STANDING COMMITTEE ON JUSTICE AND HUMAN RIGHTS
COMITÉ PERMANENT DE LA JUSTICE ET DES DROITS DE LA PERSONNE
[Recorded by Electronic Apparatus]
Thursday, October 25, 2001
The Chair (Mr. Andy Scott (Fredericton, Lib.)):
I'd like to call to order the 35th meeting of the Standing
Committee on Justice and Human Rights.
Today we'll be considering Bill C-36, An Act to amend
the Criminal Code, the Official Secrets Act, the Canada
Evidence Act, the Proceeds of Crime (Money Laundering)
Act and other Acts, and to enact measures respecting
the registration of charities, in order to combat
This morning we are very pleased to have appearing
before us Jim Peterson, the Secretary of State. Mr.
Peterson, I would invite you to introduce your very
competent supporting cast.
Hon. Jim Peterson (Secretary of State
(International Financial Institutions)): Thank
you very much, Mr. Chairman. I can say that it's a delight to
be with you. It's the first time I've ever had the
privilege of appearing before the justice committee on
a very important bill.
At the table with me is Superintendent Dave Beer from
the RCMP. From the Department of Finance I have Horst
Intscher, the head of FINTRAC; Yvon Roy, ADM and
counsel; Charles Seeto; and Richard Lalonde. We also
have a host of other experts, including tax expert
Brian Ernewein. We have OSFI
representatives here. All of these people are here to
answer your difficult questions. I'll take the easy
The Chair: Although you may never have been here
before, we've seen Monsieur Roy.
Mr. Jim Peterson: Mr. Chair, I could make some
opening remarks if you wish, or, if it's the pleasure
of this committee, we could go directly to questions.
The Chair: No, it is expected that you would wish
to make some opening remarks, and you're invited to do
M. Jim Peterson: Thank you dear colleagues. I appreciate
the opportunity to appear before your committee today to discuss
those aspects of Bill C-36, the Anti-terrorism Act, which deal
with terrorist financing.
I will focus on how the Bill expands the scope of the
Proceeds of Crime (Money Laundering) Act (PCMLA) and the mandate
of the Financial Transactions and Reports Analysis Centre of
Canada (FINTRAC). I will comment on new measures that affect
charities and will mention our international efforts.
At the outset, let me assure honourable members
that the government is committed to depriving
terrorists of the ability to finance their activities.
We believe that cutting off their funding is a key step
in reining in the capacity of terrorists to function.
Achieving this objective, however, will not be easy.
It requires both strong domestic measures and a unified
As you know, the government has been working with its
international partners to develop a coordinated global
response to dealing with terrorist funding. Canada and
its G-7 partners have moved quickly to develop and
implement action plans to combat the financing of
terrorism, doing so by blocking the assets of terrorists
and their associates.
We're also an active member of the Financial Action
Task Force on Money Laundering. We support the
organization's efforts to develop and implement
international standards to prevent the use of the
global financial system for terrorist financing. The
Honourable Paul Martin, chair of the G-20 group of
finance ministers and central bank governors, has begun
the task of broadening the base of support for
effective and coordinated international action through
Our goal is that all jurisdictions will join with us
in adopting strong domestic regimes against terrorist
financing and will cooperate with us internationally
to track down and deny a safe haven anywhere for
Canada's participation in international efforts has already
translated into domestic action, primarily through the
implementation of United Nations Security Council Resolutions.
Regulations in force since February 2001 freeze property
owned or controlled by the Taliban, and Osama ben Laden or his
New regulations, in force since October 2nd, go further by
giving the government the authority to freeze assets of other
terrorists and terrorist organizations that are listed either by
the U.N. or by the Governor in Council.
The government listed individual terrorists and terrorist
organizations under these regulations on October 2nd, and added
to that list on October 12th. These new regulations have allowed
the government to work closely with the international community
to ensure that any terrorist assets are subject to sanctions.
The federal regulator, OSFI, has on several occasions
since September 11 reminded financial institutions of
their obligations under these regulations and urged
them to cooperate fully with law enforcement in their
investigation. OSFI has also used its website to
provide financial institutions with the most up-to-date
information about listed terrorists.
The new regulations require financial institutions to
report monthly to their regulator on whether or not
they have terrorist assets in their possession and, if
so, to aggregate the information about those assets.
The Minister of Finance has committed to making regular
reports on the terrorist assets that are identified
by our financial institutions.
These regulations were an important step in our
efforts to thwart the financing of terrorist activities
through our Canadian FIs. They establish key terrorist
financing countermeasures and provide a bridge to the
anti-terrorism plan that will be accomplished, we
believe, through the passage of the bill before you.
Among other things, THIS Bill introduces changes to the
Criminal Code that put into law various measures set out in the
United Nations Regulations of October 2nd. Most importantly, the
changes make it a criminal offence to finance terrorist activities.
In addition to criminalizing terrorist financing, it is
important that effective means be found to deter and detect these
To this end, changes to the Criminal Code require all persons
to report to the RCMP and CSIS if they have property in their
possession or control that they know belongs to a listed terrorist.
In addition, the Criminal Code amendments include monthly
reporting requirements for financial institutions modeled on those
established in the U.N. Regulations of October 2nd.
This bill also strengthens Canada's existing
anti-money laundering regime both to guard against
abuse of the financial system by terrorist groups and
to provide law enforcement and intelligence authorities
with information about terrorist financing activities.
Under the current Proceeds of Crime (Money Laundering)
Act, financial intermediaries must meet consumer
identification and record-keeping standards and report
transactions related to the identification of money
At present FINTRAC is mandated to
receive and analyze reports that may be relevant to
money laundering activity and to disclose key
information to law enforcement authorities.
The scope of FINTRAC and this bill are both expanded
to encompass terrorist financing.
Let me provide a
brief overview of the key measures.
FINTRAC's role will now extend beyond money laundering to
include terrorist financing.
Financial intermediaries will have to report to FINTRAC any
financial transactions they suspect are related to terrorist
financing offences. They will also be required to report if they
are in possession of terrorist assets or have knowledge about a
transaction, or proposed transaction, involving such assets.
At the same time, FINTRAC will be responsible for disclosing
identifying information to law enforcement agencies if the Centre
suspects the information is relevant to the investigation of
terrorist financing activities.
As well FINTRAC must report to CSIS if this
information is relevant to threats to the security of
To further combat terrorist financing, FINTRAC will be
allowed to share key identifying information with its
international counterparts. However, new safeguards
will be built into the law to ensure that the
information is treated confidentially and also to limit
disclosure of this information by foreign law
I would also like to assure members that the PCMLA
was designed in a way that respects the privacy of
individuals by ensuring that reported information is
treated with the utmost care. The fundamental
safeguards that were written into the law with regard
to money laundering are also maintained with regard to
terrorist financing. For example, the operation of
FINTRAC remains at arm's length from law enforcement and
is subject to the Privacy Act.
The final issue I want to mention concerns the
registration and tax treatment of charities. Your bill
includes income tax provisions that prevent terrorists
from exploiting the tax privileges associated with
charities. The bill enacts the new Charities
Registration (Security Information) Act and amends
the Income Tax Act to prevent organizations that
support terrorist activities from enjoying the tax
privileges granted to registered charities.
The Solicitor General and the Minister of National
Revenue will now be empowered to issue a certificate
denying charitable status to an organization. The
Federal Court will be mandated to review that
certificate to ensure that it is reasonable.
Beyond the measures in the charities legislation to deny tax
privileges, other elements of Bill C-36 relating to the
criminalization of terrorist financing would support additional
steps by the government. If an organization willfully provides
financing for terrorist activity, then there would be grounds for
proceeding with criminal sanctions and the forfeiture of assets
These new measures will protect the integrity of the
registration system for charities under the Income Tax Act, and
maintain the confidence of Canadian taxpayers that the benefits of
charitable status are available only to organizations that operate
exclusively for charitable purposes.
Terrorism, honourable colleagues, must and will be
fought on many fronts. Canada will continue to work
with its international partners in the G-7, the G-20,
and the Financial Action Task Force on Money Laundering
to develop and promote global standards to fight
terrorist financing. Canada will see that tough laws
are put in place, see that they are enforced, and see
that there is a seamless web of international
cooperation to deny funding to terrorists.
I mentioned earlier that strong domestic measures are
needed if we are to deprive terrorists of funding and
fulfill our international responsibilities. With the
key elements of Canada's new money laundering regime
already in place, the measures in Bill C-36 will help
us achieve this objective by further strengthening and
expanding the new regime. The amendments to the PCMLA
in this bill will assist law enforcement agencies and
CSIS by providing them with additional information to
detect, investigate, and prosecute terrorist activities
and to deprive them of their finances.
I thank you.
The Chair: Thank you very much, Mr. Peterson.
Now we'll turn to Mr. Toews for seven minutes.
Mr. Vic Toews (Provencher, Canadian Alliance):
Thank you, Mr. Chair.
I want to commend the government for finally moving
ahead on this file. Prior to September 11, it was
clear that the federal government simply didn't have
any interest in complying with international UN
conventions. I refer not only to the suppression of
terrorist bombing but to the suppression of terrorist
financing, where Canada was not complying with its UN
obligations. That, frankly, was a disgrace, and I'm
very pleased that the government is moving ahead in
this direction. We all know that money is the
lifeblood of terrorist organizations, much as it is for
organized crime. Unless we make concerted efforts to
stop the flow of money, we will not stop the flow of
arms, nor will we stop other terrorist activities
throughout the world.
Now, I listened with interest to your comments. I
appreciate the briefing and your appearance here. It's
clear now that FINTRAC has additional
responsibilities, and I'm concerned about the financial
institutions that are providing the information to
FINTRAC in terms of tracking the relevant information.
Are our resources, that is, the federal government
resources furnished, sufficient to expeditiously
analyze the information our financial institutions are
providing us? Clearly, with the added
responsibilities, there's going to be more information.
What we don't want to see is the business of our
country, particularly that of the financial
institutions, bogged down because of too much
paperwork. I think we have a concomitant obligation to
provide appropriate resources and personnel for our
agency. Has the administration by the federal
government of this program received additional
resources, Mr. Peterson?
Mr. Jim Peterson: Thank you very much, Mr. Toews.
It's a very important point, and the answer is, in
short, yes. Let me just say that, yes, Bill C-36 does
expand our capacity to freeze and also to seize the
funds of terrorists. Prior to it, we did have in place
regulations here in Canada that allowed us to freeze
assets of the Taliban and assets of those associated
with bin Laden. Even before this bill was in place, we
were able, again by regulation, to pass another one
that allowed us to expand the web beyond the Taliban
and bin Laden to other terrorist assets—
Mr. Vic Toews: Thank you, Mr. Peterson.
I appreciate the fact that you're moving ahead on
that, and certainly Bill C-36 is very important. What
I want to know, if I could get an undertaking from you,
is specifically the needed increase in resources and
personnel. If you can't provide me with that
today, at least undertake to provide it. That's all I
require, for you to produce that in a timely fashion.
Mr. Jim Peterson: I will ask Mr. Horst Intscher,
the head of FINTRAC, to outline what he's done in terms
of expanding his personnel.
Mr. Horst Intscher (Director, Financial
Transactions and Reports Analysis Centre of Canada,
Department of Finance): Thank you, Mr. Chair.
We have begun work on creating the capacity to
undertake this additional work by identifying the
resources we would require. This is in terms of both
analytic capacity and of information technology
resources and infrastructure for the protection of the
sensitive information that would be flowing to us. I
understand that we expect we will require some
additional resources, and I'm fairly confident that we
will be able to obtain those resources through the
Mr. Vic Toews: If you could then undertake to
provide this committee with that information, I would
certainly appreciate it.
Also, is there a liaison that goes on with the bank in
determining exactly how much additional resources in
terms of personnel or otherwise we require? We don't
want the government going off in some direction without
proper input from the financial institutions.
Mr. Jim Peterson: I think you have raised a very
important point—and I'm glad you have—about the
obligation imposed on our financial institutions to
increase their surveillance and their reporting. Yes,
the onus on our private sector institutions has
increased considerably because of this. I also want to
say to you that I am very proud of and grateful for the
way they have responded, particularly the speed. It's
not an easy task for them. I expect that in the future
it'll be made slightly easier because of new computer
technologies, the new IT they will bring in. We will
certainly be coordinating matters with them on this
front. You're quite right, there is an added onus
there, and certainly an added onus on government.
Let me assure you, Mr. Toews, and the other honourable
members that we will make these resources available
Mr. Vic Toews: Thank you.
The Chair: Thank you very much.
Monsieur Bellehumeur, you have seven minutes.
Mr. Michel Bellehumeur (Berthier—Montcalm, BQ): Thank you
Mr. Peterson, the Bloc Québécois has been concerned about the
whole issue of money laundering for a long time. I remember asking
the government about it in 1994. They were the first questions I
asked during my first term and I remember very well that in 1994
the government's answer was that there were no money laundering
I also remember having talked about international agreements.
I was told there were no problems and that everything was fine in
Canada. Today, you are singing a different tune; I'm very happy to
hear you do it.
But even though we have whatever law we want, we need the
political will to enforce it and the financial resources to apply
Speaking of political will, before even looking at Bill C-36,
we know very well that since the 11th of September many countries
have frozen assets. Many countries have followed some money
movements step by step.
We also know that in Canada during the last two years more
than $100 billion, it seems, have left the country for certain tax
havens recognized by the OECD and the Canadian government. You know
We also know that it seems that Canada has now frozen about
$125,000 that was being used by terrorists or terrorist groups.
