Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 25 - Evidence
OTTAWA, Wednesday, June 13, 2007
The Standing Senate Committee on Banking, Trade and Commerce met this day at
4:10 p.m. to examine and report upon the present state of the domestic and
international financial system.
Senator Jerahmiel S. Grafstein (Chairman) in the chair.
The Chairman: We are continuing our study of enforcement of
white-collar crime and matters related to white-collar crime in our continuing
studies on the hedge fund and on interprovincial matters. This is a subject
matter that is of interest to both of our studies.
Today, the Standing Senate Committee on Banking, Trade and Commerce is
pleased to hear from the Integrated Market Enforcement Teams, IMETs, on
white-collar crime, a topic this committee has studied periodically for the last
five years and about which we have made recommendations most recently in June
2006. I want to advise the witnesses that we are seen on television from coast
to coast, but your words will also be heard around the world via the Internet.
We will be most interested in what our witnesses have to say.
The IMETs investigate and prosecute major fraud and capital market crimes and
are part of the RCMP's Financial Crime Program that is dedicated to the
investigation and prosecution of serious Criminal Code of Canada capital markets
fraud offences that are of national significance and involve actions by
publicly-traded companies with sufficient market capitalization to pose a
genuine threat to investor confidence in Canada's capital markets and economic
stability in Canada.
On May 14, 2007, the Minister of Public Safety and the Minister of Finance
announced the appointment of Mr. Nick Le Pan, a gentleman well known to this
committee and the former federal Superintendent of Financial Institutions, as
senior expert adviser to the RCMP on its Integrated Market Enforcement Teams.
Creating a Canadian Advantage In Global Capital Markets, a companion
document to The Budget Plan 2007, indicated that the elements of a plan
to improve the effectiveness of the IMETs will include the following: Attract
and retain the best-qualified police and other expert resources to conduct and
support investigations of criminal capital market offences; strengthen the
central coordination of the IMETs to guide the setting of priorities and the
allocation of resources on a national basis; and to improve coordination among
such individuals and entities as the IMETs, provincial securities regulators and
provincial Crown prosecutors.
Within this context, I am pleased to welcome from the Royal Canadian Mounted
Police, Pierre-Yves Bourduas, Deputy Commissioner, Federal Services and Central
Region; and Mr. Denis Constant, Chief Superintendent, Director General,
Gentlemen, please proceed with your opening statement. I am sure all senators
will have many questions to ask you.
Pierre-Yves Bourduas, Deputy Commissioner, Federal Services and Central
Region, Royal Canadian Mounted Police: I am delighted to speak to you today
about some of the initiatives we have undertaken to deal with the challenges
that pose white-collar crime in Canada. Before I begin, allow me to set the
context, which will make it easier to understand.
The RCMP's financial crime directorate is comprised of three branches: the
Commercial Crime Branch, Proceeds of Crime Branch, and the Integrated Market
I believe the RCMP has a proven track record as an organization responsive to
emerging crime trends. This is particularly true in matters concerning
white-collar crimes. Financial crime enforcement is recognized as necessary to
ensuring Canada's economic integrity.
The Commercial Crime Program has a relatively broad mandate. The addition of
187 full-time equivalent, FTE, resources through fiscal years 2006-07 to
2009-10, under the federal policing memorandum to cabinet will assist the RCMP
Commercial Crime Program in addressing its mandate pertaining to frauds and
false pretences; frauds against the Government of Canada; corruption of public
officials; fraudulent bankruptcies; counterfeit currency; counterfeit payment
cards; mass-marketing fraud; and, identity fraud. It should be noted that while
the RCMP Commercial Crime Program carries out corruption investigations, no
specific resources have been provided for this role.
From a RCMP Commercial Crime Program perspective, current trends in financial
crime have seen significant shifts. The RCMP is seeing a proliferation of
mass-marketing fraud and identity theft-related occurrences. Similarly,
counterfeiting payment cards and payment-card fraud have seen relatively
significant increases in activity levels. While enforcement strategies have
yielded some improvement, currency counterfeiting remains relatively high.
Although Canada's counterfeit currency vulnerability has decreased, it remains
the most vulnerable of the G8 nations.
Mass-marketing fraud activities occurring in Canada and impacting Canadians
are committed by individuals acting alone or by organized groups. Between 2004
and 2006, PhoneBusters: The Canadian Anti-fraud Call Centre, documented an
increase in the overall number of reported mass-marketing fraud incidents in all
provinces, with the exception of Manitoba. Mass-marketing fraud is also a
significant cross-border crime problem between Canada and the United States.
The RCMP's enforcement response involves numerous joint efforts to combat
mass marketing fraud operations based in Canada. The RCMP Commercial Crime
Program is a key member of the National Mass Marketing Fraud Working Group; the
lead agency in Projects Emptor and Project Colt, which are two investigative
task forces in Canada; is a key partner in the Canadian Anti-Fraud Call Centre,
PhoneBusters, and is a member of three other strategic partnerships: Atlantic
Partnership Combatting Cross-Border Fraud; Toronto Strategic Partnership; and
the Alberta Partnership Against Cross-Border Fraud.
Counterfeiting payment cards, payment-card fraud and associated identity
theft are lucrative crimes. Although individual Canadians are the frontline
victims, Canada's financial institutions suffer the actual monetary losses,
which are estimated at $1 million per day. As of June 2006, the Canadian
Payments Association reported fraudulent credit card activity losses for the
previous 12 months at $291.9 million. These losses affected 351,531 credit card
account holders with an average loss per compromised card of $830. At year-end
2005, Interac Association reported a 59 per cent increase in fraud-related
losses over two years. In 2005, there were losses reaching $70 million and
affecting 78,000 credit card account holders. This was a significant increase
from $44 million in 2003, affecting 29,000 account holders.
Over the past five years, Canada has experienced a dramatic increase in the
number of reported counterfeit currency incidents. Of great concern among
financial, business, and law enforcement communities is the unprecedented
increase in the volume of counterfeit currency detected within the financial
system and the growing links to organized crime groups.
In partnership with the Bank of Canada, the RCMP, through the Commercial
Crime Program, has implemented a national enforcement counterfeit currency
enforcement strategy. Central to this strategy are the three dedicated
counterfeit currency enforcement teams located in Toronto, Montreal and
Vancouver mandated to investigate organized crime groups involved in the
production and distribution of counterfeit currency.
Mr. Chairman, you have talked about the Integrated Market Enforcement Team,
IMET. It should be highlighted that in 2003, the federal government committed
$120 million over five years for the creation of the Integrated Market
Enforcement Teams in Toronto, Montreal, Vancouver and Calgary to address an
enforcement gap, which was demonstrated by the Bre-X, WorldCom and Enron
circumstances. By being able to detect, investigate and deter capital market
fraud, the Integrated Market Enforcement Teams ensure the security of Canada's
financial market and in doing so act to instill confidence amongst Canadians in
the marketplace and in the law enforcement's ability to investigate corporate
fraud and market illegalities.
