
Ms. Cassidy: Thank you. That’s a very good question. We have looked at different jurisdictions and this is an evolving area. Some jurisdictions — and an example I can give would be the United States — are able to provide for the seizure of virtual assets such as crypto-currency through existing legislative powers, warrants and restraining orders. Based on our discussions with them at this point, they aren’t looking at legislative amendments.
Other jurisdictions — and I can provide the example of the United Kingdom — are currently able to seize crypto-currencies based on their existing legal measures. However, they currently have before their Parliament some dedicated measures, and certainly we looked at what they were doing in developing our measures.
So the idea being that it is preferable to have a tailored measure to address the unique aspects of digital assets specifically. So different countries are taking different approaches at this time.
Senator Klyne: Is this typically in blockchain? Have you been able to penetrate that — blockchain data?
Ms. Cassidy: Blockchain data — given that many blockchains are publicly available, there has not been a need to establish production orders or similar kinds of measures at this time. But again, it is an evolving space and it’s an area we are looking closely at. Thank you.
Senator Klyne: Thank you.
Senator Simons: I’m finding it extraordinarily difficult to hear Ms. Cassidy and Ms. Ryan. Nothing wrong with my ears. I don’t know if there is a way to raise the volume in the room if others are having the same difficulty. All right. I will put the thing in my ear. Maybe I’m old.
Senator Batters: Thank you for being here and answering our questions today. First of all, to the Department of Justice officials here, during Minister Lametti’s testimony today, I would like to have asked him this but we only had a certain amount of time and had to get to other topics. He said on a few occasions — one time he said it wasn’t his decision that a certain part was put in. At another point, he said the minister in charge, the finance minister, decides what to put in the budget implementation act. No doubt the finance minister has the final say on it, but I’m assuming that the justice minister and other ministers advise the finance minister about their recommendations for what items in their portfolio are included as a budget implementation act item.
To the Department of Justice officials, isn’t that how it works? I would guess, particularly knowing how it worked in a provincial setting for a budget implementation act, that the justice minister’s advice to the finance minister, given that the justice minister is the chief lawmaker for Canada, would have quite a bit of weight.
Ms. Aitken: The process of the discussions between ministers with respect to what is going to be announced in the budget or in the act to implement it is really not something that we can talk about because that’s a process of ministers talking to each other and decision making being made similar to cabinet decision making. But that having been said, the measures that come forward for inclusion in the budget implementation act or in the budget are often measures that are important ones in various ways. So that’s often the basis for including them. Then the fact they are mentioned in the budget brings them forward in the budget implementation act as a legislative mechanism to introduce them.
Senator Batters: Not asking about the specifics because, obviously, you don’t know about which minister said what to what minister, but I’m assuming there is a general process. Is it to decide what then gets incorporated into the budget from each of their portfolios, even what items may not need actual budgetary approval, but what items might be mentioned in the budget document so as to trigger a potential inclusion in the budget implementation act? Can you tell us about that process?
Ms. Aitken: Yes. There is a process across government for identifying potential measures. As the minister said, it is the Minister of Finance who puts forward the budget, so it is her decisions that are included there. Yes, there is a process for —
Senator Batters: I guess I’m wanting to hear from the justice officials then. What involvement does the justice minister have at a certain point of indicating these are the items that I think would be proper for inclusion in this year’s budget and therefore potentially budget implementation act items?
Mr. Taylor: Ms. Aitken is a justice official as well.
There is a process. The Department of Justice, as with any other department, participates in that process and puts forward ideas that fall to the responsibility of the Department of Justice, from policy perspective, criminal law measures, for example, criminal interest rate. So we participate in that process. Of course, Minister Lametti is responsible for providing legal advice on those measures. The Charter statement was tabled in the House of Commons today. That contains the Charter considerations vis-à-vis the amendments in the budget bill.
But we really are not in a position to speak to how those decisions are ultimately taken or how cabinet ministers make decisions on what would be in and what would not be.
Senator Batters: Perhaps if we could get a copy of that Charter statement that would be helpful.
Something else I would like to ask you about. This Division 3, Subdivision B dealing with the section on allowing for search and seizure of digital assets including virtual currency is a significant section and we really haven’t had a chance before today with any particular witnesses to study it at this budget implementation act section of the Legal Committee and we have a very short amount of time.
Can you please tell us more information about this and why you think that it’s necessary to have this type of a significant measure dealt with now in a very quick fashion in the budget implementation act rather than having it be the subject of a longer study in a stand-alone bill? What is important about it that it needs to go into effect in the next few weeks as compared to something that would take potentially a year?
Ms. Cassidy: Absolutely. Thank you very much for the question.
