Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 10 - Evidence - February 8, 2012
OTTAWA, Wednesday, February 8, 2012
The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:15 p.m. for the election of the chair; and for the review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (S.C. 2000, c. 17), pursuant to section 72 of the said Act.
[English]
Adam Thompson, Clerk of the Committee: I inform honourable senators of a vacancy in the position of chair. As clerk of your committee, it is my duty to preside over the election of the new chair. I am prepared to receive a motion to that effect. Are there any nominations?
Senator Tkachuk: I nominate Senator Irving Gerstein.
Mr. Thompson: Are there any other nominations? Seeing none, I will put the question.
[Translation]
It is moved by the Honourable Senator Tkachuk that the Honourable Senator Gerstein be chair of this committee.
[English]
Is it your pleasure, honourable senators, to adopt the motion?
Hon. Senators: Agreed.
Mr. Thompson: I declare the motion carried and invite Senator Gerstein to take the chair.
Senator Irving Gerstein (Chair) in the chair.
The Chair: Thank you, members of the committee. I am honoured with what you have bestowed upon me. Before proceeding to invite the witnesses to begin their presentations, I would like to put a motion to the committee regarding its procedures and operations.
Honourable senators, I move that at all meetings of the committee only the presiding officer shall be seated at the head of the table, accompanied by the clerk of the committee and analysts from the Library of Parliament.
Senator Tkachuk: I second the motion.
Senator Ringuette: Mr. Chair, why would you have a motion to do that? The history of this committee for quite a while has been such that both the chair and the deputy chair have been seated there. Not more than one minute ago you were elected chair and already you want to negate the historical practice of this committee. By the way, this is the longest standing committee of the Senate.
The Chair: I thank you for that question. I realize that it is a change and that there has been some history. There is also history in the Senate of the majority of committees by far that do not have the deputy chair seated here. Frankly, as chair of the committee, this is how I would prefer it to be.
Senator Tkachuk: I was the deputy chair of this committee for seven or eight years and did not sit at the head of the table. That was only done when both members concurred with the practice. It was not done when Senator Kirby was chair, so the history of the chair is not as you say. Senator Angus and Senator Grafstein sat there, and I believe that for a time Senator Kolber and Senator Angus sat together; and that is it. I do not know if that is true. It is not the history and both members have to concur.
Senator Ringuette: I honestly believe that we have a practice at this committee. Personally, as a member of this committee and senator in a Canadian institution, for one thing, in regard to the public, I think it is very appropriate to have the chair and the deputy chair, and not only for the historical part. Certainly, as a woman, I like to see that the general public sees that female senators are very much involved in the banking committee and that there is gender parity, and there is also an issue of language.
That is my comment. What is this? Are we moving into a kingdom area? I do not agree with the motion. Mr. Chair, if this is the way that you will be presiding over this committee, I guess that there will be many challenges ahead.
The Chair: Thank you for your comments.
Senator Moore: I find it unusual that the chair would make such a motion, and I am wondering, do you want to think about this?
The Chair: I have thought about it, Senator Moore.
Senator Moore: I do not want to get off on the —
The Chair: Either do I but, unfortunately, this is where we are.
Senator Moore: In your position, in your thinking. That is unfortunate.
The Chair: Thank you. Are there further comments or questions?
Senator Hervieux-Payette: I have a comment. In the case of Senator Meighen, this would not apply because he was bilingual, but I do not think Senator Gerstein can reply to the French media on whatever file we are working on. I come from Quebec, and we always had a partnership. I have been here for 17 years. This was not the place where small politics were being played. I certainly do not find that it appropriate that a gentleman from Toronto would exclude me, because I have worked in good cooperation with Senator Meighen. If there had been a big problem, I could understand your point of view, but I do not think Senator Meighen complained that he had a big problem with me. For communication, the French language is very important for me.
[Translation]
I believe it is important to have someone who can answer questions in the language of the people of Quebec. We are talking about one quarter of Canada's population. It took 150 years for a woman to become deputy chair. I am the only woman who has sat on this committee for 17 years. It is not as though I did not have the necessary qualifications.
Mr. Chair, I would ask you to consider this question. I believe that we on the Standing Senate Committee on Banking, Trade and Commerce must work objectively. The future of the country is at stake. Our topics are extremely important, whether it be innovation or anything else. I do not believe that partisanship should be a factor. I do not believe this should be a unilateral decision. It is a group decision. As I voted for you a few minutes ago, out of respect for your party's desire to have you as chair, I believe you can ask my colleagues whether they agree to allow me to continue sitting beside you for the very simple reason that that is how we have always worked, in collaboration.
[English]
Senator Stewart Olsen: I hear what everyone is saying, and I certainly respect everyone's views. I do not think there is any intention to change deputy chairs, but I also respect the chair of a committee having the ability to run the committee as he sees fit.
I think we should allow the chair — not "allow.'' He is the chair. I think we should just get on with business. We have witnesses here. I do not think there is any intention other than to run the committee in a professional way. I think we should proceed.
The Chair: Thank you. Are there further questions or comments?
I will call the question: All those in favour of the motion? Opposed? Thank you. The motion is carried.
Will the witnesses please join us at the table.
Colleagues, we are continuing our working on the five-year parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. This is the second such parliamentary review since the act was first adopted in the year 2000.
Last Thursday, we heard from officials from the Department of Finance, who gave us an overview of the act itself and the government-led consultations that are presently under way. This week, we will begin hearing from other departments and agencies involved in the administration of the act.
Tonight, we are pleased to welcome a panel of public safety portfolio agencies, specifically: Representing the Department of Public Safety, Michael MacDonald — not to be confused with Senator MacDonald to my right — Director General of National Security and Operations Directorate; from the RCMP, Superintendent Jeff Adam, Proceeds of Crime Director; from the Canada Border Services Agency, Maria Romeo, Director, Emerging Border Programs Division, Border Programs Directorate, Programs Branch; and from the Canadian Security Intelligence Service, Allison Merrick, Director General DDEX, which stands for Discovery and Data Exploitation.
I understand that other officials are in the gallery ready to assist those at the table if needed. Mr. MacDonald, the floor is yours.
Michael MacDonald, Director General, National Security Operations Directorate, Public Safety Canada: Thank you, Mr. Chair. Committee members, thank you for inviting us here today to speak on our efforts under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. My name is Michael MacDonald, as introduced, and I am the Director General of National Security Operations at Public Safety Canada. I am here with my colleague Yves Legeurrier, Director for Serious and Organized Crime at the Department of Public Safety, and he is in the gallery. As you can see, I am joined by Superintendant Jeff Adam, as introduced, Maria Romeo, and, of course, Ms. Merrick.
[Translation]
Public Safety Canada and the Public Safety Portfolio work hard to ensure that Canada's anti-money laundering and antiterrorist financing regime is as comprehensive and robust as possible. We believe that Canada's regime acts as a deterrent to crime and improves the safety of Canadians and the integrity of Canada's financial system.
The Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Financial Transactions Reports Analysis Centre of Canada (FINTRAC) are crucial parts of the Regime. Together, they ensure that quality information is provided to law enforcement and intelligence communities, which in turn assists the Public Safety Portfolio and its partners to combat organized crime and terrorism.