Before even looking at Bill C-36, I want to know the extent of the
political will within the government to act in the case of money
laundering. Have you done some audits to see if the hundreds of
billions of dollars that have left Canada towards tax havens are
going to terrorist groups?
M. Jim Peterson: Mr. Bellehumeur, you have had a number of
good initiatives in this area over the last few years. We have
accepted some of your suggestions, including the one on the $1,000
bank note, which was canceled. It was a good idea, we thank you for
it, and we have accepted it.
The issue of money laundering and tax havens is a difficult
one. We cannot solve it alone. To do so, we need the cooperation of
other countries all over the world. That is why we are now working
with the international community at this tie, including G-7.
Certain discussions have already started with the Finance ministers
of G-7. We have also, through Mr. Martin, used our relationships
within G-20 to promote the adoption of standards by each of these
countries and the creation of international cooperative links.
It should also be noted that we are in a good position with
other countries, for example in the Carribean because we represent...
[Editor's note: Inaudible]
...the International Monetary Fund and the
World Bank. We have worked with them already to establish
information exchange systems and to fight money laundering. But it
will need more work.
We will continue. We have already supplied technical
assistance to Carribean countries to help them improve their
systems. Our objective is that after cooperating with all the other
countries in the world there will be no more tax havens that
terrorists could benefit from.
Mr. Michel Bellehumeur: Mr. Peterson, thank you for your
answer but we see that at this time, when Bill C-36 has not yet
been adopted, billions of dollars are leaving the country and we
seem to have no control over this. It is true that it is a complex
issue. However, if we really want to fight terrorism, we have to
invest a lot because money is the fuel of war for them also. At
this time, Canada has not invested enough in this area.
Bill C-36 is before us. My question is as follows: how will
Bill C-36, and especially its clauses on money laundering, and the
implementation of international agreements, guarantee us as
parliamentarians, Canadians and Quebeckers that you will be able to
trace the money that will leave Canada for those tax havens and
that you will be able to ensure that this money will not be used by
terrorist groups? That was my first question.
Here is my second question. To work effectively, you need
technology, experts, training and people to work on the issue. I
imagine that if the government is serious and has the political
will to act on this, it has already foreseen how much money it will
need to fight effectively against crime, money laundering and
Currently, we are in limbo. In virtually all departments, we
don't know how much it will cost. You, who are used to working with
numbers in the Department of Finance, do you have, within your
department, evaluated the price of an effective fight, and
especially the implementation of Bill C-36?
M. Jim Peterson: Thank you. We have not yet announced the
exact costs but we will do so shortly. If in the beginning we do
not allocate enough resources to fight terrorist financing, we will
make adjustments. We will increase these resources and take your
committee's suggestions into account if you have any ideas to
improve our work in fighting terrorism.
The Chair: Mr. Blaikie.
Mr. Michel Bellehumeur: But I don't have any guarantee.
The Chair: You only get your seven minutes.
You don't get Bill's.
M. Jim Peterson: There are never any guarantees, but we will
do everything possible and I know you will help us.
The Chair: Mr. Blaikie, you have seven minutes.
Mr. Bill Blaikie (Winnipeg—Transcona, NDP): Thank
you, Mr. Chairman.
I don't have so much a question as a comment. There
seems to be an interesting theme developing here with
respect to Bill C-36, and that is the need for
international or transnational uniformity when it comes
to dealing with unethical behaviour. We don't want to
create havens for various kinds of activity, in this
case terrorist activity, through a lack of uniformity.
We heard the argument yesterday that when certain laws
were toughened up in the United States, terrorists
moved to Canada in order to use Canada as a base for
their activity. At least, that was the claim of one of
the witnesses yesterday. We have heard that argument
today, that it's very important to have the same or
relatively the same laws in all jurisdictions so
that unethical behaviour cannot move itself around, so to
speak, looking for the most favourable circumstances.
I agree, Mr. Chairman, but to take another example,
some argue that there needs to be some kind of
uniformity with respect to poor labour standards around
the world and that this needs to be enforced so
that unethical business activity can't go around the world
looking for the most favourable circumstances. Now, I
find it passing strange, Mr. Chairman, that when this
argument is made with respect to labour standards, it
is regarded as a heinous notion, unrealistic—I could
name a host of adjectives that have been used over the
years to describe calls that have been made by the NDP
and others for this kind of international uniformity
when it comes to restricting unethical activity.
I hope this might be a conceptual breakthrough. I
will certainly try to ensure that it is, Mr. Chairman.
If we can act internationally to constrain unethical
behaviour, in this case the unethical behaviour we call
terrorist activity, then surely we don't want to have
havens for other kinds of unethical activity, whether
it be the exploitation of working people through lack
of labour standards or whether it be the exploitation
of the public purse through tax havens.
It's not just havens for terrorists' money we might
want to address. Perhaps we should be looking at some
kind of international harmonization or international
regimes so that corporate interests can't shelter their
money from legitimate tax imposition, period. It
doesn't have to relate to terrorist activity. I just
make this point, Mr. Chairman, because I find it odd to
sit and listen to all these arguments that I agree with
but that fall on deaf ears when I make them
myself in respect of other
I have one question related to your submission, Mr.
Minister, and that has to do with... You talk about
banks or financial institutions having to report with
respect to terrorist assets they may have. Now, I'm
presuming these are already frozen assets. If they
aren't, they should be, and if they are frozen, how can
people add to them if they're frozen?
Mr. Jim Peterson: You're quite right. Any funds
of listed terrorists that have been identified are in
fact frozen and cannot be touched by the owner of that
account or the institution itself.
Mr. Bill Blaikie: What would they be reporting?
Mr. Jim Peterson: They would be reporting on where
they've found accounts and assets, which would in
effect be frozen under the regulations now in place.
Bill C-36 will give us additional rights with respect
to those assets and funds, such as the ability to seize
You make a very interesting point on the harmonization
of standards, not just those for money laundering and
terrorist funding. One of the quintessential problems
that has always plagued us as Canadians is the overlap,
the duplication, and the contradiction of laws we have
among provinces and between the federal government and
We know that interprovincial barriers to trade in
goods and services cost us an enormous amount, anywhere
from $4 billion to $7 billion a year in lost growth, so
I take your point about the need for good laws and
perhaps for fewer laws in many cases.
The Chair: Mr. Blaikie.
Mr. Bill Blaikie: I'm not sure the minister did
take my point; in fact, I'm not sure he got my point at
all. Nice try. That was a nice little diversion into
federal-provincial stuff, but I was talking about the
international situation, core labour standards, and the
WTO. Then the minister wants to rap on about
interprovincial trade and the need for...sorry, but
that's not what I was talking about.
Mr. Jim Peterson: You also mentioned the taxation
of funds that are outside a country's border or
jurisdiction. We have worked very closely with the
international community to develop common laws with
respect to that, and we have done so by following the
OECD model draft convention for the prevention of
international double taxation and tax escape or
avoidance. This has been a good model to work from.
It is in place with many different jurisdictions.
There will have to be a lot more work done with the
so-called tax haven countries, which have traditionally
been involved in a lot of offshore banking, to make
sure they're not laundering money—
Mr. Bill Blaikie: And ship flagging.
Mr. Jim Peterson: —and not...you're missing my point,
Mr. Blaikie. I was talking about international tax
The Chair: Thank you very much, Mr. Blaikie
and Mr. Peterson.
Mr. Peter MacKay (Pictou—Antigonish—Guysborough, PC/DR): There's
a real breakdown in communications
on the entire spectrum here.
Speaking of information sharing,
I'm interested, Minister, if you could give us
perhaps some concrete examples of what it means, in
the grand scheme of things, to ensure the seamless web
of international cooperation. That's very powerful
language, but I'm interested to know what pragmatic,
concrete steps are in place to ensure that the
information sharing is taking place not only between
ourselves and our G-7, G-20 allies, but also within
departments here in Canada. It's a question that's
been asked of every minister who's appeared before us.
How is the Solicitor General of Canada, CSIS,
and the RCMP working closer, as a result of this
legislation, to ensure that information is passed on?
Further to that, I would like to know, in, again, a
very practical way, if you foresee difficulties in
proving this element of terrorist fundraising as part
of the criteria that the crown will bear the burden of
proving. Is this ideological, religious, or political
purpose behind the fundraising activity? I believe
this is going to be a very difficult and tough
threshold to meet in many instances. I wonder how the
Department of Finance has contemplated, in real
terms, how you prove this element, this purpose,
this mens rea behind the actual
Mr. Jim Peterson: With your permission, Mr.
MacKay, I would like to have Yvan Roy answer the
question about the religious belief, and then call on
Inspector Beer to talk to you about the efforts at
Mr. Peter MacKay: There is no problem. Mr. Roy, you can answer
Mr. Yvan Roy (Assistant Deputy Minister and Counsel to the
Department of Finance): With pleasure.
The clauses in this Bill that are related to terrorist
financing are of a criminal nature. You have worked in this area
since you are a former solicitor. You know that the standards are
high in such circumstances and that the proof must be beyond a
As for any infraction that requires a specific intent or
motivation, the motivation and the specific intent will be deduced
from the proof offered. In such circumstances, the proof will most
often be of a circumstantial nature. It is possible that in such
cases we may have direct proof, because, as you know, such
infractions may be subject to electronic surveillance. You also
know that we often learn a lot about people's intentions in this
The Bill tries to provide the state with all the tools
available in this regard, but at the same time it must balance the
various interests. I have read the transcripts of the Minister of
Justice before this committee and of the public servants that have
appeared before you and I know that the government does not intend
to attack groups that have nothing to do with terrorism. That is
why you have a definition of "terrorist activity" that is in some
way limited and requires a high level of proof. It is the
government's wish, and it believes that it would be possible to
find sufficient proof to make the appropriate deductions or,
through surveillance or informers, determine the reasons for which
this money is collected.
We are therefore talking about a balance of interests, of not
attacking the wrong groups and of having a high standard while
having the means to take the appropriate legal action.
The minister of Finance obviously has a secondary interest in
this matter since the application of criminal law does not come
under that department's jurisdiction, but it does have an interest
as it wants those clauses to work. We believe that it will be
possible to see that the right people are brought before the courts
in due course, as you say in English.
Mr. Peter MacKay: I have a question about proposed
section 83.02, specifically under the heading of “Financing of
Terrorism”. It talks about:
directly or indirectly, wilfully and without
lawful justification or excuse,
It's absent the word “knowingly”. It says “wilfully”.
Certainly banks in particular and other financial
institutions could willingly be in possession of funds
that came from a nefarious group.
I'm wondering if the addition of “knowingly” is
something your department has contemplated here.
I can foresee instances where money could be held,
assets could be held, wilfully, and yet the excuse of
knowingly...it might add clarity to that proposed section.
Mr. Yvan Roy: Mr. MacKay, if an institution, a
bank, actually anyone in this country, is knowingly in
possession or control of assets related in
some fashion to terrorist activities, they are under
obligation, by law, to freeze those assets,
that is, to refuse to deal
in any way, shape, or form with those assets. I would
refer you back to proposed section 83.03 to that effect.
Those who knowingly continue to deal with those assets
are guilty of an offence that is itself very
significant in that it is punishable on summary
conviction with respect to an institution by a fine of
$100,000. If the state were to prosecute that case
by indictment, the fine is open-ended. There is no
limit that can be imposed. So the sense is that those
who are dealing with money that they know is owned or
controlled by terrorists are very well captured by that
provision. When you're talking about the
financing, which is now doing wilfully what you should
not be doing, that is, giving money to these people for
that purpose, this is a different offence.
The landscape is well-covered with those
two provisions, with all due respect.
Mr. Peter MacKay: What's the length of time you
can freeze and hold these? I haven't found any provisions
that refer directly to
where those assets would go upon seizure. Is there any
provision that would funnel those assets to law
enforcement, for example?
Mr. Yvan Roy: Here is how the scheme is supposed
to be working. You have the provision in here
that says you freeze
those assets, that is, you are not moving them. You
have to sit on them, basically. You cannot deal with
the property in any way, shape, or form. There is then
an obligation in law to advise the RCMP and CSIS—the
law says forthwith, immediately—about what it is
you have done. These people are then tasked under the
law to conduct an investigation. Once you are advised
of something like this you conduct an investigation and
they will then be, in due course, in a position to
seize, refrain, and eventually forfeit that property.
If at the end of the day the investigation shows that
actually we have been wrong, it should be the duty of
the institutions—and I know they will do it—to
basically stop the freezing that has taken place.
The investigation having been conducted,
they will be then in the position to say, we do
not have suspicions any more about that property
and therefore we will, from now on, continue to deal with
To answer your question
directly, there is not a limit on how long that property will be
frozen, because of the nature of what it is we're
talking about, which is an investigation. The
process is you freeze, you investigate, you seize,
refrain, and confiscate.
The Chair: Thank you very much, Mr. Roy.
Mr. John McKay (Scarborough East, Lib.): The
thesis of your presentation, Minister, is that you are
standardizing reporting requirements around the world.
Last night on CBC Carol Off did a piece on Saudi banks.
To telescope the
presentation, it is essentially that the Saudi banks
are highly cooperative in covering for Mr. bin Laden and
his colleagues. There's reasonable likelihood that
most of the money that finances these operations is in
I'm not putting that forward as
evidence; I'm putting that forward as a media statement.
Not to put too fine a point on it, my recollection
of moneys collected so far, essentially, is that it's chump
change. So the real question is what the reach of
this bill is.
I see in proposed section 83.11 that there is a
requirement that authorizes foreign banks within
the meaning of section 2 to report their activities.