The IMET teams include investigators, market analysts, counsel and forensic
accountants. The IMET program has also incorporated a quick-start capability,
allowing it to respond swiftly to major corporate frauds and market
irregularities anywhere in Canada. All team members are available for the
purpose of rapid deployment, in the event that it becomes necessary to launch an
immediate investigation in a location other than Toronto, Montreal, Calgary or
Vancouver. In addition, IMET also operates one Joint Securities Intelligence
Unit in each of the locales in which IMET operates.
The teams are also supported by the various securities commissions,
Investment Dealers Associations of Canada, Market Regulation Services Inc., the
Mutual Fund Dealers Association of Canada, Canada Revenue Agency and the Public
Prosecution Service of Canada.
The IMET program is structured to receive strategic guidance from an
executive council as defined in the governance model outlined in the original
memorandum to cabinet and Treasury Board submission. It is made up of assistant
deputy minister representatives of the Department of Finance Canada, the Public
Prosecution Service of Canada, the Department of Justice Canada and the Public
In response to a number of recent external studies and criticisms, the IMET
Executive Council suggested that at this time it would be appropriate to review
the delivery of the IMET component of the Government of Canada's strategy for
enhanced protection of Canada's capital markets. Accordingly, the RCMP, in
consultation with the executive council, developed a business plan on how the
IMET initiative should be reformulated to address areas of concern. In addition,
as the chairman mentioned, the government appointed a senior expert adviser, Mr.
Nick Le Pan, to the RCMP to assist in developing and guiding the implementation
of a plan to improve the effectiveness of the IMETs.
I would also like to stress that law enforcement activity is only one
component required to effectively protect the capital markets. To be truly
effective, a strong integration is essential between law enforcement, securities
commissions, Investment Dealers Associations of Canada, Market Regulation
Services, Mutual Fund Dealers Association of Canada, Canada Revenue Agency and
the Public Prosecution Service of Canada.
I will briefly touch on the Proceeds of Crime Program that coordinates the
RCMP's components in relation to two federal government initiatives targeting
criminal proceeds of crime and money laundering, being the Integrated Proceeds
of Crime, IPOC, initiative and the National Initiative to Combat Money
Today, our Proceeds of Crime Program is confronted by new challenges posed by
transnational crime which continues to evolve in complexity, as new alliances,
networks and criminal structures adapt to the global marketplace. In today's
globalized economy, organized crime groups generate huge sums of money, whether
from drug trafficking or a white-collar crime. Proceeds from criminal activity,
however, cause significant concern to organized crime because they raise the
suspicions of law enforcement and leave a trail of incriminating evidence.
According to the United Nations Office for Drug Control and Crime Prevention,
estimates of the amount of money laundered globally in one year have ranged
between $500 billion and $1 trillion. Though the margin between those figures is
huge, even the lower estimate underlines the seriousness of the problem we are
facing. While there are no reliable estimates of the amount of revenue produced
by illegal activities in Canada, there is little doubt that narcotics
trafficking and other organized criminal activities, including white-collar
crime, generate billions of dollars annually.
Criminals today are becoming much more sophisticated in disguising their
illegal profits without compromising themselves. Criminals are taking advantage
of the globalization of the world economy by transferring funds quickly across
international borders. Rapid developments in financial information, technology
and communication allow money to move anywhere in the world with speed and ease.
The use of technology to promote money-laundering activity is facilitated
through alternative payment systems, such as digital currency providers, and the
increased availability and permissibility for the development of alternative
banking systems through the Internet, making it much more difficult for law
enforcement scrutiny and providing criminal organizations with new financial
avenues. While this makes our task of combatting proceeds of crime and
money-laundering activity more urgent and complex than ever, our Proceeds of
Crime Program will continue to focus significant efforts on targeting
Proceeds of crime investigations and prosecutions are key tools in the
federal government's overall effort to combat organized crime. The Integrated
Proceeds of Crime initiative will continue to contribute to the disruption and
dismantling of targeted organized criminals and crime groups. IPOC remains an
innovative model of integrated law enforcement based on the premise that
removing illegally obtained assets from well-organized and funded individuals or
groups should reduce their economic power, influence their ability to mount
large-scale criminal enterprises and remove the profit incentive to engage in
criminal activities. This is best achieved through an integrated and
multidisciplinary approach that calls on professionals from various
investigative and enforcement agencies to work together. The success of these
integrated units, of which there are 12 strategically located across Canada, is
the result of the diversity of the personnel and the knowledge, skills and
abilities they bring to the units.
As noted throughout my comments, one significant and contributing factor to
financial crime trends is that they are being facilitated by technology and the
Internet. While the RCMP may be seen as responsive to trends, in terms of
enforcement, that responsiveness contrasts sharply with the speed at which
criminals and criminal organizations are able to adapt technology to criminal
The RCMP is also seeing increasing involvement of organized crime groups in
white-collar crime activities. This is likely attributable to financial crime
being a relatively low-risk and high-profit activity.
White-collar crime activities are increasingly complex due to criminal
activity that involves technology and multiple jurisdictions.
As an organization, the RCMP will continue to be innovative and responsive to
financial crime activities and trends.
Mr. Chairman, honourable members of the committee, that concludes my prepared
remarks. I invite comments and meaningful discussions.
The Chairman: Thank you. I will introduce the members of the
committee. Notwithstanding the fact that we are toward the end of our session,
we have a full complement of senators from across the country. To my right is
Senator Angus, who is deputy chair of the committee; Senator Meighen, from
Quebec; Senator Eyton, from Ontario; Senator Tkachuk, from Saskatchewan; Senator
Massicotte, from Quebec; to my left, Senator Goldstein, from Quebec; Senator
Moore, from Nova Scotia; Senator Campbell, from British Columbia; and Senator
Ringuette, from New Brunswick. I represent Ontario, so you have a full
Senator Meighen: For the record, I have to say that while I was born
and raised in Quebec, I represent Ontario.
The Chairman: We will begin questions.
Senator Meighen: Welcome, gentlemen. What is the difference between
your activities or your areas of responsibilities?
Mr. Bourduas: In my field, I am the person in charge of administrative
activities and operations in Quebec and Ontario as well as all federal and
international investigations and national protection matters. Denis Constant,
the Chief Superintendent, has specific responsibility for white-collar crime.
Senator Meighen: This is obviously a subject of great interest to us;
the efficacy of the IMETs and your efforts to counteract what has been described
as the worst record in the G10 in terms of counterfeit currency. We take great
interest in this.