[English]
Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, public safety portfolio agencies may voluntarily provide information to FINTRAC to contribute to the detection and deterrence of money laundering and the financing of terrorist activity. The act also permits FINTRAC to disclose relevant information to CSIS, CBSA and law enforcement agencies where certain thresholds have been met.
Generally speaking, Public Safety Canada and the public safety portfolio divide their work and coordination between anti-terrorist financing efforts and anti money laundering efforts. This follows the unique and different characteristics, motives and purposes of each activity, but also aligns with international efforts in the Financial Action Task Force, the G8, the Organization of American States and, of course, FATF-style regional bodies.
Let me talk a bit about our key efforts in combating terrorist financing. In Canada we ratified the United Nations Convention on the Suppression of Terrorist Financing shortly after the events of September 11, 2001. This relates to the freezing of terrorist property and criminalizing the financing of terrorism. The Proceeds of Crime (Money Laundering) and Terrorist Financing Act assists in meeting Canada's obligations under this convention.
With respect to the identification of terrorist entities and the important act of freezing their assets, Canada observes three complementary listing regimes, with the overall goal of helping to prevent terrorists from using the global financial system to further terrorist activity. These are the regulations implementing the United Nations Resolutions on the Suppression of Terrorism; the United Nations Al-Qaida and Taliban Regulations, and the Criminal Code of Canada.
Public Safety Canada is responsible for coordinating the Criminal Code listing regime. Pursuant to section 83.05 of the Criminal Code, the Minister of Public Safety may recommend to the Governor-in-Council that groups or individuals that meet the legal threshold in the Criminal Code be added to the list of terrorist entities.
Listing an entity is a very strong public statement carrying significant consequences. Banks and financial institutions must freeze all the assets of a listed entity. Listing also prohibits all persons in Canada as well as every Canadian abroad from knowingly dealing with such assets. Every person in Canada and every Canadian outside of Canada are required to report to the RCMP and CSIS the existence of property in their possession or control that they know is owned or controlled by or on behalf of a terrorist group. Further, under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, reporting entities are required to submit terrorist property reports to FINTRAC.
[Translation]
The Anti-terrorism Act (ATA) of 2001 also enacted the Charities Registration (Security Information) Act (CRSIA) to advance Canada's commitment to participating in international efforts to deny support to those who engage in terrorist activities, to protect the integrity of the registration system for charities under the Income Tax Act and to maintain the confidence of Canadian taxpayers that charitable registration is available only to organizations that operate exclusively for charitable purposes.
Public Safety Canada and the Public Safety Portfolio work with our colleagues in the Canada Revenue Agency (CRA) to administer efforts to ensure abuse of the charities registration system does not occur. FINTRAC contributes to these efforts by disclosing to the CRA information that is relevant to this registration system where certain thresholds have been met.
[English]
With respect to organized crime, I should note that the department's role is primarily one of policy development and coordination. Our work is guided by the national agenda to combat organized crime, which was developed and approved by federal, provincial and territorial ministers responsible for justice as well as law enforcement partners responsible for justice through the FPT National Coordinating Committee on Organized Crime, which is a body composed of federal, provincial and territorial government officials, prosecutors and representatives from the law enforcement communities, work to develop unified strategies and policies to address key priorities in combating organized crime.
You may be interested to know that the national agenda has identified money laundering as a priority issue. Through money laundering, drug dealers, fraudsters, arms dealers and other criminals, organized or not, are able to operate and expand their criminal empires and otherwise benefit from the proceeds of criminal activity. By tracing the flow of money, law enforcement is able to identify, disrupt and dismantle organized criminal groups, and thereby reduce the most serious harms to our communities. It is a key tool for us.
Also key to our efforts is the recognition that we need a strong partnership with FINTRAC, law enforcement and, within the extent of law, a timely two-way exchange of information that furthers the investigational needs of law enforcement and allows feedback to FINTRAC to refine the value of its intelligence. CSIS shares information with regime partners to further its investigations and mandated activities when appropriate. CSIS is also the beneficiary of information that is shared, in particular from FINTRAC. Under the regime, FINTRAC can proactively provide financial intelligence to CSIS if it believes that such intelligence is relevant to CSIS's mandate. This intelligence can prove invaluable to CSIS's work.
[Translation]
Public Safety Canada and the Public Safety Portfolio recognize that combating terrorist financing and money laundering requires coordination and collaboration. We try to be leaders in this regard.
[English]
As such, we recognize the importance to regularly review our regime, to address emerging domestic risks and to maintain Canada's leadership in the fight against money laundering and terrorist financing. We fully support the review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and efforts to ensure that the regime: first, continues to maintain high national standards, particularly in respect of the balance between the need to preserve the personal privacy of our citizens and law enforcement needs; second, addresses law enforcement requirements by including more detailed information in FINTRAC disclosures; and, third, is in line with international standards and guidance.
[Translation]
Thank you for allowing us the opportunity to address you today.
[English]
My, colleagues and I are pleased to respond to your questions.
The Chair: Thank you for that presentation.
Do any of your colleagues wish to make an opening statement?
Mr. MacDonald: No, we are fine.
The Chair: In your position as Director General of National Security Operations, does everything funnel through you? Can you give the committee an overview? Does it start with FINTRAC? Does FINTRAC send the information to you and you put it out to the appropriate agencies?
Mr. MacDonald: FINTRAC sends its information, which my colleagues can describe better, directly to those organizations.
The role of the Public Safety Portfolio in the regime is to support the minister primarily in the listing of terrorist entities under section 83.05 of the Criminal Code. I manage that program for the minister so he or she can go to the Governor-in-Council to list entities and the coordination around that. As well, we work on developing the policy advice and any program advice that the minister can take forward to colleagues through legislation or administrative changes on the organized crime agendas.
The Chair: Thank you for that clarification.
Senator Ringuette: We have before us four different organizations. I would like to know the number of employees in each of your organizations that you have working on this regime. What is the cost? How many events of money laundering and terrorist financing have been identified in the last five years? You indicated that you play a major role in developing the list of terrorist entities. I would like to know whether that list is private or public. If it is public, can the members of this committee have a copy of that list?
Mr. MacDonald: I can answer most of your questions and will answer specifically your last question.
The Public Safety Portfolio is an unfunded partner in the listing regime. There are no employees and there is no cost.
Mr. MacDonald: There are employees that work on the regime, but we do not receive funding specifically for that. In my area of coordinating activities around terrorist financing and listing, it is part of the regular business that I do, yet I have dedicated two and a half to three resources specifically to work on those areas.
In terms of identifying events of terrorist financing or money laundering, my colleagues in the portfolio will be able to answer that better than I can. However, I will say that I had folks check before we arrived today to see how much money is currently frozen under Canada's three listing regimes. Slightly over $200,000 is frozen in banks that is not accessible under the terrorist listing regimes. We can talk more about that if you like. That is currently as of today. We have been listing terrorist entities since the events of 9/11, so for quite a few years now.
