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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, Financial Crime.

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 Enforcement Branch.

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 Safety Canada.

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 Laundering, NICML.


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 money-laundering activities.

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 purposes.

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 complement.

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 area.

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 fruition.

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 other issues.

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 relate.

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 vacancy rate.

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 partners.

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 forward with.

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 team.

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 being shared.

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 Canadians here.

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 money laundering.

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 these criminals.

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 overcome.


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 financial institutions.

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 year's time.

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 regard?

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 identity theft.

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 appreciated.

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 figures.

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 security industry.

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 comment.

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 minutes.

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 attention.

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 rather ridiculous.

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.

The committee adjourned.