The Governor of the Bank of Canada once said in 2003 that in terms of
securities market, we were the Wild West. That does not do our capital markets
any good on the international stage.
Can you give me some assurance that we are not the Wild West anymore or that
we are moving away from it? Can you tell me whether any changes have been made
to the IMETs as a result of the criticism that I believe one of them got in the
Royal Group Technologies Ltd. probe in Ontario? And/or are you waiting for Mr.
Le Pan to bring in his report in October? I am not clear as to whether that is
an interim or final report.
Mr. Bourduas: As you are aware, IMET was created in 2003. Over the
following three years, we created five distinct teams to address market fraud.
As we rolled out this program, we realized there needed to be some major
adjustment, which is why we re-examined and reformulated our core mandate to
take regional differences into account. We have had operational successes along
the way and, as I have indicated, we have learned about some of the challenges
with legal tools and legal aspects that need to be addressed. Mr. Le Pan's role
will allow us a fresh set of eyes to look at potential solutions in order to
address some of these problems.
One key area for IMET is retention of expertise within the program. As an
organization, we certainly have not remained idle. Through the executive
council, we have addressed some of these issues, focusing on human resource
expertise retention. We also tasked Deloitte & Touche Inc. to do an independent
study, which was tabled recently.
Mr. Le Pan is a very welcome addition. He has just met with a number of
individuals to help us move in the right direction to ensure our success. As I
have indicated, we have already had some successes in Toronto and in the Calgary
I would invite Mr. Constant to comment if he wishes to.
Denis Constant, Chief Superintendent, Director General, Financial Crime,
Royal Canadian Mounted Police: Mr. Chairman, before we can talk about the
"Wild West" comment of the Governor of the Bank of Canada we must set the
context. When these comments were made, the issue of IMET was just being put on
the table. The enforcement was left more or less to the regulatory side of each
province to assume that responsibility.
Since then, we have worked extremely hard to change that perception. We have
managed to get some good success in what we have done. Sometimes we forget that
we have only been in existence for three years on the IMET front. When we talk
about recruiting experts to deal with matters of market enforcement, these are
not individuals we can easily recruit.
We have spent tremendous effort to recruit the right individual to help us
muster a capacity to deliver on these investigations. I have mentioned on
several occasions that as much as the criminal process plays a huge role in the
deterrence of any criminal activities against capital markets, it is only one
component of a system which includes securities regulators, the Investment
Dealers Association of Canada, et cetera. It must be approached that way in
order to protect all the investors in Canada, our own financial institutions and
our own markets.
Senator Moore: In June of last year, we held hearings with regard to
consumer issues in the financial services sector. At that time, the RCMP told us
that the mandate of IMETs ". . . is very narrow in terms of the large sphere of
white- collar crime, and the program is properly resourced for what we are
currently attempting to do."
The RCMP witnesses added that the bigger issue is the commercial crimes
section: "I would not be completely honest if I said that we do not need more
resources on the commercial crime side."
Can you tell us a bit about that in terms of your mandate? Has it been
widened? Are there plans for more resources or is this all awaiting the report
of Mr. Le Pan?
Mr. Bourduas: First, the original mandate calls for the investigation
of serious Criminal Code capital market fraud offences. That involves actions of
publicly traded companies. That mandate has been reformulated, and we now
include a provision to focus on serious Criminal Code capital market fraud
offences that are of regional interest as opposed to national. We take into
account smaller markets to deploy our resources and address regional concerns.
We have also removed references to publicly traded companies with sufficient
market capitalization. We wanted to broaden the mandate to be able to address
some of these cases that came to our attention that we felt also affected the
economic viability of our market.
Second, in relation to the commercial crime aspect, as indicated in my
opening remarks, since June of 2006 the federal government has allocated federal
integrity money for the five core programs under the purview of the RCMP, under
federal policing. Over the next five years, we will receive 187 additional
resources focused solely on commercial crime investigations.
The commercial crime investigation will complement the nine IMETs currently
deployed in these locations. I would like to highlight that each Integrated
Market Enforcement Team is project driven. Therefore, because of the sheer
magnitude and complexity of these types of investigations, they would normally
undertake one major project per team just to ensure they are brought to
Senator Moore: You told us that last year. One team is completely tied
up with a large project.
Mr. Bourduas: That is correct.
Senator Moore: This brings us to the resources issue. You have one
team in the various centres; should you have more than one?
Mr. Bourduas: In some locations, such as Toronto, we have three teams,
and they focus on three key projects. As indicated by Mr. Constant, we are also
involved in joint intelligence with local securities market commissions. We are
not solely focused on this project, but we are also very cognizant of the
environment. We want to ensure that we prepare for the next project and address
Of interest also is intake; we are trying to look at the way we conduct
business to ensure that we have a single intake point. If we have complaints, we
can address or send these investigations to the appropriate areas.
Senator Moore: I want to know about the website launched by the
Solicitor General and the RCMP commissioner in 2003 as a tool for citizens to
report economic crimes. Is that used? Are you getting much voluntary input from
citizens through this website of potential crimes or things they see that they
feel you should look into?
Mr. Constant: Yes, it is a very good tool and is being utilized quite
a bit. In the last year or so, we integrated our PhoneBusters call centre, which
is for the purpose of having people call to complain about any issue associated
with white-collar crime. We also integrated RECOL with that — Reporting Economic
Crime On-Line — which is for any complaint of white-collar crime that could be
done through the Internet. A Canadian in Europe today, who was defrauded or
found him or herself in some similar situation, could reach us through the
Internet and file a complaint.
The Chairman: To promote Senator Moore's point, if you have those
statistics available, it would be very useful for the committee to have them.
That would help us understand the effectiveness of it.
Senator Eyton: I will make an overall observation and then ask a
series of questions. I will put them all together so you can pick and choose,
partly because of a lack of time.
You made a fairly arbitrary division between the Commercial Crime Program,
Integrated Market Enforcement Branch and Proceeds of Crime Branch. I am sure
they overlap and compound each other. That describes some of the complexity you
have to deal with every day, not only within your own force but also with all
the other authorities, bodies and regulators with which you need to deal.
You have attached a number for the Commercial Crime Program of something like
$1 million a day. You do not put any number on integrated market enforcement
because, as we can appreciate, it could be almost any number depending on the
scheme in play. On the proceeds of crime, you have put a number of $500 billion
to $1 trillion. The only number I can see on the revenue side is about $25
million a year. I know there is more than that, but that is the only number you
First, are you satisfied with the mandate, role and authority that you have
now? Second, are you satisfied with the resources and the support — and I mean
human and otherwise — that you have now? Third, can you comment on the
coordination and cooperation you get relative to the organizations that you have
mentioned in these remarks? Fourth, what is your track record? The perception is
that we are a little sleepy at pursuing some of the crimes to which you referred
in your paper. Fifth, what are the trend lines? Are we falling further behind or
are we making progress? For the kind of dollars you have and the kind of smart
criminals out there, it seems to me that you have to work 24 hours a day with
more people, funding, support and coordination. That is a long question, and you
can pick the elements you want to respond to.