In terms of the Criminal Code list under section 83.05, that list is indeed public, and that list is on the Public Safety website. When the Governor-in-Council and the government make a decision to list an entity, it is communicated to our key allies around the world so that you can freeze terrorist assets in multiple jurisdictions at the same time through the coordination efforts. It is obviously published in a special edition of The Canada Gazette. It is posted on PCO's website, Foreign Affair's website and of course our website. We can provide you a list. There are currently 44 entities listed on the Criminal Code list.
In addition, the Criminal Code list is reviewed, by legislation, every two years. That is another process that follows the listing process through Governor-in-Council decision, is published in The Canada Gazette, special edition, press announcements are posted, websites are updated and so on. You have that continual assessment. Perhaps I will turn to CBSA for a response on the other three.
Maria Romeo, Director, Emerging Border Programs Division, Border Programs Directorate, Programs Branch, Canada Border Services Agency: With regard to the Canada Border Services Agency, over the past five years, since 2000, we have spent $82 million on the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
Senator Ringuette: Did get that right? Was it $82 million?
Ms. Romeo: Yes, that is correct. On an annual basis, it is about $8 million, and now it is at approximately $5 million. In that regard, we have a number of activities. That is since 2000. I am sorry. I gave you statistics for a 10-year period.
In this regard, we have a number of activities that are performed to support this particular act. We are responsible for the cross-border currency reporting, Part 2 of the act. We have Border Services officers who will collect voluntary reports for cross-border currency reporting. In that regard, we have collected approximately 30,000 reports over a five- year period, over the period, and we have approximately 10,000 monetary seizures over a five-year period. Of those, 700 seizures are of suspected proceeds of crime.
Senator Ringuette: Suspected?
Ms. Romeo: Suspected proceeds of crime. A total value over the five-year period of approximately $200 million has been seized. It is 10,000 seizures over five years; 700 seizures that are considered suspected proceeds of crime over five years; and $200 million over five years have been seized as under the act.
Senator Massicotte: How much of that was released?
Ms. Romeo: I will get back to you on that?
Senator Ringuette: From the 700 seizures that were suspected, are they still in process? Has what you call suspicion been resolved, and in what way?
Ms. Romeo: When I refer to suspected proceeds of crime, there are four levels of seizure under the act. Levels 1, 2, and 3 seizure activities are with regard to unreported activities. The CBSA is responsible for administering the act in terms of compliance as well as detecting noncompliance. For the first three levels, proceeds of crime, the money is seized and released upon payment of a penalty. The last level is the level that is based on certain —
Senator Ringuette: The money you are talking about is this threshold of $10,000 that probably has not been declared at the border?
Ms. Romeo: That is correct. It has not been declared at the border. The 700 seizures at level 4 are based on reasonable grounds to suspect that these are linked to proceeds of crime, terrorist financing activities. The other threshold in that regard is that they have been concealed in a certain manner. They have also not been reported at the border.
Senator Ringuette: We are at level 4.
Ms. Romeo: Correct.
Senator Ringuette: You have 700 suspected at your level 4?
Ms. Romeo: Correct.
Senator Ringuette: What do you do with that?
Ms. Romeo: The proceeds are —
Senator Ringuette: No, no. What do you do? Never mind the money aspect of it. I want to understand the process. Do you charge these people, the 700 suspects? What do you do?
Ms. Romeo: At the CBSA, we administer the civil monetary penalties aspect of the regime. With regard to the suspected prosecutions, we would turn to our colleagues at the RCMP for further prosecution under the Criminal Code.
Senator Ringuette: Then we go to the RCMP. You have identified an average of $8 million a year in costs. How many person years would you dedicate to this? I guess it is hard, because every officer —
Ms. Romeo: Is costed at a different amount.
The Chair: Superintendent Adam, would you like to follow up on that?
Superintendent Jeff Adam, Proceeds of Crime Director, Royal Canadian Mounted Police: I think so. Over five years, roughly 90 resources in the RCMP are paid for under the regime. That would be 45 for each of money laundering and terrorist financing activities. There are additional resources that work on those activities that are not counted towards the regime. For example, the money laundering units are tasked to investigate FINTRAC disclosures and then turn them over to an IPOC, integrated proceeds of crime, unit for criminal prosecutions. In effect, you are getting a force multiplier there for the money laundering units who work on an investigation and turn it over to IPOC for finalizing. There is more than the 43 on the money laundering resources, for example.
In regard to events, I can tell you that, over the five years, we have had 1,000, plus or minus, money laundering files opened as a result of FINTRAC disclosures. Those are both information that we have requested and information that has been sent to us when it meets the threshold for FINTRAC to reasonably suspect money laundering and/or terrorist financing, for example.
Not to put too fine a point on it, every criminal who is engaged in criminal activity for profit, in order to maintain his or her illegally acquired wealth, will engage in money laundering of some kind. There is no number of events that we are aware of in that fashion for a total number of money laundering events. However, I can tell you about the number of FINTRAC files we open as a result.
Senator Massicotte: Obviously, this bill, along with the original bill, is to counteract criminal activity and terrorism and so on. Let me talk a little bit about organized crime, because I think it is a much bigger number than terrorism. Terrorism is real, but it is more finite.
Seven or eight years ago, the RCMP told us about the importance of countering criminal activity. Obviously, if integrity and confidence are eroded in the business system, the whole economy will be at stake. Without naming certain countries, we know of that being the case. It affects the growth and well-being of citizens and their security and safety. I was alarmed during that session with the RCMP to learn how serious criminal activity is in Canada.
I will exaggerate to get your reaction. I have a sense, seven years later, that it is still significant. I suspect that you are nudging only a little at the level of criminal activity in our country. I am a business person. I look at the number of retail stores that still exist although they never have any customers. I have to wonder where the money comes from. I would say to you that we are missing it. Seven years ago, the RCMP had this session with certain parliamentarians so they could say: We need more money. We need to be more effective. Yet, I understand your budget has not gone up that much and that most criminals are caught only when they go to the United States and serve jail there, not in Canada.
What is the problem? The problem is real. We are rubbing shoulders only and not getting to the issue. Could you comment on that point of view?
Mr. Adam: There are multiple facets in that discourse. Yes, organized crime is a significant problem in Canada. There is no question about it. We do what we can with the resources we allocated to us by prioritizing our files and tackling the greatest risks based on intelligence and threat. As I said, criminal organizations are definitely in business for profit. There is always a money laundering issue and, therefore, illegally acquired wealth by criminal organizations left unchecked. I cannot comment on empty stores, but we know it is a problem.
Senator Massicotte: Reassure me, if you do not mind, because I think we are not getting there. I do not have a scientific base, but I have the sense that we are only nudging at the problem. We have to allocate many more resources, expertise and more competent people. Organized crime has the money to attract the best; just look at all the e- commerce. We all receive many emails and will continue to receive them. What is the solution? How do we get there? What would you need to be able to say that we are getting to the problem?
Mr. Adam: The tools we are given are the ones that we have to use. That question is outside my domain. We are tackling the highest level threats that we can tackle, based on intelligence in Canada insofar as criminal organizations go. We do what we can with what we have.
Senator Massicotte: I have no doubt of that, but I am not convinced that it is enough.