This is my first question. If there is a Saudi bank that is
listed or operating in Canada or in any of our other
allies' jurisdictions, and presumably our legislation is
harmonized with those other jurisdictions, are those
Saudi banks, either through this proposed section or parallel
sections in other legislation, required to report as
would Canadian banks? I'm using Saudi Arabia as
an example. Similarly, if a Canadian bank is
operating in Saudi Arabia, is there a reporting requirement
that would obligate our bank to report back?
Secondly, what happens when you get it
wrong? Inevitably, the crown will seize and freeze
assets, which it shouldn't have done. I'm interested in
knowing what will be the extent of claims for a crown
immunity. What will be the access to recourse for
those citizens who are aggrieved by wrongful seizures and
freezings? Will there be an exposure on the part
of the crown to damages?
Mr. Jim Peterson: Foreign banks operating in
Canada will be subject to
the disclosure provisions. Canadian banks operating
abroad, through a branch in that foreign jurisdiction,
will be subject to the disclosure provisions. Canadian
banks operating abroad through a foreign subsidiary
will not be.
On the issue of crown immunity and wrongful seizure
and damages, I turn again to an expert.
Mr. Yvan Roy: Thank you, Mr. Minister.
The government has taken and will continue to take
great care in making determinations on who is going
to be subjected to some of these provisions. There are
a number of ways where the government is going to be
involved; the listing of people is certainly one of
them. Another one is how these different provisions
will continue to apply.
Basically, the regime you
have with respect to money laundering found in
the Criminal Code finds application here, and that is,
if the government is going to be making some mistakes,
the same regime that applies now will continue to apply
in the future. Therefore, in cases where the
government, for instance, has been negligent, there is
a way of getting relief before the courts. The courts
will always be there to stop this from happening and to
obtain the appropriate damages in appropriate circumstances.
The law, as it existed before, continues to apply
here, and there is no special immunity that the government
will try to seek in cases involving this. This is not
the goal of this new legislation. And we continue to be
governed by the same laws with respect to negligence
and other things of that nature.
Mr. Jim Peterson: Very simply, if you feel
you're wrongly listed, you can apply to the Solicitor
General, and if that doesn't work, you can apply to the
court. Also, the Solicitor General is required to
review the list of listed persons every two years.
But do you know what, Mr. McKay? There are going to
be mistakes. The difficulty when there may be so many
people having the same name or just a slightly
different name, and things like that... It is not
possible to run this system without making mistakes.
Mr. John McKay: Going back to a Canadian bank
operating in a jurisdiction where we think there are
terrorist assets, and in the course of normal business a
transaction occurs that the Canadian subsidiary
reports, what will be the follow-up on that?
Mr. Jim Peterson: If it is a foreign branch of a
Canadian bank, those assets would be reported to
FINTRAC; they would be reported to OSFI.
Then, if the appropriate standards were met at FINTRAC,
they would be reported to the RCMP and/or CSIS, if
there was a threat to the security of Canada.
I'd like to call on Inspector Dave Beer to talk
more about it.
Superintendent Dave Beer (Proceeds of Crime
Branch, Royal Canadian Mounted Police): Thank you, Mr.
I think it's important to understand that the essence
of the terrorist funding portion of this
legislation is essentially to add the act of
fundraising and providing funds for terrorist activity
into the existing Proceeds of Crime (Money Laundering)
From that perspective, and from an investigative
perspective, which I think is the essence of your
question, what agencies like FINTRAC and the
investigative agencies are being asked to do is to
recognize proceeds for crime, utilizing the legislative
and investigative tools and investigative branches that
were created for proceeds for crime. It's
actually simply a reversal of the process.
In your particular example, where a suspicious
transaction or a transaction attributed to a listed
person would be reported through FINTRAC, FINTRAC would
make a determination of the nature of the activity,
whether or not it was suspicious, and if so, according
to the Proceeds of Crime (Money Laundering) Act, for
which amendments are being considered here, it would be
reported to the appropriate police agency and would be
The Chair: We'll now go to Mr. Cadman.
Mr. Chuck Cadman (Surrey North, Canadian Alliance):
Thank you, Mr. Chair.
To follow up on a question that I believe my colleague
Mr. Peter MacKay brought up, regarding the final
destination of any asset seized or forfeited, will it
be returned to law enforcement? Out of the proceeds,
are there going to be moneys available to law
enforcement to continue the fight, and more
importantly, is there any indication or any provision
in this bill for restitution to victims?
I cite the Air India bombing, where we had 329
victims. I have a large Indo-Canadian community in my
constituency, and many Canadian families were impacted
by that. I'm sure they'd be very interested in your
Are some of the proceeds and the forfeitures from
terrorist funding going to be directed back towards the
Mr. Yvan Roy: The legislation, as crafted, is
simply an add-on to what is already in place. What I
mean by that, with respect to the two areas you're
referring to particularly, is the fact that the money
or the assets, once they have been forfeited, are not
forfeited to anyone in particular. It is the crown,
whether the provincial crown in cases that will be
handled by provincial attorneys general or the crown
in right of Canada in cases involving the Attorney
General of Canada, that will be the beneficiary of the
money or the assets that have been forfeited. In other
words, that goes into the federal treasury.
A voice: The general revenue.
Mr. Yvan Roy: Yes.
Regarding victims, the provisions that exist in
the code—you are very familiar with them—continue to
apply with respect to those offences, because these are
offences that are found in the Criminal Code. So if
there is to be restitution or compensation that fits
within the parameters of what is already in the code,
that will apply to them too.
But there is
nothing special, specific to the situation that is
created in this legislation.
Mr. Chuck Cadman: Thank you.
The Chair: Mr. Paradis.
Mr. Denis Paradis (Brome—Missisquoi, Lib.): Thank you very
much for you presentation, Minister.
The comments that spring to mind are related to... Minister,
you mentioned in your presentation that the amendments to the
Criminal Code will make it necessary for financial institutions to
present monthly reports. But when we think of financial
institutions, we think of certain categories of professionals who
will also have to make reports I would imagine. These categories
must include accountants, notaries, brokers and lawyers.
My comment is not necessarily related to legal professional
privilege because I think it is important that privilege not be
absolute in cases of terrorist crimes, among others, that are
committed or being committed.
The first part of my question is about the necessary balance
between divulging information on money held in areas where
privilege applies and its disclosure to implement the law.
Here is the second part of my question. In certain parts there
is mention of monthly reports. A large chartered bank can easily
make monthly reports, but for a small broker or notary in
Saint-Hyacinthe, it is a duty that can be a fairly onerous
obligation. Have you considered dealing with the professional
associations in each province to find disclosure methods that would
impose less on small professionals.
M. Jim Peterson: I think that is a good suggestion. We will
always be open to ideas that lessen the burden of disclosure. It is
true that it would be more difficult for small businesses because
they do not have the resources of major institutions. If there were
to be suggestions to alleviate that burden, I would like to hear
them. You may have other suggestions for us.
Mr. Richard Lalonde (Chief, Financial Crimes, Financial Sector
Policy Branch, Department of Finance): I would simply like to add
that the Proceeds of Crime (Money Laundering) Act affects many
financial institutions and that the scope of this Act is not quite
the same in cases of reporting transactions and frozen accounts.
In the latter case, yes the financial institutions must report
certain information to law enforcement authorities and to their
regulatory agency, but if we look at the list of financial
institutions that are subject to this, we see that it does not
cover, for example, accountants, lawyers and other small
That being said, it is true that in some cases, small life
insurance companies would be subject to this but most companies
subject to this provision are major ones.
I do not know if I have to also answer the question regarding
privilege. In this case, about the proceeds of crime the Act
provides, in section 11, I believe, that nothing related to the
reporting of transactions or doubtful operations removes anything
from professional privilege.
Therefore the common law privilege that protects certain
communications between a lawyer and client is well recognized in
this Act. That being said, it is important that all financial
intermediaries be subject to this law, otherwise there would be
[Editor's note: Inaudible]
The Chair: Thank you, Mr. Paradis and Mr. Lalonde.
Mr. Bellehumeur, three minutes.
Mr. Michel Bellehumeur: I will not ask the question I wanted
to ask. Instead I will comment on your answer to Mr. Paradis'
I know small law firms that make big transactions. If we look
at very recent history, even if it only at gangsterism in Quebec,
we see that there is a lawyer whose name I will not mention because
I am not sure of it, who was convicted of money laundering. There
were large sums involved, millions of dollars. Are you telling us
that such people are not covered?
M. Jim Peterson: We know very well that there have been
cases where a few lawyers committed an infraction. I will not...
[Editor's note: Inaudible]
...to the bar for what we do here. It is
absolutely necessary that all financial intermediaries respect the
provisions of the act on money laundering and supplying terrorists
with money. As lawyers, they can respect the lawyer-client
privilege. They have a right to do that. But when they are not
acting as lawyers, but as financial intermediaries, that is another
matter. In such cases, they would be obligated to report.
Mr. Michel Bellehumeur: I mentioned a number a while ago.
Currently, since September 11th, how much money has Canada seized?
Mr. Jim Peterson: The latest figure is $150,000.
There will be further reports coming in to us, and they
will have to be refined. As I've said, it's very
difficult often to find out for sure whether an account
that's been seized is the one that was intended to be
frozen. The minister will be giving a report in the
not-too-distant future. OSFI is working on refining
some of those numbers for us right now.
Mr. Michel Bellehumeur: Would an amount of $150,000 justify
that? Do you think you will get more than that?
M. Jim Peterson: Certainly. Even if there wasn't a penny
frozen in Canada, we would still have to be in the forefront of the
nations to protect people, including Canadians, from terrorism.
Mr. Michel Bellehumeur: But not only on paper; in reality
The Chair: Thank you, Mr. Peterson.
Mr. Owen, for three minutes.
Mr. Stephen Owen (Vancouver Quadra, Lib.): Thank
you, Mr. Minister and officials, for appearing before us
and giving us your thoughtful comments.
Perhaps I could just ask further questions with
respect to the impact this has on
lawyers. I think it's true—I think we've
trust account would be caught under clause 49, under
the definition of entity. Under clause 51,
lawyers would be caught under the professional
I heard the answer that professional confidences would
I'm just having a little difficulty understanding how
you could retain professional confidence at the same
time as reporting on a financial transaction. I think
there was a suggestion that if you were acting as a
conduit for a funding transaction, it would be
something different from your solicitor-client
privilege. Is that what is being suggested? I'd like
to have a bit of a better explanation of why that is
so, if that is the intent.
Mr. Jim Peterson: I guess the one possibility
would be to say that anything a lawyer does is beyond
the reach of the law, with respect to money laundering,
helping to fund terrorists, or moving terrorist funds
around the world. We don't believe that should be the
If a client comes in to a lawyer and says, “I want
you to take this $1 million in ten-dollar bills, put it
in your trust account and issue me a cheque,” should
the lawyer be exempt from that or not, simply because
of the privilege we've always accorded to lawyers in
dealings with their clients?
In that case, the lawyer could say, “Yes, I will
deposit this, but I have to report it.” At that
point, the client could walk out of his office and the
solicitor-client privilege would be respected.
If this committee is telling us that type of
transaction should not be caught by this bill, I would
like a very clear signal from you.
Mr. Stephen Owen: Okay. Thank you.
I think it is very important to clarify, on
the record, that this act already creates, and this
amendment bill will create, an exception to the
solicitor privilege or confidence with respect to the
flow-through of funds that are suspicious by their
nature, exceed a certain amount, or are clearly
directed toward the financing of crime.
Mr. Jim Peterson: That is not denying anyone the
right to get important legal advice from a lawyer. The
privilege is still maintained when they do that. But
when the lawyer steps beyond the bounds of giving that
advice and serves as the financial intermediary, they
must report it, as anybody else would have to.
The Chair: Mr. Roy,
a brief answer.
Mr. Yvan Roy: I'll be very brief, Mr. Chairman. I
thank you very much.
The view that is taken by the government is that the
solicitor-client privilege is perfectly protected by
these provisions. Indeed, section 11, as referred to
by Mr. Lalonde, states that clearly, in the Proceeds of
Crime (Money Laundering) Act.
What you have, however—and you can refer if you want
to the regulations—are the parameters that are
given to the transactions a counsel should be
able to conduct, without being subjected to the
legislation. Let me read very briefly what
The PCMLA includes, according to the regulations, the
receiving or paying of funds other than—these would be
covered by the privilege—those received or paid in
respect of professional fees. So you don't have to
disclose professional fees. You don't have to disclose
either disbursements, expenses, or bail.
In other words, as the minister is stating, once
you're acting as a financial intermediary you're
covered; when you're acting as a lawyer, you're
protected. That is the view that has been taken by the
government. We think that is the state of the law, at
least as we understand it.
Thank you, Mr. Chairman.
The Chair: Peter Mackay, for three minutes.
Mr. Peter MacKay: I have just a very brief
follow-up question, Mr. Roy, on that point.
I guess it becomes blurry when you're acting as a
financial intermediary if you, for example,
engage in the setting up of an account for a client.
That, to me, falls somewhere in-between the definitions
you've just described.
I suppose, particularly then, it comes down to the
knowledge the lawyer had of the reasons for the account
and the source of the funds.