The Chairman: By the way, witnesses, we will make the transcript
available to you. If you feel your answers are not comprehensive enough, please
fill us in with written responses. We are trying to get a sense of this and not
overstep our time.
Mr. Bourduas: Thank you for the question. Notwithstanding IMETs or the
Commercial Crime Program, the organization is focused on what the intelligence
world is telling us. Through partnerships, we try to realign some of our
mandates and time. With IMETs, that is exactly what we have undertaken to do.
Suffice to say that the figures advanced clearly highlight the fact that
tackling criminal organizations is a monumental task. We are being very creative
when it comes to looking at ways and means to improve upon, for instance, the
legislative regime that we have currently to help us tackle these types of
criminality. For instance, with the IMETs, we have done extensive consultation
with our neighbours to the south, looking at a legislative regime that would
allow us greater flexibility to produce evidence that is required in order to
advance some of these cases. You are absolutely right that when it comes to
results, we have had results, but since the inception of the program for the
Toronto IMET — and I am talking since December of 2003 — we had four Criminal
Code of Canada investigations, including accounting fraud, stock market
manipulation, et cetera. All these matters are still before the court, since
December of 2003. We realize that we need to have improved legislative tools,
and we are working in that vein. We are looking at key components that the U.S.
have in order to bring in and Canadianize some of these strategies, and we are
doing full consultation in relation to some of these tools.
Mr. Constant: With respect to the IMET front and the resources, the
issue is very subjective. I always said if we had more resources, we could do
much more. However, at the end of the day, we recognize that the capacity of the
Government of Canada to invest is limited, because we are only one partner among
many that is seeking additional funding. Based on the capacity we have at our
disposal, it becomes critical for us to seek that partnership with the
securities regulator and to look at how we can improve and deal with this not
only from a criminal perspective but also collectively how we can protect
Canadian investors much better.
That is why we have created a model with the securities regulator and
investment dealers association. Even though it has only existed for three years,
the U.S. has adopted our model. Therefore, we are doing great things, because
they feel the integrated model we have put out is something that they can
replicate even from a U.S. perspective. It helps us to prioritize which case
should be undertaken by the police and which case should be undertaken by the
security regulators, because sometimes we have criminal organizations that are
deemed to be much more severe in the criminal activities and we would like to
have the police look at this. In other cases, we are looking at people that are
not filing proper documentation as required on the regulatory side, so maybe it
is for the regulatory side to address that kind of activity. That is why we are
very much integrated with them. We feel that for the money that is out there to
invest in this that this is the best model with which to work with.
Senator Campbell: How far below established strength are you in the
force? How many members are you short right now?
Mr. Bourduas: Throughout the Royal Canadian Mounted Police?
Senator Campbell: The whole thing.
Mr. Bourduas: That is an interesting question.
Senator Campbell: Approximately.
Mr. Bourduas: It depends. Last week, for instance, I was in Alberta,
where there is a vacancy rate of 3.5 per cent to 4 per cent. There is a variety
nationwide, as you know. We are in the midst of a recruiting drive in an attempt
to ramp up our organization. Ultimately, we are striving to achieve a zero
vacancy rate over the next three to four years.
Senator Campbell: Have you had a zero vacancy rate since 1973?
Mr. Bourduas: No, sir.
Senator Campbell: This is the difficulty I see. You need the
resources. The forces always needed the resources, yet they are always chasing
after that mystical number and never get there.
With regard to legislation, has it been considered to bring the Racketeer
Influenced and Corrupt Organizations Act, RICO, in here like they have in the
States, where the money from the proceeds of crime goes directly to the police
departments or agencies that enforce it?
Mr. Bourduas: First, I would like to answer your comment in relation
to our zero vacancy rate. You have to bear in mind that the organization has
contracts with eight provinces and over 200 municipalities, and the complexity
of the process with regard to increase or decrease of resources makes it a
moving target for the organization. It is utopia to believe that we will ever
achieve a zero vacancy rate in this structure.
Senator Campbell: You are the one who said you wanted to get a zero
Mr. Bourduas: We are striving for that, but we are ramping up our
training facility in order to be able to reach this moving target. This is a
concern of ours, and we are trying to address it. This year, we are looking at
62 or 72 troops.
The other point with regard to legislation such as RICO, Mr. Constant and I
are wearing the scars of the implementation of the proceeds of crime legislation
when it was initially rolled out. We have looked at the American model, and we
had serious concerns. We have adopted a Canadian version that keeps a certain
distance from the seizure of proceeds and the seizure going back to the police
organization. We are more or less inclined to have an arm's length relationship.
Senator Campbell: With respect to your business plan, who else was
involved in that besides the Royal Canadian Mounted Police in planning the
business plan for IMET?
Mr. Bourduas: There were extensive consultations with key partners
when we crafted the memorandum to cabinet.
Senator Campbell: You just did a business plan. Am I correct?
Mr. Bourduas: Are you talking about reformulation of the mandate?
Senator Campbell: Yes.
Mr. Bourduas: Yes.
Senator Campbell: Who was involved in that besides the RCMP?
Mr. Bourduas: As I have indicated, the council of IMET was involved.
Therefore, assistant deputy minister representatives from the Department of
Justice Canada, Department of Finance Canada, Public Safety Canada and the RCMP
were consulted in relation to the reformulation. That was also done with key
Senator Campbell: Were security agencies involved?
Mr. Bourduas: That is correct.
Senator Campbell: Were other police forces involved?
Mr. Bourduas: The partners that are part of the IMETs.
Mr. Constant: We also have the Investment Dealers Association of
Canada from certain parts of the country. We have created sub-working groups in
order to ensure we get input from all partners that may have a voice in this. We
bring it before the executive council.
Senator Campbell: There are police forces that have commercial
components to their policing, for instance, in Vancouver, Calgary or Toronto, in
the major cities. Are they involved with IMET and with you?
Mr. Constant: At this point, we do not have a local police force with
the exception of the Sureté du Québec in Montreal.
Senator Campbell: Would this not be an opportunity to find
efficiencies within two outfits and to share resources? I know you cannot pull a
commercial crime guy off the corner gas station. Would this not be an
opportunity to get some skills going?