The existing law has not been made applicable to the legal profession for constitutional reasons, and so on. Is that a big issue for you? I have read in the newspaper of Quebec notaries or lawyers serving as a funnel of information and money for certain criminal activity. I am sure it is a rare exception. Is the non-application of that statute important to you? Is it a big deal?
Mr. Adam: That argument is still before the courts, and I would have to defer to see what the Supreme Court decides.
Senator Massicotte: I am not talking about the legal question of whether they have reason to do so. If you have that tool, would it be important to you?
Mr. Adam: If that tool were in our arsenal, we would use it, based on the priorities that we establish.
Senator Massicotte: What was the RCMP budget in respect of criminal activity five years ago and what is it today? What are the numbers?
Mr. Adam: I am not sure.
Senator Massicotte: What is the total budget allocation? How many millions do you have allocated for your special team on criminal activity? How many dollars are allocated to that? What was it five or seven years ago and what is it today? Has it increased much beyond inflation?
Mr. Adam: Does your question specifically relate to money laundering?
Senator Massicotte: It relates to all criminal activity, including money laundering.
Mr. Adam: All criminal activity?
Senator Massicotte: Money laundering only.
Senator Hervieux-Payette: He is an accountant.
Mr. Adam: It is $5 million per year for the resources from money laundering.
Senator Massicotte: Is that all?
The Chair: I would like to return to the very good question that Senator Ringuette asked about the resources committed under the regime and the level of activity. I failed to turn to Ms. Merrick, from CSIS. Perhaps we could have your answer before proceeding to the next questioner.
Allison Merrick, Director General, DDEX (Discovery and Data Exploitation), Canadian Security Intelligence Service: Certainly. The service usually does not disclose its overall resources allocation, but I can assure the committee that the resources afforded to the service are adequate to contribute effectively to the regime. My branch has the financial analysis unit, which is a specialized area that assists our operational branches in determining how we use financial intelligence as we receive it from our regime partners.
Senator L. Smith: What were your objectives in this five-year review versus the last five years, besides ensuring that you have high standards and the law enforcement requirements? What were you hoping to achieve in this review period? What trends can you share with us? What have you learned in your analyses of the information gathered through all of your activities that would be relevant to giving us an understanding of money laundering and terrorist financing? Where is this going? The Canadian public would probably love to be informed of the information that you can share. Is that a logical question?
Mr. MacDonald: Absolutely. Perhaps I will start on a strategic, higher level and then turn to the portfolio.
This relates to the senator's previous question as well and the story Senator Massicotte referenced. I will answer both at the same time. Certainly from the perspective of the Public Safety Portfolio and the safety of Canadians, we look seriously anywhere that there is a challenge to any regime that enhances safety, integrity and our borders, and brings in confidence and aids the economy. We, as a portfolio, approach any review, whether it is the ten-year year review of the regime, which just happened and will go to Treasury Board; or the consultation paper, which you have for your thoughts; or the legislative five-year review, by stepping back and asking: What are the trends? Internationally, what are our colleagues seeing? Are there new ways of moving money, for money laundering or for terrorist financing? Are we seeing new activities in any area of the world? What money flows are happening? What are the connections between people? What is occurring through electronic means? We try to look at those and those would be our goals. We look at that now as we go into this regime. There are many questions on the border and on border integrity. What is flowing across our borders by various modes at our points of entry? This is a continual thing. Our goal is always to find where there is a challenge and then develop and work towards developing solutions, be they legislative, regulatory or administrative. We have to improve the way we work as a portfolio, how we work within and how we work with our partners. On a strategic level, that is the way we go about it.
In terms of the analysis, in testimony before the committee last week Diane Lafleur and others from the Department of Finance talked about some of the new trends they are seeing and about what the Financial Action Task Force, an international standard-setting body, has identified. We are a part of the Financial Action Task Force and attend those meetings three times a year, along with the regional bodies. We contribute to those conversations. We bring back what occurs in international trends and determine whether it is occurring here and how we can contribute to that effort. To answer your questions broadly, any challenge to the regime is a challenge, and that is how we approach it.
I will turn it over to my colleagues to answer the other two parts of your question.
Senator L. Smith: It would be interesting to have a sense, besides the percentage, of the number of cases you are handling. Is more activity coming in from one country versus another? If so, have you had further communication with that country to identify ways that you would prohibit or stop future activity? Is any of that information available, without being too specific?
Mr. Adam: In addition to the Financial Action Task Force, the RCMP is a member of the strategic alliance group, which is the Five Eyes, otherwise known. That involves the major police forces from five different countries. For the U.K. it is SOCA. For Canada, it is the RCMP. For the United States, it involves ICE, Homeland Security and the FBI and DEA. From Australia, it is the Australian Federal Police. From New Zealand, it is the New Zealand National Police. We do share and exchange information on typologies and trends as to what is happening in those countries, and we work proactively together to try to come up with both solutions and responses to trends, as they may or may not impact on Canada and or the other countries involved in the group.
Senator L. Smith: Is there any significant, generic answer you could give us as to what is the biggest trend change in the last five years? You read in the newspapers of Canadian citizens being killed in Mexico, and you read also about the drug trade in Mexico. Possibly could some of those influences be coming into our own country? I think it is important for our citizens to understand where dangers are anyway, for whatever reason.
Mr. Adam: Dangers that we are looking at the moment are in the new technologies. We are looking at and seeing an increasing prevalence of store value cards or prepaid credit cards. We are looking into mobile phones that have the ability to carry money on a phone and transfer money from phone to phone. We are looking at organized crime tendencies. When we move against one activity or one area, organized crime has a tendency, like water, to move to another area. They are very fungible that way. They are always trying to probe at the weakest link. That is how we prioritize essentially.
Senator Harb: I wanted to ask you a couple of questions about the 10 year evaluation of anti money laundering and anti-terrorist financing regime and whether you have had a chance to see this report? Mr. MacDonald?
Mr. MacDonald: Yes, I have.
Senator Harb: I wanted to bring to your attention Recommendation No. 5. Can you look at it?
Mr. MacDonald: I will see if I have the actual report.
Senator Harb: Okay.
Senator Stewart Olsen: Senator, could you read it for us?
Senator Harb: Maybe that is a good idea, with the permission of the chair. It talks past efficiency of the regime. In fact, they make a recognition that there have been some improvements since 2008, but they speak about inefficiencies found related to the full use of FINTRAC proactive disclosures as these stem from organizational mandate and perhaps the allocation of regime funds and limitation and information sharing attributable to certain legislative and regulatory provisions.
Perhaps you can explain to us your understanding of this recommendation and how you are trying to respond to it.
Mr. MacDonald: I am trying to find the exact page.
Senator Harb: It is on page 7, Recommendation No. 5, under the conclusion.
Mr. MacDonald: The challenge is we do not have the piece of paper.
Senator Harb: Maybe I can pass it to you.
Mr. MacDonald: Thank you, senator. It is probably the one piece of paper I did not bring. I apologize.
I am actually not in a strong position to respond to that, to be honest.
Senator Harb: I appreciate your honesty.
Mr. MacDonald: I have not fully thought about that or had my folks look into that. I am not turning sideways, but has anyone else? I think we may all be in a similar situation.