I want to thank all of you for being here and for your
expertise in this area. I think it is absolutely
critical in the war against terrorism to get at the
lifeblood and the source of this activity, although I
think, sadly, we've all learned that the cost of
terrorism is not as high as we thought it might be
when it comes to the types of activities they can
engage in. Weapons of mass destruction are not
necessarily the same as we thought they were before
More generally, to the minister, does your department
envisage the necessity of greater technology in terms
of surveillance? What accounting is there for that in
your plans? What new powers do you foresee in this
information gathering? On the use of electronic
eavesdropping through satellites and wiretaps, is that
something you can foresee FINTRAC engaging in directly,
or will it be entirely left in the hands of the RCMP,
CSIS, and Defence?
Mr. Horst Intscher: Thank you, Mr. Chairman.
We have no authority, and seek no authority, to
conduct investigations. We are entitled to receive and
analyze certain information that financial institutions
are obligated to report to the government. We can also
access, under arrangements, databases maintained for
law enforcement purposes. We are also free to receive
voluntarily provided information by law enforcement, or
by citizens for that matter. But we are not entitled
to go out and seek information through overt or covert
investigation. We were created as an analytic body.
That's our mandate, and we certainly are not seeking to
expand that aspect of our mandate.
The provisions of this bill make it possible for us to
look at this same data, not only through the optic of
the search for money laundering, but also through the
optic of the search for terrorist financing. The
provisions in the bill that relate to FINTRAC are
simply intended to provide us with the authority to
look for a different type of activity in the same data
that's already being reported to us.
The Chair: Thank you very much.
Mr. Grose, three minutes.
Mr. Ivan Grose (Oshawa, Lib.): Thank you.
My question may only serve to prove how difficult this
is going to be. We talk about confiscation and lifting
exemptions for charities. At the moment, the United
States and Britain are bombing Afghanistan, in the hope
of hitting a few terrorists, I understand. But the
United States is also dropping food. The United
Nations is supplying food, and half a dozen
well-recognized charitable organizations are supplying
Inasmuch as we don't know what the terrorists look
like, with a couple of exceptions, they are probably
benefiting from this food. Food is often used as a
weapon of war. How in the world do you separate the
wheat from the chaff?
Mr. Jim Peterson: Mr. Grose, you raise one of the
very difficult questions we're called upon to face.
These are tough calls. The law deals with financing
terrorists; it does not proscribe humanitarian efforts
to help other people. So one would have to look very
closely at every transaction, to make sure that line is
Mr. Ivan Grose: But it's going to be a very
difficult line to draw.
Mr. Jim Peterson: I'm sure the person you should
talk to on this is the CCRA minister, Mr. Cauchon. We have
about 76,000 to 77,000 registered charities in Canada
today, and a lot of these involve those very difficult
types of distinctions.
Our effort here is to make sure a charity that
funds terrorists, or directs money to terrorist
activities, is de-certified, has its tax status
removed, and has its funds forfeited to other charities
or to the crown. Our effort here is to deny tax status
to it and the capacity to exist.
In the case where a charity is supplying food to
refugees in Afghanistan, I have no doubt the CCRA would
tell you that is not financing a terrorist activity.
The Chair: Thank you, Mr. Grose and Mr. Peterson.
At your suggestion, we'll see if we can arrange to
have Minister Cauchon here at 11:30.
Some hon. members: Oh, oh!
The Chair: Mr. Fitzpatrick.
Mr. Jim Peterson: I didn't realize I had such
power. I've never had that before.
Mr. Brian Fitzpatrick (Prince Albert, Canadian
Alliance): Thank you, Mr. Chair, and thank you,
gentlemen, for taking the time to come here.
I have some difficulties with the reporting
requirements under this legislation. I think Mr.
Blaikie raised the point already. Under proposed
section 83.1 it's mandatory that you
report to the Commissioner
of the RCMP and the Director of CSIS if you have funds
or assets. I'm sure there are provisions where they
have to be frozen as well. Then we have the
money laundering requirements, which I'm not totally
familiar with, but I imagine they impose burdens and
obligations on third parties that are holding assets,
and so on.
The question that comes to mind is if we have those
two requirements, why do we have proposed section 83.11, where on
a monthly basis these institutions have to report to
their regulatory agencies with these monthly reports?
I'm going to try to put this in perspective. In
Ontario there are probably thousands of financial
planners, insurance agents, and small independent
operators. They're going to be filing monthly reports,
I presume, with the Ontario Securities Commission.
I doubt whether the Securities Commission has anybody
who's going to monitor and go through these reports.
They have lots of obligations already.
What are they supposed to do with these things? By
that stage the assets are frozen, this has been
reported to the RCMP and CSIS, and the money laundering
thing has already kicked in. Now they must also have
somebody in business continuously monitoring these
accounts and sending these reports to the Securities
Commissioner, or, if you're in the insurance business,
the Superintendent of Insurance.
So they are getting thousands of pieces of paper every
month, and I'm sure they're not going to look through
these things. What are they supposed to do—box them
up and ship them to the Commissioner of the RCMP, CSIS,
or the intelligence community? What's the purpose of
this mountain of paperwork that I think you're really
creating under proposed section 83.11?
Just as another point, two experts on terrorism
were here yesterday. I think they basically
said the cattle were out of the barn. This
legislation should have been in place a long time ago.
The al-Qaeda network is probably underground, and
they're three steps ahead of us on this sort of thing.
What's the purpose of the mountain of paperwork under
proposed section 83.11?
Mr. Jim Peterson: Look, if this committee today,
or after the law is enacted, as you may
amend it, has better and less onerous ways to do this,
then we welcome those suggestions. We will, I can
assure you, be working with financial institutions to
try to alleviate that burden as much as possible.
It's obvious why FINTRAC would want this information.
We don't want to duplicate its activities. Our
financial intermediaries are already reporting to
FINTRAC on money laundering, so we think it just makes
sense to add one more report, i.e. on terrorist
financing. We think that helps the institutions that
have to report, as opposed to reporting to a different
You may ask why we want them to report on a
monthly basis as well to the Superintendent of Financial
Mr. Brian Fitzpatrick: The Securities Commission
Mr. Jim Peterson: OSFI, which is where we will be
getting the reports federally.
Part of the role of OSFI is not to act as a cop but
to ensure that these institutions are safe and
sound. Part of that investigation into whether an
institution is safe and sound, protecting depositors
and policyholders, is their system of governance. That
goes into OSFI's calculation.
If they get information on the types of activities
that are coming through, and can monitor the
information that comes in, then that is again one of
the aspects of the governance of a particular
institution. So that is part of the reason we think
it's important that they report to the regulator as
I'm not particularly as worried about the big
institutions, because they have the capacity to do this,
but I think it will be a factor in a lot of smaller
institutions being told, “We want you to be very prudent
and we want you to adhere to the law as well.”
The Chair: Your time is up, Mr. Fitzpatrick.
Mr. Lee, three minutes.
Mr. Derek Lee (Scarborough—Rouge River, Lib.):
Mr. Peterson, as you know, Parliament has a
constitution based in unfettered power to send for a
person's papers and records, and although that can only
be changed explicitly by statute by Parliament, in
clause 70, which deals with proposed subsection
59(1) of the proceeds of crime act, the PCMLA,
there is wording that refers to the case of an order
for production of documents. On the face of it, it
might be interpreted to actually impinge on
Parliament's constitutional right to send for a
person's papers and records.
So my question is, is this why the change in wording to
insert conditions on responding to orders for
production of documents? Why the change in wording?
Secondly, was it intended to bushwhack Parliament's
constitutional right? The answer to that question is
either a simple yes or no. If it is yes, we have
another set of issues. If it is no, then could we have
that confirmation today, or later in writing in due
course, so it can be confirmed on the record that it is
not the intention of the statute to impinge on
Parliament's PPR authority?
Mr. Jim Peterson: I can't imagine, Mr. Lee, that
it would be, but I shall ask Mr. Roy to respond to your
very precise question.
Mr. Yvan Roy: I would like to give you a precise
answer to your precise question, but I'm not sure
I would be in a position to do so, because I'm not sure
I got the question as clearly as I should.
Section 59, as it is to be amended, simply, by my way
of reading it at least, refers to an addition with
respect to the financing of terrorist activities. In
the production orders, it is with respect to judicial
orders that can be issued for the purpose of getting
information. I do not see anything in it that would
touch in any way, shape, or form the privilege of
Parliament to seek information and documents. But I
should hear you more.
Mr. Derek Lee: To clarify this, if I may, the
wording says that an official at the centre shall reply
to an order for production of documents only if there
if there is a CSIS act or a certificate referred under
section 60.1. There must be a certificate.
If the order for production of documents includes
orders that Parliament would make under PPR, then it is
arguable that Parliament would have to ensure some kind
of a section 60.1 certificate. Of course, that is not
the case now, and in my view never should be.
I'm asking for clarification. Why the change in
wording to require the certificate? I'm going to
assume that no one ever thought of this. The government
was not thinking of this—and that's good, ignorance is
bliss—but if they were, if someone in government was
thinking of parliamentary orders for production when
they wrote this, then they're trying to bushwhack
Parliament and I want a confirmation of the
intention—not just for now but in case this issue comes up
later. I want it very clear on the record that it is no
one's intention, around this table, in the House, or
in government, to impinge on Parliament's PPR. If
you read the wording of the section, and consider my words now,
I think you'll understand what I'm getting at.
Mr. Jim Peterson: Mr. Lee, I can assure you that
as we poured through the minutiae of these very
detailed amendments, the thought never crossed our
minds. But I think it's a very good point you've
brought out. I think we owe you a response, and we'll
get it to you as soon as possible. Thank you very much
for your stellar sweeping.
The Chair: Thank you very much, Mr. Peterson and
Mr. Bellehumeur, three minutes.
Mr. Michel Bellehumeur: The current provisions of the Criminal
Code have allowed the seizure of $150,000 related to terrorism. We
know that in Canada billions of dollars are laundered annually.
Even if we increase the infractions, the applicable penalties, and
if you get the power to freeze these sums for longer, if there is
no political will to conduct inquiries and go the distance, you
won't necessarily seize more money. That's what I want you to
understand. I'm not saying that it is not necessary. I understand
that it is necessary to do so and in fact we are asking that it be
done, but we need more than information and powers that are on
paper. Political will is needed, and I don't feel that the federal
government has it. That was not a question but a comment.
I will now ask my question. It touches on something else that
concerns me. Does the proposed section 83.28 apply to lawyers? Can
you tell me if subsection 83.28(8) applies to lawyers? If that is
not the case, we have a problem.
Mr. Jim Peterson: Thank you Mr. Chairman.
You are right. When we started working on the money laundering
bill, we believed that between $5 and $17 billion were being
laundered annually. So we have succeeded.
I will let Mr. Roy answer the specific questions you have
Mr. Yvan Roy: Thank you Minister.
Your questions, Mr. Bellehumeur, bring me to a clause in the
bill that allows for a specific kind of inquiry.
Mr. Michel Bellehumeur: You are forcing someone to testify.
Mr. Yvan Roy: We are forcing someone to testify. I believe
that the Minister of Justice said to you that this means of inquiry
is already allowed under other acts. In fact, because here it can
be used in cases of mutual assistance.
You are asking if a lawyer could be called to testify before
this committee. The answer is yes since there are no limitations in
A lawyer can be called upon to testify before any court of law
but there are limits as to what he can say during his testimony and
the court will recognize those limits. What are they? The lawyer-client
If you are a lawyer, that does not mean that you can't testify
or be forced to do so, but there are impassable limits, in other
words that privilege we all know.
The Vice-Chair (Mr. Denis Paradis): Thank you very much Mr.
Roy and Mr. Bellehumeur.
We will move on to Mr. McKay.
Mr. John McKay: The way in which money is
traditionally transferred from jurisdiction to
jurisdiction in certain countries is a fairly informal
network. Literally, somebody will walk into a shop on
the Danforth, write a cheque for $1,000, the individual
will charge a fee and phone somebody in another
country, Afghanistan, Pakistan, you name the country,
and the transaction is completed.
The British bill I think—and I'm not absolutely
certain, having gone through it—provides for seizure of
cash really in any form, and there's no $10,000
threshold or anything like that.
I don't really know whether this is a large item or a
small item. I do know it is a traditional way of
doing transactions in certain kinds of cultures. I
would expect that at least criminal activity takes
place in these kinds of transactions. Certainly it's
not all criminal activity by any means—there may
not even be large percentages of criminal activity—but I
should imagine it would be a way of doing
transactions that defeats the intention.
Can you give to this committee any assurances, either
within this bill or outside of this bill, that those
kinds of transactions, if you will the nickel and dime
transactions, are being monitored, and whether in
fact... I'll put it dramatically: this
bill seems to cover the big ones, but there's a whole
bunch of fish swimming through the net because the net
is not tight enough.
Mr. Jim Peterson: Thank you, Mr. McKay.
I have no terribly satisfactory answer for you on
this. A Hawala-type operation is an alternative
remittance system. It is, we believe, caught by the
current money laundering law and will also be caught
under the terrorist provisions that are brought in to
Having said that, we then go from a question of what
can you do to stop these things to recognizing that they
may be highly movable and portable, that they may not
have a big infrastructure, and certainly are not
One of the discussions we're undertaking with our
international counterparts, and it will be a big part
of the discussions of the Financial Action Task
Force on Money Laundering on this is how can we deal
with this type of informal, non-registered, highly
mobile type of remittance system?
Dave, maybe you'd like to say something about this.
Maybe, Horst, you have some thoughts on it.