Mr. Constant: Yes. This is an initiative that we have been going
In fact, part of the strategy in the reformulation, which is being drafted as
we speak, talks about how we can solidify the current system we have in place.
Part of it is to bring some of the local provincial police forces as part of the
Senator Ringuette: I can understand the difficulties associated with
your mission and how hard it must be to recruit hackers and forensic
accountants, for instance, because it is part of the needed skills for your
task. What is your strategy to recruit that kind of expertise within your unit?
Mr. Bourduas: We have a number of strategies. Mr. Constant will
explain, but some of the challenges with which we are faced are to be out there
and be competitive in the current Treasury Board framework.
Senator Ringuette: You cannot have an open competition for a hacker.
Mr. Bourduas: Notwithstanding hackers, we have other areas of
expertise where we are all vying for these viable precious resources, and we are
in direct competition with the market.
Mr. Constant: Within the RCMP, we have managed to put a special
emphasis on trying to recruit people who came into the organization with those
skill sets initially. Even though that capacity was limited, we have tried to go
after that within the public sector in order to complement what we had on the
inside. This is a challenge we face every day, and it will not go away.
At the same time, this is a building process. When we talk about the
retention of expertise, even within our own unit right now, we are very much
aware that this is not something we must look for today but something we must
look for probably within the next 10 years. That pressure will continue for a
long period of time, because this is not a capacity that we can fill in one day
or one month.
Senator Ringuette: I understand. Maybe you have people within who have
certain abilities and who can receive training.
You have talked about the cooperation you have with the different market
agencies. However, you have stated at least five or six times in your
presentation that you are dealing with a global problem. What is your global
source of information?
I will provide an example. When we talk with the RCMP unit dealing with child
pornography, they have an international network of information that goes back
and forth and helps track these people down. Do you have the same kind of
organization that can supply you with information? Canadians invest in
international stock markets.
Mr. Bourduas: Absolutely. I call it the electronic herd. They are
moving stocks from one country to another at the push of a button. Therefore, we
need connections throughout the world.
As I have indicated, the IMETs are working hand-in-glove with our neighbours
to the south, who have a large financial market. We have looked at some of their
best practices with respect to the law enforcement, regulatory and legal
aspects, the kinds of tools and successes they have, and trends and analysis are
There was much discussion about whether the IMET should connect to the RCMP
or we should create a separate agency. When one is buying the RCMP, one is
buying 26,000 strong, who are spread domestically, and also 34 liaison officers
around the world. These folks are also assisting in our investigations.
You must bear in mind that some of these investigations are leading on the
world stage, and we use our internal assets, including our liaison officers, who
are scattered all over the world, to assist in these types of investigations.
Senator Ringuette: For clarification, you have access to current RCMP
officers who are dispatched around the world, and you use their intelligence.
That is good, but is there no international organization per se that is able to
help you and that is focused on looking at the kind of criminal activity that
you have in your mandate?
Mr. Bourduas: Like I have indicated, and you have noticed, we work
hand-in-glove with the securities commissions, Investment Dealers Association of
Canada and the like. These people also have networks. Of course, they apply
their trade on the global stage.
Senator Ringuette: Is that network sufficient?
Mr. Bourduas: These people are managing investors' money. Therefore,
they have a fairly intricate network of advisers who can provide information in
relation to trends analysis. We tap into these resources.
As indicated before, we have joint intelligence units that are operating
locally. These people are sitting around the table. Therefore, we try to bring
together all of this information to paint a clear picture as to the type of
challenges we have on the global forum.
Senator Tkachuk: Would one national security regulator be helpful?
Mr. Bourduas: Do you mean one regulator compared to 13 regulators? In
our opinion, to ask a question is to answer the question. A single client with a
single set of needs would be advantageous from our perspective.
Mr. Constant: At the same time, we are probably one of the only
countries left that has a regulatory sector that is fragmented to the degree
that it is. If we are looking to avoid some duplication, the most important case
here is the consistency that we need from one province to the next. We want to
ensure that we have that consistency. One system would be easier. We hear it
often, even from our neighbours to the south. They ask where they should start
looking, whether they should start on the east side. Therefore, it becomes a bit
of an issue, not only for us but for them as well.
Senator Goldstein: In another life, I was involved in a field of law
in which there was a fair chunk of commercial fraud. My experience there,
whenever we referred something to the RCMP — and I am going back five years and
more — I was told constantly that the RCMP does not have sufficient resources to
deal with commercial crimes, which the RCMP considers to be relatively minor.
Would that be a true statement today?
Mr. Constant: I would be inclined to say yes. I go back to the
statement I made earlier: If we had more, we could do more. We are cognizant
that we need to prioritize. Knowing that the taxpayers are paying our salary and
paying for our operation, we recognize that the emphasis must be put on the
priority that we feel could constitute the most danger for Canada and for
When we talk about white-collar crime, we are sensitive to the fact that we
want to ensure that we prioritize our intelligence; we make sure we attack the
criminal organizations looking to do the most damage to Canadians. We prioritize
in that context in order to ensure that our resources are leveraged to the best
of their capacity.
Senator Goldstein: A relatively major crime would be the Bre-X
Minerals Limited scandal. It has been a long time since Bre-X broke, and we have
not really seen much progress in terms of prosecutions. Is there a disconnect
between the RCMP and the judicial system for crimes of that nature?
Mr. Constant: For crimes of that nature, when we talk about capital
markets in this country, we are always being compared to our neighbours to the
south. Their legislative framework is quite different from ours. If we want to
hold that comparison, it is important to ensure we bring the legislative
framework that supports that kind of enforcement. We do not have the grand jury
style here in Canada. We do not have the partial immunity for suspects. We do
not have the compelling evidence from witnesses. However, we are being held to
the same standard. Therefore, it makes it difficult because the process we have
to deal with in Canada, the current structure, is inclusive of these kinds of
tools that they have in the United States.
Senator Goldstein: Have you made any suggestions as a body to the
Solicitor General, who is responsible for you, about changes in the law that
would facilitate prosecutions?
Mr. Constant: That is a good point that you are raising. In the
reformulation plan that we are working on, which will form the basis of Nick Le
Pan's report also coming out in October, we will talk about that specifically.
The legislative enhancement is one of the four key components of the
reformulation plan that is included in the report. We will address what we feel
are key issues that are lacking from a legislative perspective. We know that we
probably will not get everything that we should have, but, at the same time, we
want to ensure that we have at least the basics in place that can assist us in
dealing with these types of crimes.