Mr. Adam: On parts. Insofar as the efficiencies and dealing with proactive FINTRAC disclosures, I am not certain if proactive versus a requested piece is understood here. FINTRAC will analyze their data, and, whether or not we have asked for it, they may pass through a threshold in order to provide us with information that could support a criminal investigation on money laundering, for example.
FINTRAC's abilities over the past four years, since I got to proceeds, have matured greatly. The reports and the detail and the information and intelligence included are truly excellent, and they are extremely valuable tools for us to use in investigations.
Up until that maturation process, we have responded and just recently have retasked and reorganized our money laundering resources to deal with those proactive disclosures as a priority. We are trying to address the better information with being more proactive and more efficient when we get those proactive disclosures.
Ms. Merrick: I will echo the comments of my RCMP colleague. I do not have the fulsome notes in front of me on the efficiencies but, having been part of the 10-year evaluation process, the efficiencies with FINTRAC, certainly from the service's process, have improved. We have a fulsome relationship with them. I believe that some of the inefficiencies found in the past have been rectified. The service has an MOU with FINTRAC that now permits FINTRAC to query service indices upon request, which was missing from previous MOUs, so there are initiatives under way that are improving the regime and the information sharing mechanisms within it
Senator Harb: I brought this up because the government is proposing to remove the threshold of the electronic transfer of funds between countries. We asked Finance, when they appeared before us the other day, about the statistics for 2011. It is over 11,878,508 different transfers that have taken place, reportable. I presume over $10,000, because that is when they report it.
If you remove the threshold of 10,000, do you know, did FINTRAC share with you, for example, what we are talking about in terms of the number of transactions we will have?
Mr. MacDonald: FINTRAC has not, but just yesterday I was speaking to the individual that will be appearing before this committee tomorrow from FINTRAC. He, in fact, is prepared to anxious that question: We will give you your piece of paper back, and we will make sure we will get that to him. They are prepared to answer the threshold issue, and they have all the data and the numbers.
Senator Harb: My problem is not the reporting. It will be easy for them to report. My problem is whether you will be able to have the necessary resources in order to deal with this flood of transactions that may or may not make any sense at all.
Ms. Merrick: From the perspective of CSIS, we have to put this in the context that we are not interested in every transaction that crosses into FINTRAC as a result of the lowering of the thresholds. FINTRAC, who may speak to this, has a threshold to meet upon disclosure to CSIS that the information is relative to national security. As well, FINTRAC has to meet its internal threshold.
CSIS informs FINTRAC of our operational interests as they relate to national security upon the provision of a voluntary information record. Again, that is only a small subset of potentially any transaction that may be receiving. While CSIS recognizes that the reduction would result in a larger transmission of reporting to FINTRAC, the outputs to the service would not be as large.
Senator Harb: Mr. Adam, you talked about the international cooperation between the listing regime and other regimes. What measures do you have in place to protect the privacy of information as it relates to Canadians so it does not end up falling into the wrong hands? What mechanism do you have in place when it comes to sharing such information?
Mr. Adam: We follow Treasury Board guidelines for information management. As well, we closely scrutinize records, for example, from FINTRAC, which are maintained at a protected B level. They are operational and any information sharing is properly "caveated'' and follows basically the guidelines from national security.
The Chair: Following up on that, what would you say about the level of cooperation? It is one thing to share but the general working together of the various agencies, given you deal with so many agencies, is another thing. Could you give the committee an idea of the spirit of cooperation?
Mr. Adam: In Canada, the spirit of domestic cooperation is very good. We all are trying to ensure the safety of Canadians because our families are amongst them. Internationally, police-to-police is my area, where the spirit of cooperation is very high. We all recognize that transnational organized crime is a threat to all of us. When we become aware of criminal activity that impinges on another jurisdiction, in particular among the Five Eyes, we will reach out to them to see if they are aware of it and ask what we can do jointly in response.
Mr. MacDonald: In Public Safety Canada's perspective, when it comes to combating terrorist financing and our activities on the listing regime, as Mr. Adam said, the cooperation is high. For example, since 2002, my area has been managing a coordination committee of not only key partners in the listing regime but also other partners who contribute to Canada's public safety.
That body has gone through several iterations. We have striven constantly to improve the way we work together in groups, while creating very robust forward leaning, as they say in military terms of reference, and ensuring that people come to meetings and contribute. We meet monthly. When we move forward with a recommendation to the minister on a possible listing, the process meets more often. We have a strategic vision of where we are going and we adhere to it, approved at the senior levels.
We also expect people to come to the table and be very pro active. That type of proactive nature has taken us to some good places. We also try to reach out to the provinces and territories. We have reached out to banks and small credit unions in provinces and small towns to ensure that they understand what the list of terrorist entities means, and that they can go to the website of the Office of the Superintendent of Financial Institutions to get the names on the listing as soon as the Governor-in-Council puts them in place. In that way, small and large financial institutions can be assured that any assets are frozen.
As well, there is the public private partnership body chaired by the Department of Finance. We all sit on that committee. We listen to what the private sector — banks, money service bureaus and other businesses — have to say in open conversations. Finance Canada leads that cooperation between the public and private sectors. Those are three good examples of our successes overall in helping the regime to be more robust.
Senator Tkachuk: I want to pursue the area of privacy. Security and liberty are always in conflict. In our wish and desire to be secure, we are collecting information at an unbelievable rate. You talked about the numbers from FINTRAC. When the proposed legislation was introduced in the house and then in the Senate, We were all concerned that this was being kept for 15 years.
That is the information that they have but then they pass it on. Mr. Adam, perhaps you can remind me about how many files you opened because of information you received from FINTRAC. I think you gave a number.
Mr. Adam: It was roughly 1,000.
Senator Tkachuk: Does CSIS open files?
Ms. Merrick: CSIS has a different process. The information received from FINTRAC is part of a financial intelligence stream, so it does not equate a file per se.
Senator Tkachuk: When you open a file, do you ever close it? I have friends that are police, and I do not think they close the file. When you open the file, do you ever close the file? Even though there is no further evidence to prosecute, do you keep the file open?
Mr. Adam: If we receive a disclosure from FINTRAC that upon investigation does not appear to bear any evidence of criminality that we can determine, we will close that file and then it is subject to government retention records and policy both from privacy and from our internal policies with the different legislations that we have.
Senator Tkachuk: Will that also be destroyed in the 15-year period?
Senator Massicotte: Do you delete or retain?
Senator Tkachuk: Does that stay in a file cabinet somewhere or is it deleted off the computer?
Mr. Adam: The RCMP had a money laundering database containing tombstone information from FINTRAC disclosures, and upon a review of that with the Privacy Commissioner, we determined that we did not need to have it anymore; it was deleted.
Senator Tkachuk: We can have some confidence in the fact that at the end of 15 years, year one will be deleted from the FINTRAC files. Do we have as much confidence that CSIS and the RCMP will delete the files from that year when nothing happened? Does the file stay open?
Mr. Adam: I will have to get back to the committee on that because of the various time frames in the various pieces of legislation. I cannot say for sure that if a file is closed, it is not retained based on different rationale, i.e., a criminal prosecution and an appeal period or exhibits need to be destroyed. How long the court actions takes to conclude depends on when the sticking time starts for the destruction and retention of that particular information. I will have to get back to the committee on that.