Mr. Horst Intscher: I would note that, in our
view, these types of remittance systems are caught
under the definition of money services businesses, and
therefore are subject to the record keeping and
reporting requirements of the Proceeds of Crime (Money
Laundering) Act. They will be subject to
compliance audits by FINTRAC, as are other money
In addition, to the extent that they do not reveal
themselves to us as reporting entities, when their
remittances in any way come in contact with the
regular, the formal financial system, there will be an
additional means of ascertaining what their activities
are and taking steps to bring them into compliance with
If they fail to comply with the record keeping and
reporting requirements, they are opening themselves up
to serious sanction under the provisions of the act
that relate to failing to report. Perhaps Mr. Beer
might have something to add.
The Chair: Mr. Beer.
Supt Dave Beer: The question is a very astute one,
and there's no question that informal systems such as
you described will pose quite a challenge.
Let me revert to the question raised earlier by Mr.
Peter MacKay about the importance of international
communication and understanding. The extent to which
these informal systems exist, and taking the
opportunities to learn more about them; the extent to
which they will be more difficult to trap, inasmuch as
they're outside of the traditional banking sector or
the traditional financial sector; the extent to which
we can use other investigative techniques and powers,
dealing with them more in terms of a substantive
offence than purely a money laundering offence or a
terrorist funding activity—these will be important to
gaining some success. But you're absolutely right; it
would be very challenging.
The Chair: Thank you very much, Mr. Beer.
Mr. Peter MacKay.
Mr. Peter MacKay: Thank you, Mr. Chair. To all of
you again, I'm very heartened to hear the minister say,
in a very frank way, that this is going to take some
time. We're not always going to get it right. We're
going to learn from the experience of other countries.
I think that's a very healthy approach to take,
Minister. This is something we're all going to be
going through collectively, both here in this country
and across the world.
I have two very quick questions, specifically to
follow up my colleague, Mr. Bellehumeur. The first
deals with the investigative hearings described at
proposed subsection 83.28(8), in clause 4. I
believe that is the specific subsection that talks
about exemptions from disclosure of things that might
otherwise be considered privileged, both as to demands
for testimony and the production of documents, which
might crop up in the case of a lawyer representing a
The other question I had relates specifically to
instances where there has been a seizure, for whatever
period of time. I think we can all foresee instances
where, because of the complexity of cases involving
financial transactions—and I've been involved in ones
that dealt with vehicles or with incredible volumes of
documents because of the attempts to avoid leaving a
money trail... I'm wondering what safeguards there
are for those whose assets have been seized.
Mr. Roy, you referred to the fact that cases may come
to light—sometimes months or years down the
road—where considerable sums of money have been
frozen. Is there a compensatory scheme? Is there
recourse for an individual to say, “Look, I've lost a
great deal of money in interest while my assets have
been tied up through this procedure”? Is there a
fallback for them? God forbid that this happen, but it
could, and it has in the past.
The Chair: Mr. Roy.
Mr. Yvan Roy: Thank you, Mr. Chairman.
As I indicated when I tried to answer a question from
the other Mr. McKay, the law as it stands continues to
apply in those circumstances. If there were, on the
part of the state, negligence that could be ascribed to
the behaviour, the law will continue to apply.
Therefore redress would be available before the
appropriate courts in those circumstances.
I also expressed, when I answered the question coming
from Mr. McKay, the thought, and certainly the
wish, that the guidelines given to government officials
are to use provisions like this only in appropriate
cases. We are not supposed to use provisions like this
to go on a wild goose chase.
That is certainly not what is expected and not what
has happened with respect to money laundering, for
which we've had such provisions. We've had experience
for the past 13 or 14 years, and it has not happened.
It is not expected that it will happen with the
provisions proposed to Parliament for adoption here.
They are targeted to terrorism, but sit within the
general context of the law. The protections that exist
in that context continue to apply here. There is
nothing removing governmental actions here from the
general application of the law.
Mr. Peter MacKay: No, I appreciate that.
The Chair: Thank you very much. I have to go to
Ms. Carole-Marie Allard (Laval East, Lib.): I have a question
for Mr. Roy. Mr. Roy, you have often testified before our committee
regarding the study of another bill that was very important for my
constituents of Laval-East.
In fact, you know that once again last weekend a young
teenager was shot by a biker. That is very tragic.
Previously we studied an antigang bill and now we are looking
at an antiterrorist bill. Can you tell us if the concept of
participation in the antigang bill is related to the one in the
antiterrorist bill? I know that this is not about finances, but I
would like to benefit from Mr. Roy's knowledge.
Mr. Yvan Roy: Thank you madam.
I worked closely on the development of the bill to which you
refer, C-24. My involvement in the preparation of Bill C-36 was not
as great since I had changed jobs in the meantime. However I am
happy to say that the concepts in Bill C-24 were used by the
writers of Bill C-36. Incidentally, the participation and
facilitation concepts that were studied by this committee in the
context of Bill C-24 are in Bill C-36. If they were relevant for C-
24, they should also be for C-36.
Ms. Carole-Marie Allard: I would like to ask you another
question Mr. Roy. We have the impression that the antiterrorist
bill broadens the powers of the Federal Court, gives certain powers
to the judges of the Superior Court and also to the judges of Court
of Quebec to decide on releases. In the end, are we not diluting
the powers of the judicial system by giving multiple jurisdictions
to multiple courts? Have we considered the creation of a special
tribunal for terrorists acts so that it could rule on a case from
beginning to end?
Mr. Yvan Roy: As far as I know, there has been no question of
creating a specific special court for this. It has been
established—and you yourself have remarked that it is in the
Bill—that there must be judicial supervision of many powers given
to the State. That is why the judges of different jurisdictions
have supervisory responsibilities.
The basic principle adopted is that when federal government
measures are at issue, we use the Federal Court to decide and
supervise the judicial powers, and when the case is more provincial
in nature we use the provincial and superior courts to supervise
We have created special tribunals in very special cases. I do
not believe that this is something that we should favour. I prefer
to have judges with an extensive knowledge of the law look at these
questions and consider the numerous elements and interests that
have to be taken into account in such difficult circumstances.
The Chair: Thank you Ms. Allard and Mr. Roy.
A last question goes to Mr. Sorenson.
Mr. Kevin Sorenson (Crowfoot, Canadian Alliance):
Thank you, Mr. Chairman.
I want to thank you for coming. I found this very
fascinating. When we talk about the war on terrorism,
obviously travel and dollars—being able to limit
their financing—are two of the key roles in fighting
Part of what we're concerned with here is there are no
institutions, I would imagine, here in Canada with
“Al-Qaeda Inc.” bank accounts. We realize
from witnesses there are many small cell groups active
in Canada. CSIS has said there have been 50
organizations raising money for terrorist organizations
in the past. So we know there are large organizations,
but there are also these little cell groups. In the
past week, in Fort McMurray, three terrorists were
arrested with 15 different aliases and all these
different credit cards.
What I'm driving at is this. Various financial
institutions are going to be required to determine if
these larger organizations are active in their
territory and using their banks as an institution. But
how effective are little banks in Fort McMurray, with
three individuals—and maybe another four individuals
in a small little cell group—going to be?
And what is the cost to them going to be? Have we
anticipated any administrative costs we can expect
these administrations to have to come up with ?
We talk about summary convictions, and you also
mentioned that larger institutions may be able to
handle or absorb these. Summary convictions of
$100,000 may be a fairly small conviction for a very
large group, but these little cell groups... My
concern is—though I never really thought I'd ever hear
myself say this—for some of the institutions. Are
they going to put someone in charge of that?
My other question, very quickly, involves the example
where $150,000 has been seized. How many different
groups are represented within this dollar amount, and
how did it come about? Did it come about as a result
of banking institutions coming to CSIS or RCMP, or did
it come about through the RCMP saying: “These are
individuals; let's seize their personal accounts”?
The Chair: Thank you, Mr. Sorenson.
Mr. Jim Peterson: Thank you very much, Mr.
On your second point, the $150,000 that was announced
previously was the result of financial institutions
coming forward, having recognized some of the
terrorists who were listed.
On your issue concerning small financial institutions,
maybe in smaller communities, not having the resources,
to the extent they're linked into one of the major
financial institutions I suspect it will not be long
before they are online with certain types of
communications systems that will hopefully alleviate
I know part of the work of FINTRAC and Horst Intscher
is not to act as cops, but to work with all types of
institutions on implementation. Maybe he could say a
few words about that.
Mr. Horst Intscher: The approach we are going to
take with all reporting entities, really, is to work
with them in partnership to help them understand their
compliance responsibilities and achieve compliance in
as easy and unburdensome a way as possible.
To assist them in making some of the determinations
they have to make, we have issued some guidelines. We
will be continually revising the guidelines, to flag
for them things they should keep in mind when they
conduct transactions. Also, to help them report to us
in a simple manner, we're establishing very simple
electronic reporting means that they'll be able to use.
We will be calling on them periodically to ask if they
have any problems and whether we can help them or help
provide training materials.
Mr. Kevin Sorenson: Some of these are very small
The Chair: Mr. Peterson wants to make another
point, Mr. Sorenson, and this will be the final point.
Mr. Jim Peterson: Having been so graciously cut
off, thanks, Mr. Chairman.
The Chair: Not at all.
M. Jim Peterson: I would like to answer Mr. Bellehumeur's
question. Do we have the will to go after the money launderers and
I can assure all of you that there is a great will to do so
within the government. We will do everything in our power,
everything possible, which should be the duty of every one of us.
I want to thank you all very much, Mr. Chairman, and
especially you, for this opportunity to appear before
you. If you have other questions arising out of your
deliberations that involve us, we'll be pleased to work
with you. Good luck.
The Chair: I'm sure you've enjoyed your first
appearance before the justice committee so much you'll
be anxious to come back.
Mr. Jim Peterson: Certainly.
The Chair: I would also note, further to your
suggestion earlier that we have the minister
responsible for the CCRA drop by, that our staff here
is capable of practically anything. We're going to
suspend, to allow the opportunity to change cards, and
we'll have the minister responsible for CCRA before us
I suspend only momentarily.
The Chair: I call to order the continuation
of meeting number 35 of the Standing Committee on
Justice and Human Rights.
Our next witness is the Honourable Martin Cauchon,
Minister of Canada Customs and Revenue Agency. I will
leave it to the minister to introduce the officials who
Mr. Cauchon, we're anticipating opening remarks and an
opportunity for members of the committee to engage in
discussion around them.
With that, I welcome your being here.
For the record, I'd like everyone to know that the
minister had in fact planned to come, even before Mr.
Peterson brought it up.
Hon. Martin Cauchon (Minister of National Revenue, Lib.): Thank you
very much, Mr. Chair. We are pleased to be here.
I would like to ask the people with me today, who
are experts in the field, to introduce themselves.
Mr. Ed Gauthier (Acting Assistant Commissioner,
Policy and Legislation Branch, Canada Customs and
Revenue Agency): I'm Ed Gauthier, acting assistant
commissioner, policy and legislation, at the CCRA.
Ms. Donna Walsh (Director, Special Compliance
Initiative Division, Charities Directorate, Canada
Customs and Revenue Agency): I'm Donna Walsh, director,
special compliance initiatives division, charities
Mr. Paul Kennedy (Senior Assistant Deputy Solicitor
General, Solicitor General Canada): I'm Paul
Kennedy, Senior Assistant Deputy Solicitor General.
Mr. Ian Blackie (Chief, Counter Terrorism Division,
Solicitor General Canada): I'm Ian Blackie, chief,
counter-terrorism policy, Department of Solicitor
The Chair: Mr. Cauchon.
Mr. Martin Cauchon: Thank you very much, Mr.
As you said, I'll be starting with some opening
Mr. Chairman, thank you for having invited me here today to
talk about this very important bill whose aim is to discourage and
eliminate terrorist organizations and protect Canada, the Canadian
way of life and the fundamental values that are dear to us.
Charities in Canada play an essential role in the care and
support of the disadvantaged. Terrorist organizations seek to
exploit the values we believe in as a compassionate society and
abuse the benefits of our way of registering charities.
By making it difficult for such organizations to use
charitable resources to support their causes, this
legislation will help to eliminate the threats they
pose to our nation and the world.
Countries around the world recognize terrorist
fundraising as a global problem and a complex issue.
No strategy or measure will put a stop to it, but through
consensus building and cooperation, both here and at the
international level, we can set up a broad range of practical,
unified and effective measures to beat this problem, Mr. Chairman.
That is why we need a comprehensive legislative framework that
includes both penal and administrative measures.
The Charities Registration (Security Information) Act
provides an important new tool to fight terrorism.
It puts in place a fair and open administrative legal
process to help prevent groups with terrorist
affiliations from supporting their deadly acts by
obtaining or keeping charitable registrations.
Under the current registration process administered by
the Canada Customs and Revenue Agency, information that
is classified for national security reasons is not used
to deny or revoke charitable status. Because such
information is not protected during the current appeal
process, important information that could potentially
connect a charitable organization with terrorist
interests simply cannot be used. In the absence of a
special legislative regime to protect such information,
the information would be at risk of being disclosed if
there is an appeal of the decision to revoke or deny
The inability to use this key and critical information
makes the integrity of the charity system vulnerable. A
mechanism needs to be put in place that is specifically
designed to allow the government to use and protect
relevant classified information in its decisions to
deny or revoke charitable status.
Mr. Chairman, these are necessary measures in addition to the
amendments we foresee to the Criminal Code to make the financing of
terrorist organizations and all other forms of terrorist support in
The September 11th attacks have demonstrated very well that we
cannot afford to close our eyes to any means used by terrorist
organizations to get financing.
The measures proposed under the Charities Registration
(Security Information) Act focus on a particular aspect of the
problem. Like other measures adopted under Bill C-36, this special
procedure will be applied only in exceptional circumstances.