When we talk about capital markets in this country, when the police go in and
do an investigation on a publicly traded company, we get into a company where
the management of a company has been removed in many cases. They want the police
to come in. We come in and try to gather the evidence that is necessary in order
to pursue the culprit. However, the company also has a mandate to protect
shareholders' values. It does not take very long from the moment we walk in for
the doors to start closing. If we do not have the tools, such as compelling
witness evidence or immunity for some of these people, it is difficult to bring
them back to the table after the fact to get the evidence that is required that
will pass the threshold of the justice system in Canada. That is why we feel
these tools are critical for us to go forward in that environment.
Senator Massicotte: Thank you for appearing before us today. This is a
very important issue for our country and for the integrity of all business
people and citizens here.
I share my colleagues' cynicism or major concern. We have a serious concern
that our resources and our efforts will not be able to handle the problem. This
morning's newspapers contained an article that talked about money laundering of
sums ranging from $12 to $20 billion a year by an international organization.
These are huge amounts of money, and money laundering techniques are so advanced
today that the money becomes quite credible, it becomes the money of business
people. It may even be too late to control this problem.
In Canada, it takes a long time before we hear any mention of legal action. A
number of Canadians have cases against them in the United States for crimes
committed in Canada and the U.S. and we have no assurance that the situation is
being handled properly. That may be due to a limited number of resources; you
gave us a good defence of your business plan in this regard. However, I am
afraid that the problem may be larger than we think and that we are losing
control over it.
Mr. Bourduas: You mentioned money laundering. There will be conclusive
results in this area, because we are talking about attacking organized crime and
The problem is that over time, we have tried to amend the act, but we have
never gone far enough, and we have never been given enough power.
For example, when we talk about fraud or human trafficking, did you know that
the money laundering legislation does not allow us to seize assets acquired as a
result of human trafficking? We have to change our laws so that we can target
We need proof beyond a reasonable doubt in the case of money laundering. We
are asking that once the offence has been proven, we be able to use a balance of
probabilities test. That is different. For example, if we look at the federal
tax return of someone who reported an income of $10,000 a year and who is living
in a castle, the balance of probabilities criterion must come into play. That is
the type of instrument we are referring to. There is no doubt that we are always
compared to our neighbours to the south and our results are rather mediocre.
Senator Massicotte: So you think the solution would be to change our
laws. Why is this not being done? Is there a lack of political will?
Mr. Bourduas: Discussions are underway, but some people see things
differently. There are discussions about amending certain aspects of the law
that are always interesting and lively, because we have our own view of things,
and some of our partners have quite a different one.
Senator Massicotte: So it is up to us to sound the alarm.
Mr. Bourduas: Exactly. I gave you the very up-to-date example of human
trafficking. At the moment, the Canadian legislation does not allow us to seize
goods acquired through human trafficking.
Senator Massicotte: When are you to make recommendations to your
superiors to get the legislative amendment process underway?
Mr. Bourduas: We are in constant dialogue with our partners, including
those in the Public Prosecutor's Office. We examine everything in light of the
intelligence we receive and we take into account the obstacles we have to
Senator Angus: Gentlemen, thank you for being here. I believe you
visited us earlier in our study.
Mr. Bourduas: That is correct.
Senator Angus: Was that in our study of the money laundering bill?
Mr. Bourduas: We have looked at this, yes, indeed.
Senator Angus: It was a witness on those hearings or another witness
who told us that the Financial Transactions and Reports Analysis Centre of
Canada, FINTRAC, gets the information from the reporting people, and they had
referred 100 possible complaints to IMETs in Toronto, I believe. Only one had
resulted in a prosecution. Does that ring a bell? I am not trying to trick you.
I thought it was one of the reasons we were getting you gentlemen back here, to
help us and to help you get more resources.
Mr. Bourduas: There are different components. Of course, we can always
use more resources, as we have indicated. We also have to look at the
legislative framework. In relation to FINTRAC, of interest to this particular
body is that Bill C-25 has been adopted, whereas FINTRAC will now be in a
position to provide us with beefed-up information in order to have a better
sense of the types of individuals we are dealing with in relation to some
disclosure. That was raised, as a matter of fact, in my last appearance before
this committee. We are pleased to see that we will get additional information
and more specific information about individuals who are transacting with the
Once again, it is a step in the right direction. I highlighted in my previous
appearance before this committee the fact that we did not have sufficient
traction around this information to provide us with enough to be able to conduct
and pursue investigations. Now, we hope with these amendments, we will be able
to put more meat around the bone, so we will be able to advance some of our
investigations more quickly. It is a step in the right direction. The jury is
still out. We will wait and see, and I will be more than happy to report in a
Senator Angus: On the 100 files to which I am referring, do you know
the fate of those files? Does it ring a bell with you? The chairman and I used
that statistic in a number of circumstances to highlight our enforcement
problems in Canada in terms of commercial fraud, generally, but also money
laundering and terrorism.
The Chairman: Rather than speculating could you give us the number of
complaints in the last two years that IMETs received? Could you give us the
number from FINTRAC, specifically, and what happened to those complaints? In
other words, we have heard other evidence as well in the United States about
this, and we want to see how we are doing from a mathematical standpoint.
Mr. Constant: I believe, Mr. Chairman, you are referring to the
proceeds of crime. The FINTRAC reports to Proceeds of Crime Branch, not to
IMETs. We have these statistics. In fact, we produced these statistics at the
last appearance in February of this year.
Senator Angus: It was actual cases, but only one was resolved, and
that was our concern for you.
Mr. Constant: I will produce the statistics.
Senator Angus: In your opening remarks, you talked about the
effectiveness of IMETs. Do you have any suggestions as to measures that could be
used to assess the effectiveness of IMETs, criteria that might be useful in this
Mr. Constant: Mr. Chairman, that is an excellent question. We are
putting the final touches on a system we are putting in place that will give an
assessment of the Canadian sentiment about capital markets in this country. We
have created a system through which a series of criteria gives us an opportunity
to define whether the confidence of an investor is greater at any moment of the
year. We are putting the system together, and we have brought in people.
I know that the question was raised before about the relationship with other
countries. We have a very good relationship with the SEC, an excellent
relationship on the capital market with the FBI, but we also have an excellent
relationship with the Serious Fraud Office from Great Britain. To validate the
system that we are putting in place to measure the confidence of Canadian
investors in the capital market in this country, we are bringing in professors
from around the world, one from the Serious Fraud Office. He was a key person
who helped to set up the Serious Fraud Office in Great Britain, and he is
working to validate our system. We will test the system in the next six months.
We have made some dry runs.
The Chairman: This committee attended the Manhattan district
attorney's office and were privileged to meet their white-collar crime team. We
were delighted that Mr. Morgenthau himself appeared. We had excellent
discussions in his offices in New York City, and we were mesmerized. We asked
him what his budget was just for the Manhattan district attorney's office for
white-collar crime. We were told, it was $86 million a year. If we compare your
budget, which is $120 million over five years — $24 million a year — to just one
office in the United States, an important office but not the only one in New
York City, or Manhattan. However, the budget for the Manhattan district
attorney's office for this alone is U.S. $86 million. That is close to CAN $95
million. The amount for just one office in the U.S. is almost four times the
annual amount for all of Canada.