The Chair: Please send that information to the clerk of the committee.
Mr. Adam: Yes, sir.
Senator Tkachuk: On the question of organized crime, other senators have asked about the amount of financing committed to these operations. Quebec and Ontario have provincial police forces, who are concerned about organized crime as well. Do you combine efforts? Is there a task force in those cases? Montreal and Toronto have city police, provincial police and the RCMP. In Saskatchewan, you would only have the RCMP and the city police. Does the province contribute to the effort as well as what the federal government would contribute to the effort?
Mr. Adam: In reference to Ontario and Quebec, we work closely with our provincial counterparts in those non- contracted policing provinces.
In Saskatchewan, where we are, the police contracted to provide provincial and in many cases municipal policing services. Again, there is force multiplier in action there where every member is an RCMP member and every member has as strategic priority combating organized crime. When money laundering information would come up from a contracted policing member, a provincial police member in Saskatchewan, for example, that would eventually trickle its way up into the federal units of the RCMP and/or be enacted at the lower level.
Notwithstanding where we are in Canada, we are working with our provincial counterparts regardless of the uniform.
Senator Tkachuk: We talked about the files that are open, but you obviously receive information. Of the 11 million files in one year, I think it was, how many reports would you get in the RCMP and in CSIS from FINTRAC saying that this looks like something you might want to pursue, over a year?
Ms. Merrick: I would have to get back with the exact number. I did not bring statistics with me.
Senator Tkachuk: Could you give us an estimate?
Ms. Merrick: On the proactive disclosures from FINTRAC, on a yearly basis, I hate to speculate, but I would put out maybe 35 at the most. It seems high, but it is not an inordinately high number of the proactive disclosures.
Senator Tkachuk: What about the RCMP, if you only got 35?
Ms. Merrick: I do not have the statistics in front of me.
Mr. Adam: There were 777 disclosures released by FINTRAC to regime partners and or law enforcement. There is some double counting there possibly, but FINTRAC would be best off to talk about that.
Insofar as the RCMP, over the last five years, it would be just under 500 proactive disclosures from FINTRAC during the last five years.
Senator Tkachuk: Are they reasons for action, or are they usually, "Oh, this only supplements what we already are working on?'' Are they added to files, or are they revelations?
Mr. Adam: I will try to do some math in my head here.
Senator Tkachuk: Even in general discussion. I do not need to know the numbers. I always say you could have a camera in every office and home, and you know what I mean, but here we are gathering all this information, these million pieces of paper on Canadian citizens, year after year after year, and they begin to tell a story. This story could be released or used for nefarious purposes. That is what I am trying to get at. There must be a cheaper way to achieve the same 700-and-some disclosures that you get out of 11 million pieces of paper.
Mr. Adam: The RCMP received or initiated new investigations, in 2010, on 93 FINTRAC proactive disclosures. Those are people that we did not know anything about, and that information came up to say that there is suspected money laundering activity involved in that series of reports. Any one disclosure could contain several hundred transactions. More transactions, of course, when you are gathering evidence, would lead you to a stronger case if in fact they were money laundering. That is 93 new investigations initiated, and 153 were in addition to an investigation that was already on going. It became additional evidence to us and was therefore used in the investigation.
Mr. MacDonald: I can add a bit about that, if you permit me, because I think you are hitting on some interesting aspects that are really talking about the nature of what is intelligence and what is evidence. Last week, you had a bit of a presentation on one for one, or one disclosure ought to equal one type of investigation, and does it lead to evidence for a conviction. I think we have to be mindful of the fact that collecting evidence and intelligence is a puzzle, and you put pieces together that lead you to a story. Sometimes there are gaps in the story and, at times, those gaps float over time, over several years.
In the case of CSIS's mandate to investigate threats to the security of Canada, FINTRAC information might lead us to understanding a part of the puzzle of what they are looking at, and it might lead to something later on down the road, or it might help explain connections, whereas for money laundering in the RCMP, it could potentially be something crucial that helps further an investigation, where an investigation could be stalled, but it can also help lead to connections or just provide a better basis to go after certain types of evidence.
It does get a bit murky and complicated, and we in the regime try and work through what the FINTRAC information is giving us. We ask ourselves why do we need it and how is it helping to advance us, because it leads to many of the questions that you asked.
I wanted to provide that bit of a context.
Senator Tkachuk: It seems to me that it is always good to close one hole, but another one opens up. There may be a briefcase in the middle of the night walking across the Saskatchewan border to North Dakota, and no one will see it, and that is fact. You have $10,000 or $20,000 or $100,000 or a half million in cash in the dead of night in North Dakota making its way to Montana, and it is all done. That is what I am trying to get at. How are we doing on the security end and the borders? Are we catching anybody carrying cash across the border?
Ms. Romeo: We certainly are catching people attempting to cross the border. I spoke to these level 4 seizures where they are in fact suspected and we do have an opportunity. That information is crucial information for FINTRAC because again, as was said, that is a piece of the puzzle.
Senator Tkachuk: Thank you. I did not mean to interrupt.
The Chair: Mr. MacDonald, earlier in your comments today you mentioned that you talk with your international colleagues about new ways to move money. Last week, from the Department of Finance, they raised the whole issue of the gift type card, the disposable credit cards that can be purchased at many retailers. You do not have to provide the information that one would have to provide if you went to a bank. They are reloadable and can be issued in substantial denominations. That was last week. Today, we are hearing about how you can transfer money from one cell phone to another cell phone. I suspect, and you can correct me, that neither of these facilities were available five years ago.
We are now looking at a five-year review of this act. The question I would ask of you and your associates is, are there any recommendations that you would want to make to this committee that would give you authority that you feel you need, since this did not even exist five years ago, and that you do not have in terms of monitoring this type of transfer of money? Your colleagues may want to enter into the discussion as well.
Mr. MacDonald: As I mentioned earlier, we are a partner in the regime and in the consultation process, and a key partner with Finance. Within our portfolio, we look at some of the methods that are posing challenges, and we can work with Finance directly to make those issues and those challenges known. I have not come prepared to provide anything to the committee.
The Chair: There are no recommendations you are making to us of additional authority that you feel you or your associates would need.
Mr. MacDonald: No. The Department of Public Safety is not making any direct recommendations to the committee at this time. I think I speak for everyone.
Senator Stewart Olsen: My question relates to any possible recommendations. Going back to the actual identification of possible activities, there has been some addressing of this within the new act. Have you given some thought to whether there is anything you would like to see further? I know that I am asking you for recommendations but we need to start at identifying possible criminals.
Mr. MacDonald: I appreciate the question. My response is similar. In our view and that of the folks beside me, who are front line officers, identity of individuals is key to our immigration system at point of entry in terms of admissibility and security risks; and it is key to furthering investigations in money laundering, terrorist financing, and any criminal offence to ensure that you are looking at the right individuals. We are looking at any efforts we can make overall around establishing identity.
Senator Stewart Olsen: It is an ongoing process. If we can help, we would certainly be willing to take any recommendations or considerations.