Mr. Chairman, I would like to underline that the objective and
the relevance of the Charities Registration Act have not changed
since the tragic events of September 11. I remain convinced that
the judicial review process that we are proposing meets the
standards of equity and fair application of the law guaranteed by
the Canadian Charter of Rights and Freedoms.
That is why the measures we are proposing under Bill
C-36 are substantially the same as those proposed under
Bill C-16, with the significant exception that they are
now tied to the new provisions of the Criminal Code
defining terrorist groups and activities.
The approach we are proposing mirrors provisions
embodied in the Immigration Act, a model that has
withstood the test of time and court challenges,
respects the principle of fundamental justice, and
conforms to the Canadian Charter of Rights and
The outlined process is one that reflects our
commitment to maintaining a transparent and fair system
while safeguarding public safety and national security.
It also assures charities the protection of procedural
fairness and due process in our legal system through a
process of automatic and independent judicial review.
The judicial process obliges the Federal Court to
provide the organization with a summary of the
information available to the judge so the organization
is reasonably informed of the case against it. It also
provides the opportunity for the organization to
challenge the case in open court.
The organization as well, Mr. Chairman, has the right
to legal counsel to introduce evidence, call witnesses,
and cross-examine. This would not be the case under the
normal appeal rules, under which an appeal on a
decision to refuse or revoke charitable registration is
heard by the Federal Court of Appeal.
The proposed process also allows an organization to ask for a
no-publication order. If the court agrees to the request, no
information, such as the fact that the no-publication order has
been requested, will be communicated to a third party. The no-
publication order will be lifted only if a Federal Court judge
determines that the security clearance is reasonable. It is only
after a decision by two ministers, approved by a Federal Court
judge, that the Canada Customs and Revenue Agency can take steps to
refuse or revoke the registration of a charitable organization.
Such a structure creates strict accountability. The clearance
will be valid for a period of seven years, but could be reviewed
earlier if an involved organization can demonstrate a significant
change in the circumstances that lead to the revocation. This is a
balanced and objective process based on facts.
In conclusion, Mr. Chair, I would like to reiterate
that Canada is not immune from terrorism.
Terrorist-support activities, including fundraising,
lead directly to deadly terrorist attacks. This is an
issue of concern to all Canadians, an issue on which
the government must take action.
Canadians want and deserve an efficient system of charitable
organization registration that does not give rise to exploitation.
To maintain public confidence in charities, we must ensure that
terrorist organizations receive no support and that our system is
protected from abuse.
Thank you for your attention.
Thank you very much.
The Chair: Thank you, Mr. Cauchon.
The first question is to Vic Toews, for seven minutes.
Mr. Vic Toews: Thank you, Mr. Chair.
Thank you, Mr. Minister, for your attendance here and
for the attendance of your officials. We appreciate
the cooperation your department and the other
departments have been showing in this difficult,
time-consuming, but very necessary, review.
Canada has a very long border with the United States.
It's no secret that it's relatively undefended. We
have numerous crossings in Canada between Canada and
the United States. We simply don't have the manpower
or the personnel to watch every trail that crosses
For example, in my riding of southeast Manitoba,
there must be hundreds of trails back and forth between
the United States and Canada. I know the police and
border officials work very hard to target specific
people perhaps or issues to ensure safety and that our
laws are respected.
One of the issues, of course, for you, as the minister
responsible for the Canada Customs and Revenue Agency,
is the issue of our customs officers. There has been
some controversy over the last while. I don't think
it's unique to your department. Certainly, we hear
some of the same kinds of concerns from the national
parks officers. Although they are peace officers of a
sort, they do not have side arms and other protective
equipment that their union, or collective bargaining
agent, thinks is necessary for their safety and the
safety of Canada.
You've indicated Canada needs to take criminal
legislative steps or administrative measures. Mr.
Minister, wouldn't you also say we need to take
enforcement steps? We need to stand with our officers,
our men and women, who have peace officer status and
various powers and yet are helpless to stop people
coming into Canada, even when they detect them coming
in illegally. Essentially, the responsibility is put
on the RCMP for the actual arrests and detentions.
Similarly, with the national parks officers, we see
the same kind of thing. It's clearly a safety hazard
for these individuals to not carry side arms.
Workplace Safety, Health, and the Ministry of Labour
have made the determination that this is a safety and
health issue. Yet our federal parks officers are still
not armed. Our Canada Customs officers don't have the
We've gone through this provincially in Manitoba.
When I was involved in the government there, we decided
to train our parks officers and provide them with side
arms so they could meet new and increasing challenges.
Mr. Minister, are you reconsidering your decision not
to provide officers with the appropriate training and
side arms? They can relieve some of the incredible
burden the RCMP officers are under. They're obviously
short-staffed for a number of reasons. I don't want to
get into the reasons. I think they could use the help
of the competent people we have in the Canada Customs
Do you have any comments, Mr. Minister.
Mr. Martin Cauchon: Of course, I have comments.
I have many comments.
To start with, Mr. Chair, regarding Canada Customs,
it's part of my department.
Mr. Vic Toews: You are here.
Mr. Martin Cauchon: I always like to talk about
the customs organization, as well as the reform we
started some time ago.
The mandate of Canada Customs is of course to make
sure we keep the border open and keep protecting our
society. We make sure we have a safe society and safe
communities. We have the mandate at the official ports
At the beginning of your speech, you were referring to
not only the remote ports but in between the ports.
In between the ports is more or less the responsibility
of the RCMP.
Through part of the reform we've tabled, and of
course Bill S-23, we intend to use more
technology. When we look at the management of the
customs organization at this point in time, with
increased volume and commercial shipments, if we want
to keep making good risk assessments, we have to use
technology such as INSPASS and NEXUS.
I guess it will be part of our discussions with the
States, as to the situation in between the ports. Is
there any technology we can use there? Certainly, it's
something we're going to look at.
Regarding the question of side arms, some time ago a
decision was taken by the department not to provide
customs officers with side arms.
First of all, we're no one's force. We've said it
many times. Lately we've been given what we call
additional power. We call it official power for the
customs organization. People are going through
training at this point in time. Some have been
trained. Official power has been implemented in some
places. I do believe, with the training, they've been
provided with the necessary tools to fulfill their
Over the past decade, we've been working jointly with
police forces. We have to bear in mind, of course,
that part of our mandate is the safety of our community, as
well as the safety of our officers and employees.
Based on what I've seen, and the information I have, at
this point in time it's not necessary to provide
customs officers with side arms. We are reviewing, and
proceeding with, risk assessment on a regular basis.
There's something underway at this point in time.
I would like to point out that there are arguments on both
sides. You've raised your concerns. You've made your
point quite well. There are strong arguments
to the contrary as well. Some say it would be even more
dangerous to have customs officers with side arms at
Another point, in conclusion, is that, to me, not only
is it not necessary but the first image you have of
Canada is custom officers. It reflects what we are as
a society, and giving them side arms would not reflect
our values in a sense. Having said that, when
facing that situation, we need a balanced approach. We
need to see if indeed it's necessary, but at this point
in time, my conclusion is that it's not.
The Chair: Thank you very much.
Mr. Bellehumeur, you have seven minutes.
Mr. Michel Bellehumeur: Minister, all of part 6 of Bill C-36
is about charities. I agree with you that we need a mechanism to
prevent terrorist groups, under the guise of a very charitable
name, from collecting money to finance their terrorist acts. I have
no problem with that. However, I have a problem with the way you
wrote it. It's not new for you since Bill C-16 went a little in the
same direction and you have already heard these comments.
Do you believe there will an abuse of all these provisions
about the secrecy around the judicial process and the proof brought
forward by the security intelligence agency to refuse or revoke the
status of a charitable organization? Do you believe there will be
cases of errors against a person or organization because of the
proof provided somewhat in secret and of the process used in one
case or another? Do you believe that people and organizations will
be treated inequitably? Do you think that is possible given the way
part 6 is written?
Mr. Martin Cauchon: Mr. Chairman, there is no justice system
in the world that will allow us to conclude what the member just
alluded to. However, I believe that within the judicial system we
know, given the imperatives of the Canadian Charter of Rights and
Freedoms, and the rules of natural justice whose application must
vary according to circumstances, I truly believe, Mr. Chairman,
that the legislative framework we have set up and perfected with
the Solicitor General is one that offers the most protection. I
believe that the rules of natural justice are preserved especially
since what we are setting up, Mr. Chairman, in essence is a
framework that already exists under the Immigration Act and is a
framework that has also already been recognized by other courts at
the international level.
I would like to underline that not only must a certificate be
signed by two ministers who decide independently, but that in
addition it is necessary to go before a judge. Witnesses can be
heard, documents tabled, and, in addition, when the certificate is
deemed reasonable, since that is the legal test, it is possible to
ask for a review before the end of the seven years.
Mr. Michel Bellehumeur: Am I wrong or are these broad powers
that you will have henceforth in terms of inquiry, building proof
and so forth? Once again, there is confidentiality. It's very well
for you to say that witnesses will or can be heard, there is an lot
done in secret in your department, perhaps also for national
security reasons. Do you agree with me in saying that these are
fairly broad powers?
Mr. Martin Cauchon: Mr. Chairman, first, this Bill has been
the subject of consultations with a lot of interested parties,
These powers must always be analyzed through the prism of our
society and national security. We must seek a balance that
maintains Canadian values in terms of charities and protects these
Canadian values against the risk of abuse, and also, on the other
hand, ensures that we can protect the information for the sake of
public interest and the protection of certain individuals.
When I look at the stakes before us, I think that we have
succeeded in reaching the correct balance in this Bill.
Mr. Michel Bellehumeur: Precisely, Minister, I believe it is
important to have a law that balances the rights of individuals and
the collective rights on the one hand and national security on the
Would it bother you to state your position on this balance
every three or four year in an act that would have a sunset clause?
Don't you think parliamentarians should decide again on certain
parts of the act that affect individual and collective rights,
especially certain sections of part 6—maybe not all—and other
sections that should be revised?
You are a lawyer and a minister, and certainly no fool. You
know that the police have very broad powers. There are arrests
without warrants, temporary detentions and so on. Given your
personal experience, and as a parliamentarian and a member, you are
there to protect and seek a balance between the laws and individual
and collective rights. Would you accept sunset clauses in the act
so that you could, as a parliamentarian, decide again on these
sections that grant exorbitant powers according to some members of
the judicial system?
Mr. Martin Cauchon: First, Mr. Chairman, I am not here in a
personal capacity. I am here as the Minister of National Revenue.
It is therefore obvious that I am addressing this committee in that
That being said, I also know that the committee is called upon
to discuss the entire Bill and the famous issue of sunset clauses.
When we look at the current situation as a whole, anywhere in the
world, we see that the question of terrorism is a very serious
problem. There are international agreements that ask the all the
different countries take action. Relationships have been developed
between different countries to fight against this scourge.
Mr. Chairman, I think that countries must enact laws to
protect our societies, protect the public interest, laws that must
seek the appropriate balance to which I just referred.
I believe that when we are analyzing a law, whatever its aim,
we certainly have to seek that appropriate balance, but also look
at its appropriateness in terms of the Canadian Charter of Rights
and Freedoms. If the law passes the Charter test, it is justified,
justifiable and appropriate in our free and democratic society.
From that point on, it is a law that is healthy for all of our
Canadian society given the three-year revision clause that exists.
That is my opinion, Mr. Chairman.
The Chair: Thank you very much.
Mr. MacKay, for seven minutes.
Mr. Peter McKay: Thank you, Mr. Chairman. Thank you, Minister,
for your presence here today and that of your officials.
Picking up on this issue, Mr. Minister, I find very
heartening what you've just said about the need to
protect certain rights, certain civil liberties, and if
we tread on those, there very much has to be this
application of the law and the charter to determine
whether it is justified in a free and democratic
That's why I find a bit of an inconsistency in the
approach that's been taken by this legislation. It is
specifically enunciated in these sections pertaining to
your department that there will be judicial
consideration of a certificate; yet we find that the
issuance of a certificate from the Department of
Justice, the Attorney General, in instances pertaining
to matters of privacy and information in the possession
of the government... Not to pre-empt you, but I'm sure
you will come back and tell us that this may come under
the scrutiny of a charter challenge.
Do you not see this as inconsistent, in that your
department has this judicial oversight capacity, the
process in which a judge can review the appropriateness
of a certificate, and yet there is the complete
exemption of that for the issuance of a certificate in
the Department of the Attorney General when it comes
to information in the possession of the government?
Mr. Martin Cauchon: What we're talking about here,
first of all, is a different part of the legislation.
We're dealing with what we call the Income Tax Act
here, and a very specific provision, the charity
provision of the Income Tax Act. We put in place a
process in order to make sure the organization
will have, as we used to say, its day in court, while
making sure we protect our society.
Of course it's always important to make sure that
those who could fund a terrorist group don't have
access to our system, but there's still time for due
process. Within that legislation we're looking at the
balanced approach, at making sure we do respect due
process and they do have their day in court in the best
I should refer to people from the Department of
the Solicitor General for other comparisons and
comments on this.
Mr. Paul Kennedy: If I have taken the
question correctly, you're referring to the provisions
under the Canada Evidence Act, the certificates—
Mr. Peter MacKay: The certificates of exemption that
can be issued by the Attorney General.
Mr. Paul Kennedy: This regime here obviously was
designed before that legislation was introduced,
because it was in Bill C-16. It's intended to be a
comprehensive regime in and of itself, just as section
40.1 under the Immigration Act, Bill C-11, has a regime
in it too.