You have obviously spent some time looking at the American system to see
which model is better. I assume there are improvements in the model on which you
have been working. We do not quarrel with that. Senator Eyton put his finger on
this. He said to look at the scope of the crime. Here we are with just a smidgen
of dollars that we are throwing at this, and we are trying to protect Canadian
markets and Canadian integrity in our marketplace. If you gentlemen cannot
comment on that, I appreciate that. It might be a policy matter. We might talk
to the minister responsible.
Do you have a comment about that?
Mr. Constant: I can say that the reformulation plan that we are
producing at this point may play a role in this. The Government of Canada has
already earmarked some of the money for next year in next year's budget to
enhance the IMETs program. I am always careful not to draw comparisons with the
U.S., but at the same time, I recognize that our capacity is limited. I would
call our model lean. We want to ensure that we prioritize and that we do not
have IMET people doing work that could be done by other agencies. Our capacity
is limited, but we are doing well with the current capacity.
Senator Moore: With regard to your mandate relating to identity fraud,
can you tell us about those types of cases, whether they are on the increase or
decrease and the dollar amounts?
Mr. Constant: White-collar crime, identity theft, telemarketing, et
cetera, are rampant not only in Canada but also around the world. I am part of a
six-country committee. In countries such as the Netherlands and the United
States, we hear many complaints about culprits who originate in Nigeria. Many
here today are likely familiar with the Nigerian fraud scheme that has been
ongoing for years; it is huge. We have produced some data on identity theft to
give you an idea of the magnitude of the problem.
Last fall, I participated in a forum that included Americans and Canadians.
We talked about the problems associated with identity theft and counterfeit
cheques, which are also huge issues around the world. The Minister of Public
Safety asked me about the magnitude of the problem of identity theft, which
contributes to many other areas, such as fraudulent use of bank cards and credit
cards. It is one component that leads to people being deprived of their money.
From the data we produced, we find that the problem is very conservative. The
perception is that it is a victimless crime, because the banks have chosen to
pay back the victims whose money is stolen in this way. It is not in the
interest of the banking institutions to go public and say that their credit
cards are deemed to be vulnerable. Often these activities are not reported. I am
the perfect example of this.
I was victimized twice in 14 months. I did not report it to the police
because the bank called me 20 minutes after I was victimized and said, "Do not
worry; we will take care of it. We will refund your money. We know that they
stole $3,200 from your account but it is not important; we will pay you back."
However, there is a victim. If the banking institutions can afford to pay
back my money, it is because they charge 18 per cent interest rate on credit
cards and charge bank fees. There is more to it than what we see on the surface.
Senator Moore: I did not hear the conservative figure. You told us
about your example. Can you give me some dollar figures? Are mortgages being
used to facilitate these kinds of crimes or is it done with credit cards?
Mr. Bourduas: The Interac Association reported a 59 per cent increase
in fraud related activity over the last two years. In 2005, the losses reached
$70 million and affected 78,000 debit-card holders. Those figures are from that
one association only.
The Chairman: Senator Moore has been urging the committee to study
this issue separately. We will take this up in the fall.
Senator Angus: We learned this morning of a new bill in Parliament on
The Chairman: We know that.
Senator Goldstein: Mr. Bourduas, you spoke twice of changing the
burden of proof in criminal matters from beyond a reasonable doubt to the
balance of probabilities, which is a civil test. You indicated that it would be
helpful to you in terms of securing convictions, where appropriate. In another
breath, you spoke of the United States as being a model in terms of being able
to prosecute effectively, but the United States has not changed the burden,
which is still, beyond a reasonable doubt. To what extent do you believe
changing the burden — if we could under the Charter, which I doubt — from beyond
a reasonable doubt to a balance of probabilities, would be helpful to you?
You indicated that there was an inability on your part to seize the proceeds
of crime of human trafficking. You indicated twice that there is a law that says
you cannot do that. You know this more than I do, but I am not aware of any such
law. Can you guide me?
Mr. Bourduas: In the United States, 98 per cent of the seizures are
done on the civil side. That might address this point. With regard to the
balance of probabilities, I agree with you, there are some constitutional
challenges. The burden to prove beyond a reasonable doubt and to be able to
track financial transactions is monumental. That is why we are behind the eight
ball with proceeds of crime. We are looking at ways to address the issue.
Senator Goldstein: Which law precludes your seizing proceeds of crime
of human trafficking? I do not understand that.
Mr. Bourduas: You are asking about human beings and fraud. This is not
included in the list of offences related to proceeds of crime.
Mr. Constant: Section 462 of the Criminal Code stipulates from which
predicated offences proceeds of crime can be seized. For many years, the
position of the RCMP has been that we would like to see all offences where
profits are deemed to be of dual procedure, but at this time we have to deal
with only the ones that are predicated and listed under section 462.
The Chairman: If you could send the committee a memoir, it would be
Senator Campbell: On the one hand, when I asked about the Racketeer
Influenced and Corrupt Organizations Act, RICO, you said that you did not like
it and that it was not Canadian. On the other hand, you said that 98 per cent of
the cases are handled under civil litigation in the United States. Is there
anything stopping us from doing the litigation here?
Mr. Bourduas: Four provinces are looking at civil forfeiture on the
proceeds side. Ontario is being contemplated as one of the best models that we
have nationwide. In my opinion, that highlights the fact that we might have
problems on the Criminal Code side and why some of the provinces are taking the
bull by the horns.
Senator Campbell: We do not care as long as you have a way of doing
it, whether it is under the Criminal Code or under provincial legislation; it
does not matter. If that is true, what can this committee do to help the
provinces to encourage them to do this?
Mr. Bourduas: Obviously, the provinces have received the message
already and are looking at instituting these kinds of civil forfeiture regimes.
As I indicated, Ontario has been quite successful. It is of interest that there
has not been any Charter challenge thus far, and I do not believe there will be
in the near future.
Senator Campbell: How many cases of human trafficking have we had?
Mr. Bourduas: In Canada, I am aware of the most recent one but,
overall, I do not have the statistics on human trafficking.
Senator Campbell: Can you give me a ballpark figure, 10?
The Chairman: As opposed to speculating, it would be useful if you
could check your records and send it to us.
Senator Campbell: We kept going back to human trafficking, and I
thought there might be more of this than I was aware of, so I would like to know
The Chairman: Some of the statistics that we have seen from other
jurisdictions show that there are 18,000 people being trafficked through Canada.