Mr. MacDonald: I echo the comments made by the Department of Finance last week. They look forward, as you are doing, to the comments that will come out of your report on that. That will certainly factor into the decision-making process; it is important.
Senator Ringuette: My first question is to Mr. Adam, from the RCMP. You indicated that you were abiding by the policy of Treasury Board with regard to disclosure of information. Could we have a copy of that policy or rule from Treasury Board?
I assume that of the four groups here today, only the RCMP can conduct an investigation, lay charges and enter into court proceedings. Is that correct? Perhaps I am naive, but I have never heard of a case where CSIS put laid charges.
Mr. MacDonald: When it comes to terrorist financing or money laundering, it is the RCMP.
Senator Ringuette: Exactly.
Mr. MacDonald: The Canada Border Services Agency has certain powers, but it does not have criminal powers in that regard.
Senator Ringuette: The RCMP is the ultimate policing authority to do the investigation and lay the proper charges before the courts.
Mr. MacDonald: That is correct.
Senator Ringuette: I am reviewing the process. CBSA indicated that over the last five years you made 10,000 seizures and 700, less than 1 per cent, were suspect. At that level 4, you turn over your file to the RCMP.
Ms. Romeo: Yes. We do not necessarily turn over the entire file. Our seizure reports go to FINTRAC, becoming an opportunity for them to analyze the information. We do contact the RCMP.
Senator Ringuette: What do you do with the 700 suspect seizures? They cannot stay in limbo. Something has to happen. If they are suspect, they require an investigation; and the investigating body is the RCMP.
Ms. Romeo: Yes. I am sorry but I will have to get back to you to confirm that aspect.
Senator Ringuette: I understand.
Mr. Adam, you indicated that in 2010, you opened 93 investigations from FINTRAC only, not from Canada Border Services Agency or any other entity. How many of those 93 investigations led to charges? How many are you still investigating? How many have been closed, as Senator Tkachuk asked about?
Mr. Adam: I will have to get back to the committee on the specific numbers for each of those conditions.
Senator Ringuette: Would you know how many charges have led to court proceedings from those investigations?
Mr. Adam: Of the 93?
Senator Ringuette: Yes.
Mr. Adam: No, not off the top of my head.
Senator Ringuette: Will you send that information to the clerk of the committee?
Mr. Adam: Correct.
Senator Ringuette: With regard to prepaid access products, i.e., the credit cards dominantly issued by Visa, MasterCard and AMEX, whose headquarters are in the U.S., you indicated that you collaborated with the FBI. During the last two years, let us say, how many disclosures of information did you get from your U.S. colleagues about prepaid credit cards?
Mr. Adam: I am not sure I understand where you are trying to go. Recently, the U.S. passed into law that stored- value and prepaid cards are monetary instruments when they come into the U.S.
Senator Ringuette: They are currency.
Mr. Adam: Their value must be disclosed.
Senator Ringuette: Yes.
Mr. Adam: Insofar as using those cards in the United States for criminal activity, I have never seen a report about such activities related to prepaid or stored-value cards. However, in their criminal investigations, the U.S. has made seizures of cards used for criminal activity, for example to pay off drugs; but that information would not come our way.
Senator Ringuette: Maybe I should have done a preamble to my question. At our previous meeting, officials from the Department of Finance talked about international cooperation with the U.S., Australia, the U.K., New Zealand and so forth. They said that you had an established standard with regard to the flow of information and that required information would be exchanged.
There was an assumption — maybe it was on my part — that the U.S. also had this threshold of $10,000, whether it be cash or whether it would be with regard to prepaid cards. I am assuming, from what we were told at our last meeting, that the same standards apply for all the countries that are cooperating in this regime. I asked them specifically: Then we can expect credit card purchases, and the headquarters and the databases are in the U.S. — that the required disclosure from the financial institution in the U.S. is the same as in Canada. Is it?
Mr. Adam: There are two parts to that question, FATF standards and sharing of customer information. Not all the stored-value cards are from Visa or MasterCard or AMEX. I am sure there are some Tim Horton's cards here or Walmart cards or other cards.
Senator Ringuette: I do not know how many people would put $10,000 worth on a Tim Horton's card.
Mr. Adam: I am not sure they will take $10,000.
Senator Ringuette: That is a lot of coffee.
Mr. Adam: There are cards that we know of where there is a stated limit, and that would be from any one of the banks in the States, of which there are many, that satisfied their CDD, et cetera, regulations in the States and that do not have a limit. Now, if those cards could be used in Canada, then that would give that person access to their funds crossing a border. The information of the acquisition of that card would remain in the States, at the bank, and would not necessarily go to the police unless there was a criminal investigation by the States, and then if there was again a link to Canada, that might be shared.
Senator Ringuette: What you are telling us, in essence, is that the U.S., with regard to money laundering and terrorist financing, does not have the same legislation and application with regard to financial institution disclosure and reporting?
Mr. Adam: The legislation in the States is not the same as that in Canada.
Mr. MacDonald: I think it is important at this point to explain a bit about the Financial Action Task Force, based in Paris.
Senator Ringuette: We were told all of that in our last meeting.
The Chair: Mr. MacDonald wanted to respond to your question.
Mr. MacDonald: I will be brief. The FATF standards, the 40 for money laundering and the 9 for terrorist financing, are what you would call evergreen. They change with time. While the standards can be set in year 2004, they have to be updated to reflect new and evolving methods of moving money, terrorist financing. What happens is that those get updated, and then countries have to comply with those international standards. As was explained last week, we are mutually evaluated, so Canada has had mutual evaluations. There is where you find areas where Canada may not be fully compliant or partially compliant with certain events.
However, in between those cycles of standard setting and evaluation, any new and developing methods, such as the one we are talking about today, for example, can develop. Some countries will proactively go and introduce, through domestic law, ways to address that new challenge. Others may wait. Others may not do it because their legislative process is different than ours and so on.
You get little disparities with some of these new trends in between the evaluation cycle. While the FATF sets the standards, it is constantly moving and we are constantly all trying to keep up the standards.
Senator Ringuette: I understand, but this is not a new piece of legislation, and the international centre is not new. We may talk about additional products used in crimes, but the basic legislation for a financial institution to report is necessary.
My last question —
The Chair: I thought that was it.
Senator Ringuette: No. That was a comment to his comment that you allowed.
Is INTERPOL part of your organization?
Mr. Adam: We are part of INTERPOL.
Senator Ringuette: Is INTERPOL part of this money laundering and terrorist financing group?
Mr. Adam: Yes. They have a seat at the FATF.
Senator Moore: I was a bit confused, Ms. Romeo, by your response to Senator Ringuette. I do not think you went through the four levels of seizure. Could you do that, please?
Ms. Romeo: The first level of seizure is a level 1 seizure. In that regard, there is a $250 penalty that would be assessed. The traveller has an obligation to report, but they did not report the funds. The funds were not concealed.
The second-level penalty associates with it a $2,500 penalty assessment. In that regard, the individual has not declared the funds, so therefore they have misrepresented. There is a method of concealment —
Senator Moore: Were they concealed as well, concealed and not reported?
Ms. Romeo: Concealed and not reported.
For the second level, I missed one of the criteria. They also had to have had a first-level penalty assessed on them previously.