The Cullen Commission final report identified the need for Canadian law enforcement and prosecution to better follow the money, so to speak, in terms of better responding to the ability to address the proceeds of crime and the laundering of the proceeds of crime. The issue of being able to seize digital assets, which can move very quickly, is one that has been raised as an issue where existing legal tools aren’t ideally suited to the seizure of digital assets. This was identified as an area where action was needed in a timely manner to provide law enforcement with the tailored tools to seize digital assets in a manner that reduced uncertainty.
This particular measure was identified as an important and time-sensitive measure to provide some predictability for the law enforcement community in their ability to address crypto‑currencies use in crime.
Senator Batters: When did the Cullen Commission report come out?
Ms. Cassidy: The Cullen Commission report was issued last June.
Senator Batters: Another question that I have is regarding the Canada Post issue. The R. v. Gorman decision. I’m wondering why the government didn’t table a bill before April 12 because that was actually the end of the delay period, as I understand, in the R. v. Gorman case to comply with the ruling. What was the delay granted by the Newfoundland court case? Was it a year or less than — it was a year? Okay. Thank you.
Why didn’t the government table a bill before the April 12 time frame so that it would be in effect? I’m wondering if that potentially shows that this issue is being taken somewhat less seriously because the ruling applies only for Newfoundland.
Mr. Taylor: The only thing I might add on that is you’re right that the effect of the decision was stayed for one year, until April of this year. An extension was sought, however, and granted. I don’t recall the exact date, but I believe September of this year. That issue was addressed that way.
As I said earlier, Canada Post, as I understand it, is conducting itself in a way that would exceed the grounds required under the proposed changes in the budget bill.
Senator Simons: I want to continue following what Senator Klyne and Senator Batters have been talking about with the crypto-currency.
The budget implementation act says that warrants pertaining to digital assets will be served in part by searching computer programs, which is broadly defined. In the case of something like the convoy, we had funding facilitated through decentralized blockchain and the resulting crypto-wallets were hosted on individuals’ hard drives.
How would law enforcement execute this type of digital asset seizure? Does that involve white hat hacking of people’s accounts? What kind of warrants would — what would the justification be to access individual hard drives in cases like these?
Ms. Cassidy: Thank you very much for the question. In terms of what this specific measure is intended to respond to is where, for example, law enforcement carries out a search of a place and identifies what may be a specialized crypto-currency hard drive. If they have the warrant to seize that device and they have the reasonable grounds to believe that device will hold digital assets that may be confiscated, then they could use this warrant to be able to search that device. Otherwise, they wouldn’t be able to.
Another example is where, again, in carrying out a search or when they know they’re going to search a place and the other investigatory measures they have taken to that point give them reasonable grounds to believe that crypto-currency — the ability to access a crypto-currency while it may be at that place, for example, where the private key is written down or — then they could apply for this warrant to be able to use that private key to access the digital wallet. But it does not provide them with the ability to hack into a wallet. It’s a very specific use that is envisaged by this measure.
Senator Simons: It’s to literally search the physical hard drive for the virtual currency?
Ms. Cassidy: Yes. Again, if, for example, they obtained the hard drive through a warranted search or if they obtained the private key through a warranted search of a place, then they could use this warrant to enter the information in a digital wallet app, reconstruct the digital wallet using the information that they have obtained and be able to see this is the transaction that we had evidence that may be proceeds of crime. That is the specific type of crypto-currency.
Senator Simons: It was simpler when you found a briefcase full of money, I suppose. Thank you very much. That’s very helpful.
The Chair: I had some brilliant questions myself, but the combination of Senator Klyne and Senator Simons covered that territory for me in terms of the mechanisms by which this adds a tool to a complicated and postmodern tool kit. Thank you for answering my questions without me even asking them.
We have no others on the list. That will enable us to bring this session to an end, slightly before the maximum time.
Let me begin by extending my thanks to each of you and your colleagues for being in attendance here. It was excellent, informative and very much appreciated. I think we shared that view with the minister during his time, and it’s equally true in our dialogue with you.
I want to thank the senators for their thoughtful questions and informing me as much as yourselves about these issues.
I want to also thank the staff for the work that they provided to us in supporting the committee here, the interpreters and all the folks who hold our work together for us.
If you recall, colleagues, there’s a time frame within which we are working with respect to Bill C-47, and it would be helpful if you, to date, have developed any comments or observations you would like to make in relation to the components of the bill we are studying. If you have and are able to share those with us by perhaps next Tuesday, we can begin to move towards compiling a report to get ourselves back to the Senate Chamber in a timely way. There may be more that you will identify, but we are working to a pretty tight deadline, the week after the break. Thank you.
This brings this session to an end.
(The committee adjourned.)