This legislation uses the following technique: if
there is evidence going to the judge, and the judge on
review looks at it and says—and let's use
foreign-source information as an example because it's
the classic one we hear about—this is relevant, I
have to disclose it to the other side for it to be part
of the hearing, for them to hear it. The state counsel
at this stage can say, all right, if it has to be
heard, because of our international obligations wherein
it is not supposed to be disclosed, we'll ask that the
information be returned to us and that the judge
disabuses his or her mind of it.
In other words, what we've consciously done is said if
it has to be disclosed, because of our overriding
long-term obligations to continue information sharing,
we will take that back. This effectively weakens our
case, because the judge won't consider it. This is the
option we followed in that particular model instead
of an override.
The override provision you have in the Canada Evidence
Act deals with a situation where you have a trial judge
over here and a Federal Court judge who may order
disclosure, for it to be used on the other side. It's
at this stage that the Attorney General can file a
In effect, then, trial judges are given a series of
powers to sanction or punish the state for having done
this. Amongst their various powers they can say to the
crown lawyer who is reliant upon it that they will
strike a witness's testimony, stay a particular count,
or stay proceedings. No matter how you do it, a
sanction is imposed upon the state through recourse to
this particular technique.
If that assists...we have used one model. There's the
other model. In either case, there's a sanction to the
state because the evidence is not used. In our
particular case—I know the member is a former
prosecutor—it would be akin to a statement that the
judge has looked at it and ruled it inadmissible on a
voir dire and the evidence is never heard.
Mr. Peter MacKay: It's done in camera.
Mr. Paul Kennedy: That's right. It could be a
wiretap application where the judge looks at an
affidavit. The source information says you have to
disclose the nature of the source. The human source,
as a privilege, can't be...it's the privilege of the
individual. The state, in that case, has to bear the
consequences. Those are the models and principles at
Mr. Peter MacKay: I appreciate that further
explanation, Mr. Kennedy, and to the minister.
Even granted that this came from a previous piece of
legislation that obviously didn't anticipate the events
of September 11, I still submit to you that there is an
inconsistency in approach, wherein you're taking the
right approach by putting in a safeguard and an
oversight capacity to your legislation that doesn't
exist in the Attorney General's ministry. I don't
expect you to comment on this decision. I'm only
pointing it out.
With respect to the practical implications of this
legislation—and this may go a bit far afield of the
act itself—I would like to ask the minister what new
equipment and technology he foresees his department
requiring as a result of some of the security measures.
Surely, there will be a necessity in the future to
make every effort to coordinate any new equipment or
technology that might be put in place at our
border—the longest undefended border in the world—to
ensure there is a synergy. That is, if we were to have
a process where we gave an individual, a Canadian
citizen or a landed immigrant, a certain type of card
or electronic pass, this process would be comparable to,
would work cheek by jowl with an American system, which
they may similarly be looking at.
Is this contemplated? Is this something your
department is moving towards? Could you give us some
indication as to what the future might hold for that
type of process?
The Chair: Mr. Cauchon.
Mr. Martin Cauchon: Broadly, Mr. Chair, of course
what we will put in place is basically a new vision of
the question of managing the customs.
Today we're working based on a
transaction-by-transaction system. In our reform we're
looking for more a pre-clearance system, and of course
technology would have to be involved. As you quite
rightly said, we're going to have to work in
cooperation with the States. For customs, if
harmonization is needed, we'll do it.
As a matter of fact we have already in Ontario what we
call a NEXUS program, for example. With NEXUS,
people on both sides of the border have access to the
very same card. They're using the card when they cross
the border. We gave them cards because, after
obtaining information from them, we decided they don't
represent a high risk for our communities.
So this type of technology will be used. Of course, as
you can see, we have already started to go forward with
what I call harmonization with the States since NEXUS
has come into existence.
Mr. Peter MacKay: And Mexico as well, I suspect.
Mr. Martin Cauchon: I don't know how it works
exactly with Mexico, but for the northern border, we
have that technology in place.
We have CANPASS on our side as well. They have a
type of pass that is a bit like CANPASS on their side,
so obviously we're going in the very same direction. We
have basically the same vision. We're about to see
more use of technology on the land border and also for
international airports and seaports.
The Chair: Thank you very much.
Mr. Paradis, you have seven minutes.
Mr. Denis Paradis: Thank you very much, Mr. Chairman. Thank
you very much also, Minister, for you presence and your opening
remarks. I would also like to congratulate you on your performance
since the events of September 11, especially in the areas of
customs and security.
My first comment is about the registration of charities. There
is a lot of discussion about the means of removing the rights of an
organization whose activities are not in accordance with its
objectives, but less about doing good audits for the registration.
If I worked for an organization whose rights were being taken away,
it would probably be easier not to challenge the decision and to
re-register my organization under another name. In other words, it
would be easier to resubmit or re-register under another name. I
would like more explanations about the type of examinations at that
My second comment is about customs. Based on the data, we can
see that we intercepted more people at the border who had a
criminal record and were trying to enter Canada from the United
States than the Americans intercepted people with a criminal record
coming from Canada.
The American ambassador, Mr. Paul Cellucci, whom you have met,
mentioned in a speech yesterday that if we harmonize our rules in
ports and airports, among other things, there would not necessarily
be a loss of sovereignty by Canada. We should explore this idea
further. If we define a global access plan for North America, we
could perhaps get fast-track procedures between Canada and the
United States, which would ease commercial transactions that are so
disrupted now. I would like to hear your comments on this matter.
My third comment is about the Income Tax Act. It talks about
criminal organizations. Let us remember that in the case of Al
Capone, the United States used the tax act to beat him in some way.
Could the Income Tax Act be useful in our case? These terrorists or
terrorist cells are surely not the first to file a proper income
tax form but could the Income Tax Act, as it stands, and its
application, perhaps be of some use in catching these terrorist
Mr. Martin Cauchon: Your first question is one of enquiry. I
will therefore refer it to my colleague.
Mr. Paul Kennedy: It's an excellent question.
Clearly, on organizations deregistered under this, the
only effect of our legislation is to take away their
status as a charity. Once this is done, the provisions
of the Income Tax Act kick in. Then the organization
has in effect one year in which to correct its
situation. In other words, it has to transfer its
assets to another bona fide registered charity.
If it does this within one year, there are no
problems. If it fails to do it within the one-year
period, there is a penalty imposed equal to 100% of the
value of the assets of the charity. You have to bear
in mind that the charity accumulated those assets using
its charitable status to get tax deductions.
The individuals could clearly go on to try to
refashion themselves into another organization. If
they create a new organization, they would have to
apply for charitable status. If that was their goal,
this legislation would apply, because it deals with
deregistration but it also deals with new people who
are applying. So we'll know who the individuals are.
The other provisions are...if you chose not to come
back and apply for charitable status, but wanted to go
as a non-profit organization and raise funds that way,
then you'd be caught by the provisions of part
II.1 of Bill C-36. It deals with entities. An
entity is defined on page 12 as “a person, group,
trust, partnership or fund or an unincorporated
association or organization”.
So if they went on in some other fashion then without
charitable status and engaged themselves in the same
activities, They would fall afoul of the
provisions of terrorist activities and those who are
either facilitating, supporting, and doing other
activities. If you do that, you can leave yourself
open to the civil forfeiture provisions, as well as the
criminal provisions of part I of this bill.
Clearly we would be reliant upon intelligence in the
possession of CSIS and the police in order to help us
identify organizations that did those things, but there
are mechanisms here that would capture those activities
if they tried to come back and repeat them.
Mr. Denis Paradis: I would like a clarification, Mr. Chairman.
Is there currently a mechanism that is more severe than
previously and that is used when someone or some group wants to
register and is suspected of terrorist activities? Is there such a
mechanism that would allow detection and further questioning?
Mr. Martin Cauchon: Every time an organization makes a
request, it is addressing an autonomous agency that makes its own
decisions and the minister does not intervene. Obviously there are
a certain number of conditions to be met and a certain number of
questions to be asked, but what is important here—the question is
relevant—is that there is already information on a certain number
of organizations from everywhere in Canada. Obviously we are
speaking hypothetically because I do not personally have access to
that type of information. But it is true that it exists in Canada
and elsewhere in the world.
Currently, we cannot use the information related to charities.
The Bill would allow the gathering of information related to
charities and the use of that information in the judicial process
that we are setting up.
Mr. Denis Paradis: Yes, but I would add a brief point if I may
Mr. Chairman. The list of friends of ben Laden has been published.
I imagine it came from what we know of these charities, from
recordings that you talked about. We don't need the Bill for the
people who record new charities to find out about the friends of
Mr. Martin Cauchon: But we need the tool we are asking you for
today because the legislation is such that we cannot use, as we
speak, the information from SIRC or the RCMP.
Therefore the legislative framework that we are asking for
today is necessary despite the fact that the list has been
published. It is also necessary because it could happen that the
information may come from SIRC or even the RCMP and may not include
those organizations yet.
The Chair: Thank you, Mr. Paradis and Mr. Cauchon.
Mr. Denis Paradis: Mr. Chairman, I had asked a question that
had two other elements.
The Chair: Well, seven minutes it is.
Mr. Sorenson, three minutes.
Mr. Kevin Sorenson: Thank you, Mr. Chair.
Thank you for coming, Mr. Minister and staff.
I have not a long preamble but three basic questions.
First of all, do you foresee a large number of groups
losing their charitable status? How big a problem is
In the last group of witnesses that were here, we
talked about the importance of fundraising for
terrorism. We realize that they do a number of things:
identity theft, the ones in Fort McMurray with 15
different aliases; credit card theft; credit card
fraud; bank fraud; fundraising; and legitimate
businesses that are siphoning money into terrorist
In order to have a charitable status already, it has
to be an organization that does a lot of very good,
positive things. In other words, there is a criterion
for having charitable status. We're talking about
taking away charitable status from groups that are
involved. If a group highly represented in numbers was
part of perhaps a religious organization, and in that
organization there is a group of 5, 10, or 15
individuals who are expounding with conviction, or
perhaps they're expounding the conviction of that
organization, could or would that organization lose its
The Chair: Was that your short
Mr. Kevin Sorenson: Those were two questions, Mr.
Chairman, and those are really the ones to touch on
first. But the last one would be to the minister.
Do you believe the responsibility of the peace
officers or border police, or whatever—we don't have
them now—the police officers, should be taken out
of your portfolio and put into the Solicitor General's?
The Chair: Thank you, Mr. Sorenson.
Mr. Paul Kennedy: I'll handle the first question.
I think ministers, in other instances, had indicated
that if you look at our experiences with section 40.1
of the Immigration Act, approximately once or
twice per year, or in about 22 instances in the past
decade, the provisions have been used to identify
someone who has been a member of a terrorist
organization and to have them removed from the country.
The indication on other occasions was that we expect
this to be used with that same kind of strategic
Part of this will be a prophylactic effect. If you
have the powers, people will cease to do things because
they know you now have the capacity to do something
about it. Currently we don't have the capacity, and
they're sheltered from any action by the state.
The other thing, in the example you gave—and I think
that's the unique advantage in terms of the tools
available to the state—is that part 6 gives the state
the ability to recognize the kind of circumstance
you've talked about, where you may very well have a
religious institution that is carrying on valid social
purposes in a community.
If you're looking at the
provisions under part 1, you would go in and you would
freeze and forfeit the assets to the state.
Under the charities portion of the income tax regime,
if the facts allow us to, we can go and talk to some of
the people and say, we think you have a problem; try to
clean the problem up. The information, though, may be
not of a nature that allows us to carry on that kind of
dialogue, and ministers then have to have recourse to
Once the certificate is filed and the charity is on
notice, and assuming it's upheld by the court, the
charity then has one year in which to correct its
situation. So it could take the assets, which might
very well be religious or community buildings, and
transfer them to another bona fide charity, and the
assets are not touched. All we care about is that
those assets not be abused for purposes to fund or
support terrorist activities. So it allows them to
take those assets and put them under a proper charity
and allows that proper community activity to continue.
Within that period of time, if the same organization
wished to remain in place, it's also possible to clean
house, if I can call it that, and if it has directors
or officials in charge who are abusing their status and
using it for that purpose, maybe put a new executive in
and come back and say, there has been a material
change; will you review your action and withdraw your
certificate? That is a possibility as well.
Those are the two routes.
The Chair: Thanks you very much, Mr. Kennedy and
Now, John McKay, for three minutes.
Mr. John McKay: Thank you, Mr. Chairman.
I want to direct a question concerning, if you will,
charity chill. The legislation reads:
83.01(2) For the purposes of this Part, a terrorist
activity is facilitated whether or not
(a) the facilitator knows that
a particular terrorist activity is facilitated;
Is it within the realm of possibility that a charity
that funds a foreign agent, and in turn
unintentionally finances terrorist activities, may
itself become unwittingly part of a terrorist group?
I'll use as an example World Vision. World Vision
operates in Palestine. Presumably, nothing goes on in
Palestine without the knowledge of the PLO or the
Hamas, recognized terrorist groups.
A mosque in my riding, for instance, raises funds for
relief efforts in Afghanistan. They put the money
through an agent in Afghanistan. That agent in
Afghanistan has to cooperate with the Taliban. I
assume nothing happens without the cooperation of the
Taliban in Afghanistan.
Are you casting this net so broadly as to, in effect,
chill out what would otherwise be considered to be
charitable activities, because these charities,
particularly the respectable ones, particularly the
good ones, will receive legal advice that they may be
caught up in this net? How are you as minister, and
you as officials, going to give assurances to those
charities that are otherwise legitimate, otherwise
doing proper activities, that they should have no fear
of this legislation?