For level 3, the individual, the traveller, did not report the funds. They used a method of concealment. In that regard, it was concealed within a conveyance, so within a car, for example. It was a more elaborate method of concealment. They did not report the funds, and they had a previous level 2, and it is $5,000 in that regard.
For the level 4, you would have had a previous level 3. The goods were concealed, and they were suspected proceeds of crime. The Border Services officer would have had reason to suspect that those funds were associated with proceeds of crime. For the level 4, it is an outright forfeiture at that point in time.
Senator Moore: You had 700 of those cases in the past five years, I think you said.
Ms. Romeo: Yes, that is correct.
Senator Moore: Senator Ringuette asked you about what you did with those 700 cases and that they clearly would require some investigation. I think she asked you if you referred some or all of those to the RCMP. I do not think I heard your answer.
Ms. Romeo: I cannot confirm how many were referred to the RCMP, but we do, within the CBSA, have a criminal investigations area, and we also do refer to the RCMP. Depending upon which legislative authorities, we would be performing that investigation.
Senator Moore: You have a criminal investigation unit within CBSA?
Ms. Romeo: Yes, we do.
Senator Moore: How long have you had that?
Ms. Romeo: We have had that for quite a number of years. They look after investigations with regard to criminal activity on customs enforcement, for example, human smuggling.
Mr. MacDonald: Human smuggling is an offence under the Immigration and Refugee Protection Act.
Senator Moore: Is that not what the RCMP does? I did not know you had that unit. The experts here are the RCMP. They have been at it a lot longer than CBSA. I thought they would be the people who would pick up that file, with their expertise, and do the investigations; but you are saying, no. How do you decide which ones you will give to the RCMP?
Ms. Romeo: I will have to get back to you. That is not my area of expertise, so I will confirm the distinction between the RCMP and the criminal investigations area.
The Chair: Do you have any comments, superintendent?
Mr. Adam: No, sir, I do not.
Senator Moore: I guess I am a little concerned about duplication. Where the most expertise lies is clearly with the force; there is no doubt about that. I would be interested in hearing the answers. Whatever you will bring, maybe you can submit it to the clerk so we can all know what the answer is.
Senator Massicotte: The chair often used the expression that a chain is only as strong as its weakest link.
[Translation]
Having used that expression, if I understand correctly, under the existing regulations, the department is responsible for deciding whether it must do something for foreign countries. Earlier we were talking about the Americans, who have a very strong system. Many countries are not regulated as harshly and even are very relaxed about criminals and their bank accounts. How do we manage that here? In other words, if a criminal uses a bank account from one of those countries, often little countries, and comes here with his chequebook or a prepaid card for perhaps $50,000, is there a filter? Do we have a way to catch those transactions? What do we do in those cases? These people often use their international knowledge about the methods that should be used. What are we doing in this area?
[English]
Mr. MacDonald: Again, I will go first with some high-level points and then let others come in.
A couple of things: First, the very goal of the Financial Action Task Force and its members and their compliance with the 40 and the 90 recommendations is to work together so that financial institutions and, in some cases, governments do not do business with certain countries that are non-FATF compliant. The FATF has a list — I use the term loosely — of countries that are known places for terrorist financing or money laundering. There is a lot of international pressure put on not doing business with those countries.
Canada also clearly ascribes to all the United Nations sanctions. We have sanctions against various countries, where financial institutions are not allowed to do transactions and Canadians are not allowed to do financial transactions or other kinds of transactions, such as goods and services, and so on. The UN Al-Qaida and Taliban Regulations were great examples, where airlines were not allowed to fly into Afghanistan at the time when the Taliban was in charge and Canadians and companies were not doing business in that area. Clearly, it is the domain of Foreign Affairs, so I will not over speak that, but those come out of the United Nations Security Council. These are more high-level ways that the regime follows other international efforts to look at countries where we ought not to do business and where individual Canadians should not do business. I will see if there are any other comments.
Ms. Romeo: I was going to mention with regard to the prepaid cards that you are referring to that we do await the public consultations. Certainly, depending on the comments that are received and the direction that the Department of Finance would like to go in this matter, that is when we will begin to explore all of the various opportunities and to work with international partners to determine those that have implemented this within their legislation and how have they done that, and to look at best practices in order to gain a clear picture and understanding of what can be done and what authorities will be required.
[Translation]
Senator Massicotte: I am trying to understand. If a businessman, a business criminal arrives from one of the countries that Mr. MacDonald identified, with a prepaid card or even with his chequing account, the Canadian company, the Canadian party may not accept those amounts? Is that correct?
If that is the case, I assume it is public because the person who receives the cheque must know that. What are these countries? Are there a number of them? This blacklist must be public, this blacklist of countries from which we do not accept cheques or prepaid cards or credit cards?
[English]
Mr. MacDonald: I do not have a full answer for you. However, that is largely the domain of the Office of the Superintendent of Financial Institutions. They communicate with the financial industry businesses where UN sanctions are and where one ought not to do business. They communicate out the terrorist listing for freezing of assets or not dealing with any assets. That is probably a question that OSFI could answer best.
Senator Massicotte: We often talk about the list and money laundering, but I am not aware of many countries, although we suspect many to be loose in their regulations, from which we do not accept cheques or credit cards. Usually it is an Interac system. I am not aware of that list; that discretion remains with the Minister of Finance, I suspect.
Ms. Romeo: Yes.
Senator Massicotte: I understand he has never executed any order to prohibit any of that. Is that accurate?
Mr. MacDonald: I do not think we are in a position to answer such a detailed question on the Minister of Finance's powers.
Senator Massicotte: If that is the case, we will attract thousands of transactions, but there is a big hole out there. It is an easy one to get through and these people are pretty smart. If the objective is to track money laundering, we have to get there. Maybe amendments should be made to this act to make sure we do get there.
The Chair: Mr. MacDonald, you made an opening presentation. You and your associates have answered many questions from the committee. Before we conclude, I would like to ask you or your associates if there are any recommendations that you would like to make on any matter to this committee as we continue our deliberations on the review of this act.
Mr. MacDonald: We do not have any recommendations. We have tried to answer the questions. We have some follow-ups that we will be providing to the clerk. We have given you some names, for example, of organizations that may benefit the committee, such as the Office of the Superintendent of Financial Institutions; we know you are meeting with FINTRAC; and even some more detailed questions from Finance. We have tried to provide that kind of recommendation to the committee. We have enjoyed our time.
Senator Massicotte: I presume you all agree with the recommendations and proposed amendments to the act. You say you have no further recommendations, but I presume you agree with the amendments being proposed.
Mr. MacDonald: We are in the process of working together to actually look at those proposals right now.
Senator Massicotte: You have not looked at them yet.
Mr. MacDonald: We continue to look at them and assess them.
Senator Massicotte: When can we expect your recommendation to say that you agree with those? You are the ones who will be implementing those and you are the one who has the on-the-ground knowledge as to whether they make sense.
Mr. MacDonald: I will come forward through the Department of Finance.
The Chair: On behalf of the committee, I would like to express our great appreciation for a most enlightening presentation. Thank you, very much.
(The committee adjourned.)