The last word we heard was that there was one very unsatisfactory prosecution,
but you can confirm that. That is another big gap in our legislation.
Senator Ringuette: You mentioned earlier, Mr. Constant, that you will
be able to measure the confidence of investors in Canada. How will you do that,
through an Internet site?
Mr. Constant: No, it is a system that has been set up for which we
have a criteria. This could be done through a survey to specific individuals. It
would definitely involve partner agencies. The survey asks Canadians to tell us,
based on the investing they have done in the last 12 months, if they feel there
is better security now with the law, prosecution and enforcement resulting from
our attempts to tackle some criminal activities that may be associated with
people dealing in a market.
There are a number of criteria we have identified, which I could list for
you. That is another issue I can make available to the committee, which would
give you a little of the criteria to make it easier for you to get an
appreciation of what we are trying to achieve.
Senator Ringuette: How much will this cost? This will be a continual
process, I assume.
Mr. Constant: I believe the cost is not horrendous. From the moment it
is established, we will do it internally. We are set up for this kind of
process. We run our own surveys to the Canadian public every year through
various programs. It is not only the capital market. When we want to get the
degree of satisfaction of Canadians toward policing in this country, we run the
same survey. We may send it to 5,000 or 10,000 people in this country, and we
get some response back.
This would be targeted toward Canadians. There will be a variety of people
participating in the survey. This is based on key criteria we have identified
already through the system. It is not an expensive proposition.
Senator Ringuette: If an industry or group is interested in measuring
the degree of confidence of investors in Canada, it should not be the RCMP; it
should be the securities commissions or the Investment Dealers Association of
Canada or a group such as that.
You seemed to indicate it is to measure the confidence in the policing of the
Mr. Constant: I go back to the point I made earlier: The criminal
component is only one component. When we established that system to measure the
confidence of Canadian investors in this country, we brought the Investment
Dealers Association of Canada and other partners to the table to get their input
in formulating that system. They are part of the process too. It is not about us
measuring the confidence only from a criminal process; it is from a regulatory
side, from the Investment Dealers Association of Canada.
Senator Ringuette: From your answers, I see this as something that
should be done by the securities commissions.
The Chairman: Which one of the 13 securities commissions?
Senator Ringuette: It could be the Investment Dealers Association of
Canada. It is not in your mandate to determine if Canadians are confident in the
stock market. We are talking about the availability of resources — money and
human. Such areas should not be a priority and others should. That is my
Mr. Constant: I would not want to suggest that the securities
commissions do not have their own measuring tool. I would not even want to
guess, because I am sure they do.
Senator Ringuette: I will not ask where you get the list of investors
you are polling. That is another issue.
The Chairman: Are you able to answer that briefly?
Mr. Constant: We have not yet surveyed anyone, Mr. Chairman. That is
why I said the system is at the development stage.
Senator Eyton: Are you keeping up? I would like to zero in a little.
Are you sophisticated? Are you capable of monitoring new and developing
technologies and new financial derivatives?
For example, financial derivatives are an immense market involving billions
of dollars daily. It is possible, party to party, to rig some of the trades and
thereby affect significant transfers of money internationally. It is a world
market, very accessible, and significant parties with significant assets can
join the fun.
In the U.S., I saw a demonstration where someone with a credit card opened a
web-based wallet, took a photograph of himself and established a PIN number
private to him and protected himself in less than a minute. Then he went to a
merchant in Tokyo and was able to transfer funds from his web-based wallet that
he deposited in the account. The merchant in Tokyo was able to access it and
looked at the picture of the individual and confirmed the PIN number within
That is not comprehensive, but there is much happening. How sophisticated are
you and what are you doing about it?
Mr. Bourduas: This money is not fed into the computer. The most
important stage of money laundering is the placement stage. What do you do with
hockey bags filled with money? That is the reason we are promoting a know-
your-client regime with every financial institution, insurance company and
casino, and we would like to venture into the legal profession as well.
Suffice to say that e-currency is an agenda item that the RCMP has taken the
lead in on the world stage. As a matter of fact, next week we will have a
meeting in Washington, D.C. with the Five Eyes to discuss e-currency and stored-
value cards. These are the new trends we are seeing worldwide, and we are
discussing them with our partners in order to develop a legislative regime, not
only for our country but worldwide. You are absolutely right; this is a weak
link that needs to be addressed. Placement is the area where we must focus or
Senator Eyton: I am sure you know you cannot rely on cash because cash
is disappearing. I can see a time 20 years from now where people will not
typically have a wallet with cash in it.
Mr. Bourduas: Someone buying drugs on the street corner will need that
$20. That is the point that needs to be emphasized. Cash is the weak link when
it comes to drug trafficking or criminal enterprise. Cash is the norm.
Senator Biron: You spoke about the organization Nigeria Proud. Over
the years, I have received a number of letters from Nigeria, and this is really
quite a scam. Do a significant number of people fall for this scam? It is really
Is Nigeria cooperating to help eliminate this fraud and arrest the people
behind it? Moreover, are you trying to inform people about the scams so that
they do not get caught?
Mr. Constant: We are getting excellent cooperation from Nigeria at the
moment. As I said earlier, I am involved in a committee made up of
representatives from seven or eight countries including Spain, Great Britain,
the United States, Nigeria and the Netherlands.
On the issue of the scam and the Nigerian letters, we know that this problem
is not unique to Canada, but rather exists around the world. Nigeria was
involved in this letter scam. The scam also included counterfeiting cheques that
were given to companies falsely claiming to represent a very well-established
company in Canada or the United States.
They were fake cheques, and many people were the victims of the scam. Once
the cheque was cashed and the bank noticed that it was a fake cheque, if the
person who had cashed the cheque had spent some of the money, he or she became
responsible for the entire amount.
We therefore asked the seven or eight countries in the group to assess the
international threat so that we could establish the priorities for getting to
the root of the problem. We should not deceive ourselves. Although these
individuals are labelled as being fraudsters from Nigeria, it would be naïve to
think that they are located in that country. They can be found throughout the
world. We think that a threat assessment will enable us to locate the threat. We
are in this group with seven or eight countries; we can combine our forces to
attack this problem.
The Chairman: I thank the witnesses. We are at the end of our hearing.
I thank all the senators. We are very interested in this subject matter. This
committee is an advocate of expanding resources and helping you and your
colleagues to do a more effective job. We do not believe that you are adequately
financed to do the job based on our own evidence that there are huge gaps. If
there are smart criminals out there, they just have to listen to this evidence
to know what areas to go to where you will not have enough resources to keep a
surveillance of them.
It is important to continue our assessment of what you are doing to try to
assist you. We will continue to do so and certainly continue to be an advocate
to officials about increasing your resources.