The Chair: Thank you, Mr. McKay.
Mr. Martin Cauchon: First, as I said, that piece
of legislation has been crafted in order to make sure
we would give organizations due process, while
making sure as well that people wouldn't be able to
abuse the system.
Secondly, the item you are referring to is the
notion of mens rea. The mens rea is not
part of the bill. It's a factual analysis we're
making in order to proceed on reasonable grounds with
Maybe you could add to that.
Mr. Paul Kennedy: I would just comment that, in my
understanding, currently if you are a
charity, you have in fact a positive obligation imposed
upon yourself to ensure that your assets and activities
are not used for other than the strict purposes of the
mandate for which you've been given charitable status.
So you bear a continuing obligation of due diligence.
My other comment is that you've made reference to the
definition of “facilitation” on page 15, I assume.
The facilitation aspect there is a definition for that
part, part 1,
so it gets imported back into
What you have to be aware of
here is the knowledge element that is talked about for
that purpose. You don't know that the
organization is going to do a particular act, but you do
know you're dealing with a terrorist organization that
involves itself in that range of terrorist activities
we saw there. So it has to be read that way.
The Chair: Monsieur Bellehumeur.
Mr. Michel Bellehumeur: Minister, a while ago you spoke about
the Canadian Charter of Rights and Freedoms with such conviction
that my question will be about that.
Everyone we have heard, and even Minister Peterson, has talked
about the possibility of abuse. All the other witnesses we have
heard up to now say that there are exceptions to certain principles
recognized in the Charter: arrest without a warrant; breaking the
right not to speak; the increase in electronic surveillance; having
one's name put on a list without one's knowledge; the suspension of
the Access to Information Act; the new principle of suspicion. We
no longer need only a reasonable belief to something will happen;
if we have suspicions, we can do this or that. There is therefore
a departure from the Canadian Charter of Rights and Freedoms.
Since you are talking to me about the Charter, I will ask you
the following question. In the Charter itself, it says that if a
parliament uses the notwithstanding clause, it is only for a period
of five years. It must be voted on again to remain in force.
Therefore the sunset clauses were not invented by the Bloc
Québécois. That is known in Canada. Even in the most important law,
the Canadian Constitution, there is a provision for a revision
every five years of certain departures that a parliament may have
put in laws.
Why do we not put such sunset clauses in this class
legislation? You are here to represent your government and not
yourself as an individual, as though you could have no personal
opinions. How can your government refuse to put sunset clauses in
certain clauses that allow departures from the rights recognized
under the Charter of Rights and Freedoms and not give clear reasons
for doing so?
Mr. Martin Cauchon: Mr. Chairman, I believe that the issue was
abuse. I have spoken about that and explained it. There is not a
single judicial system in the world that can give society a 100%
guarantee against abuse. There is always that possibility, in all
judicial systems, in all laws. What we are looking for here, and I
have mentioned it, is a balance between private and collective
interests on the one hand and public security and the protection of
certain individuals on the other hand.
Mr. Chairman, I respectfully submit that we have the audacity
to claim that what we are doing passes the test of the Canadian
Charter of Rights and Freedoms but that what we are doing is aimed
at fighting an international scourge and meeting certain
obligations we undertook as a result of certain international
In this context, if we are serious about what we are doing,
knowing full well that this Bill respects the criteria of the
Canadian Charter of Rights and Freedoms, it is a tool that we
should keep as a society, especially since there is a review
mechanism in the Bill.
Mr. Michel Bellehumeur: You lack rigor, Minister.
The Chair: Thank you, Monsieur Bellehumeur.
Mr. John Maloney (Erie—Lincoln, Lib.): Minister,
you have more or less 76,000 or so existing charities
registered with you. Do you anticipate any initiatives to
perhaps review those existing organizations, taking
a proactive approach on whether there may be any
On any new applications, I'm interested to know, do you do
CPIC checks of the directors or any cross-references
with CSIS or the RCMP on the bona fides of new
applications? In the annual filings
they have to do with you, do you in fact do spot audits
to confirm whether or not their activities are
legitimate and that the funds have gone where
they should have gone, to the charitable activities.
Mr. Martin Cauchon: I will pass on to the officials
afterwards, but for the first question, they have to
table a report on a yearly basis, as you know. In that
report they have to provide some information as well.
At this point in time, if there's information
coming from police forces available, we said that
with the legal system we have we actually can't use them.
The aim and goal of this bill is exactly to
make sure we're going to be able to use them to
refuse registration or simply to deregister an
organization, so perhaps there's something else to add.
Ms. Donna Walsh: We do have an ongoing audit
program. We audit between 500 and 600 charities a year
normally, and those charities are selected on the basis
of a number of indicators—some are random-sample
selections, some are based on complaints. We review
the annual returns, and we do have a system in place to
take key factors off the information returns every year.
We also have a proactive approach in terms of trying
to make sure that charities understand their
obligations under the act. We have what we call a “road
show”. We go out to communities all across the country
every year and we invite charities from the area to
come and attend sessions, to hear about their filing
requirements, their general obligations under the act.
We try to take that positive approach to
compliance as well as to the enforcement end on the audit
side of things.
The Chair: Thank you, Mr. Maloney.
Mr. Peter MacKay: Mr. Maloney has raised a very
interesting point. Since everything we've been doing
legislatively and otherwise has been concentrated on
this renewed effort to combat terrorism, I would like
to pick up on what Ms. Walsh has just shared with us.
Is there going to be a necessity
for more personnel and perhaps
the production of a manual for federal and provincial
crown attorneys who are involved in the prosecution and
the investigation side of this? I know the RCMP have
commercial crime units, but I would suggest this
is a very specialized area of the law we're now
Mr. Minister, do you anticipate your department
undertaking that effort to produce a manual or to
provide any special training, and perhaps
additional personnel, for those who are engaged in this
effort to ensure compliance and enforcement of
these new regulations?
Mr. Martin Cauchon: Do you mean the bill as a
whole or the charity division?
Mr. Peter MacKay: I guess I'm asking you under
your responsibilities whether or not these additional
provisions will require that personnel response, as
opposed to just the legislation.
Mr. Martin Cauchon: Mr. Chair, under my
responsibility, the question of the charity division,
part 6 of the bill, doesn't require any additional
resources from other organizations, whether provinces,
for example, or territories, because, basically,
charity organizations are managed by their departments
under the Income Tax Act. It's a special provision.
When we deal
with the information within the department it's deemed
to be confidential all the time. So I don't foresee any
additional need with some stakeholders who could work
with us, knowing as well that the information couldn't
be provided to other organizations, because we're dealing,
as I said, with the Income Tax Act.
Mr. Peter MacKay: I apologize for
perhaps not being as direct as I should,
but what I'm getting at is an increased diligence in
this area of enforcement, of
how charitable organizations might be used for an
illegal purpose. Will that result in the necessity of
the production of either a manual or working closer to
train and ensure that police, who will be enforcing this
under commercial crime, and prosecutors...will they be
given any additional assistance by your department?
Mr. Martin Cauchon: Not from my department.
Mr. Peter MacKay: No?
The Chair: Thank you very much, and
now to Madame Allard.
Ms. Carole-Marie Allard: Minister, last week during the
conference on money laundering certain practices by certain people
were brought to light that are at the very least debatable, asking
for refugee status. We know who these people are since they are
making a request. We also know that many of these people
disappeared after making the request. We do not know where they are
in Canada. The numbers are out.
The Bill does not refer to the Income Tax Act except to target
charities. Can we assume that with this Bill the government is
increasing its powers to use the Income Tax Act to try and trace
these individuals? Could we not try to link them?
Mr. Martin Cauchon: Obviously our audit division is very
active. When we allude to a tax question, for example, we always
work in terms of risk evaluation, somewhat like in customs. The
audit division is re-centering its efforts where there is a higher
risk of tax fraud. It is obvious that all this is done on a regular
What is interesting, in terms of the Bill, is that we can
effectively use certain tax information very specifically in the
case of charities. We will be able to use the tax information
before the courts to get a refusal to register or simply a deregistration.
Ms. Carole-Marie Allard: Yes, but I want to know if the Income
Tax Act is being broadened simply for the registration of charities
or if there are other things that could be done under this act to
cross-check information. Therefore, is secrecy under the Income Tax
Act still strictly limited to charities?
Mr. Martin Cauchon: I am not sure if I fully understood your
question, but under the Income Tax Act it is obvious that a
confidential element remains basic: that's section 241 of the
Income Tax Act.
Ms. Carole-Marie Allard: We do not affect that with this Bill.
Mr. Martin Cauchon: Under this Bill, we could use the
information in a very specific manner to get a refusal or a deregistration.
Ms. Carole-Marie Allard: But it's always related to
Mr. Martin Cauchon: Essentially, it will provide us with an
additional tool. It is related to charities.
Ms. Carole-Marie Allard: Thank you.
The Chair: Thank you very much, Madam Allard.
Mr. Chuck Cadman: Thank you, Mr. Chair and thank
you, Minister, for appearing. I'll take advantage of
my opportunity to question you on your responsibility
Recently, it was brought to my attention that at
Pearson International, during peak arrival times, up
to 25% of the front-line staff were essentially
university students with just a couple of weeks of
training. Also, at many of our land border crossings
we have students doing secondary inspections.
Now, this isn't in any way questioning the motivation
or the commitment of the employees involved, but in
light of what happened on September 11, I think people
are expecting a little more experienced and trained
staff to be doing our primary and secondary inspections
Are there any plans in place to do something about
upgrading the experience, having more experienced
people at the borders?
Mr. Martin Cauchon: First of all, in light of
September 11, I think our reform of the Customs action plan
is shown to be even more appropriate in the sense that
the vision we put in place prior to September 11 is
even more accurate today. As I said, my aim and goal
today is to make sure we speed up the implementation of
that reform using more technology, and therefore
proceeding with a much better risk assessment.
But the question you're referring to is the use of
students at the border. First of all, no matter what
we do, I would like to tell you that the cornerstone of our
organization will always be our customs officers. We
need their experience. They've done wonderful work over
the past decade. Since September 11, I'm just as
pleased with the work they've done for Canada. And
today, Mr. Chair, I would like to thank them and
congratulate them for the wonderful work they've done.
They receive good training, and they get
trained on a permanent basis once in a while as well.
For example, I referred earlier to the question of
official power... They received training then.
On the question of students, we have more than 7,000
customs officers. If you include the student programs,
it goes up to a little over 8,000 customs officers.
That program has existed within the department since
1962. It's been a good program, a fantastic program.
It provides students with good work experience, and so
far what I've heard is that people are quite pleased
with the work they're doing. We have to take into
consideration as well, Mr. Chair, that some of those
students come back year after year throughout the time
they spend at university. At the end of the two or
three years, they have more experience. As well, they
do work under supervision when needed.
Mr. Chuck Cadman: Thank you.
The Chair: Mr. Paradis, for three minutes.
This is the final question.
Mr. Denis Paradis: I would like to return to the point we were
discussing earlier, the issue of customs and the access of
Canadians to American soil and vice-versa. I mentioned that
Ambassador Cellucci had talked about harmonization in his speech.
He said there would be no loss of sovereignty if we could come to
an agreement with the Americans. Our colleague Manley was in
Washington yesterday. He asked what rules we could find to help
trade between our two countries. In addition, there are American
representatives who have held or will hold public hearings about
the American borders.
All this is bubbling at this time. If we could streamline our
procedures in ports and airports and harmonize them with those of
the Americans without any loss of sovereignty for Canada, there
might be a more fast-track way between Canada and the United
What is your position on this? Are there now negotiations with
the United States and at what point are they?
Mr. Martin Cauchon: Obviously when we talk about the
harmonization of certain programs we are not talking about
sovereignty. Essentially, when we look at the two customs systems,
in the United States as well as in Canada, we see that both
countries have exactly the same mandate, even the same objectives.
What is important is to ensure that what we do on our side and
what they do on their side serve the same objectives. From that
point, I believe that working together we can jointly improve the
customs system and be more efficient. For example, we can set up
more preclearance systems.
The example I regularly give is the one of a container that
arrives at the port in Montréal and that is going to Boston
afterwards. If Canadian customs checks it in Montréal, why should
it be checked again at American customs?
If we can reach an agreement on the objectives and learn what
we do on each of our sides, there could be harmonization. That does
not necessarily imply harmonization. There could be times when we
develop our own programs. Since we are talking about harmonization,
I must say that the NEXUS program that I alluded to earlier is a
For example. In the last few days I have said that the customs
situation was almost back to normal in terms of trade volume and is
perhaps 10% below what it was before September 11. In terms of
passengers, travelers, that is another matter. We are talking about
a decrease of about 30%.
Now, as to waiting times, I have always asked people to
consult the Web site that we have set up at the Canada Customs and
Revenue Agency. When we analyze waiting time and ignore the issue
of volume, we can see that things are back to normal at the trade
level. If you analyze the waiting time on the Canadian side, you
will see that things are going well but that the waiting time on
the American side is too long. I think that could make things
At this time, my dear member, there are talks between Canadian
and American customs to develop an action plan for managing the
borders. In addition, I will soon be going to Washington, D.C. to
discuss this issue.
The Chair: Thank you very much, Monsieur Paradis,
Monsieur Cauchon, and officials for assisting us.
Mr. Fitzpatrick has decided that his question
was answered, so on that note, I'm going to suspend. We'll be
reconvening promptly at one o'clock for our business
[Editor's Note: Proceedings continue in camera]