Bill C-25 (Historical)

An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act

This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record-keeping and reporting measures applicable to financial institutions and intermediaries. It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.
It allows the Financial Transactions and Reports Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies, and to make disclosures to additional agencies.
It permits the Centre to exchange compliance-related information with its foreign counterparts and permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.
It creates an administrative monetary penalty regime.
It amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the Centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.

Proceeds of Crime (Money Laundering) and Terrorist Financing Act

[Lawrence Cannon, Conservative, Pontiac, QC]

moved that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[Diane Ablonczy, Conservative, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I appreciate this opportunity to speak to Bill C-25. This legislation contains needed measures to update Canada's fight against money laundering and terrorist financing activities.

This new government is determined to be on the front lines of the important global fight against money laundering and organized crime, and against terrorist financing activities.

Canada's anti-money laundering and anti-terrorist financing regime must be kept up to date and must adapt to evolving money laundering and terrorist financing schemes. Criminals are constantly changing their tactics and finding new ways to evade the law.

The proposed amendments in the bill before the House today are critical in helping to stay one step ahead of these criminals.

Bill C-25 illustrates that Canada's new government is serious about ensuring that Canada's anti-money laundering and anti-terrorist financing regimes both meet revised international standards in this area and also address the areas of risk here at home.

Before I address the specifics of this bill, I would like to take a few moments to provide some background to this proposed legislation to emphasize the importance of Bill C-25.

First, we ought to remind ourselves what exactly are money laundering and terrorist financing.

Members of the House are well aware that the activities of organized crime, such as drug trafficking and prostitution, generate significant amounts of money, usually in cash. The criminal or group must find a way to spend and invest the funds without attracting attention to the underlying illicit activity, lest it be shut down and they lose their source of revenue.

Money laundering of course is very difficult to quantify. However, the International Monetary Fund makes an educated estimate that the aggregate size of money laundering worldwide is between 2% and 5% of global GDP. That is a very significant amount.

How does money laundering work? How does it take place? Money laundering occurs in three stages. The first is the placement stage. In this stage the launderer introduces the illegal profits into the financial system. This is done in a number of ways. One is breaking up large amounts of cash into less conspicuous smaller sums that are then deposited directly into a bank account. Another is using cash to purchase a series of monetary instruments, cheques, money orders, et cetera, from financial institutions that are then collected and deposited into accounts at other locations.

The second stage is called layering. In this stage the launderer engages in a series of conversions or movements of the funds to distance them from the first place they were deposited. For example, this could be through the purchase or sale of investment instruments such as shares or a series of wire transfers to various bank accounts globally.

Having successfully moved the criminal profits through the first two stages of the money laundering process, the launderer then enters the third stage which is integration. It is at the integration stage that the funds re-enter the legitimate economy. The funds can now be invested or used to purchase luxury assets, real estate, securities or other investments.

Money launderers tend to seek out jurisdictions with weak or ineffective anti-money laundering programs. Canada does not want to be on that list. However, because the objective of money laundering is to get the illegal funds back to the individual who first collected them through criminal activity, launderers usually prefer to move funds through areas of highly developed, stable and sophisticated financial systems, and where the large volume of transactions may diminish the risk of suspicious transactions being detected. That is a country like Canada with a sophisticated and stable financial system.

The other element, terrorist financing, how does that fit into this picture? Terrorist organizations require financial support in order to carry out their evil and destructive activities. A successful terrorist group, like a criminal organization, must be able to build and maintain a steady flow of funds. It must develop sources of money, a means to covertly move that money around, and a way to ensure that the money can be used to obtain the materials needed to commit terrorist acts.

Terrorist financing comes from two primary sources. First, there is state sponsored terrorism, sadly. Financial support is provided for these terrorist activities by states or organizations large enough to collect and then make funds available to the terrorist organization. A variation of this is where a wealthy individual provides funding. For example, Osama bin Laden is thought to have contributed significant amounts of his personal fortune to the establishment and support of the al-Qaeda network.

The second source of terrorist financing is money derived directly from various revenue generating activities. As with organized criminals, a terrorist group's income often comes from crime or other unlawful activities. For example, a terrorist group may engage in large scale smuggling, various types of fraud, robbery and narcotics trafficking.

However, unlike organized crime, terrorism can be financed using legitimate funds such as those collected in the name of charitable causes. These loopholes, often exploited by terrorist groups, need special attention in order for Canada to move effectively to deny terrorists the funds they use for their destructive deeds.

It is this second source of terrorist funds that the measures in the bill are designed to detect.

It is important to remember that this activity has an effect on all Canadians because money laundering, major criminal fraud, and financial crimes have the potential to undermine the Canadian economy by impacting the reputation and integrity of individual financial institutions, not to mention the financial sector as a whole.

Members of the House will appreciate that the integrity of Canada's banking and financial services depends on citizens and investors being able to trust that institutions are well regulated and protected from criminal elements.

By extension, a healthy financial system is absolutely critical to Canada's ability to attract investment, and therefore increase and sustain overall economic growth and productivity.

If funds from criminal activity can be easily processed through a particular institution because proper anti-money laundering controls are not in place, institutions could be drawn into unwitting complicity with criminals. As well, evidence of such abuse will have a damaging effect on the perception of other financial intermediaries, regulatory authorities and Canadians themselves.

The potential costs of money laundering are of course serious. If not addressed, organized crime can infiltrate financial institutions, acquire control of large sectors of the economy through investment, create competitive disadvantages for local businesses, and continue to fund harmful criminal activity such as drug trafficking, human smuggling and prostitution which preys on women.

What has Canada done to prevent and deter money laundering and terrorist financing?

Since 2001 Canada has had an anti-money laundering and anti-terrorist financing regime that is in the top tier of our international partners. This legislation has helped ensure that Canada is not a haven for money laundering and terrorist financing activities.

Indeed, Canada has made significant progress in detecting suspected cases of money laundering and terrorist financing. We continue to work closely with our domestic and international partners to improve the regime.

In 2005-06, reporting entities filed upwards of 30,000 suspicious transaction reports with the Financial Transactions and Reports Analysis Centre of Canada, FINTRAC. In turn, FINTRAC made 168 case disclosures to law enforcement agencies. In addition, 10 new domestic information-sharing agreements were signed with financial sector regulators.

FINTRAC now has 30 information-sharing agreements with foreign counterparts internationally.

Canada's new government has committed to a strong and comprehensive anti-money laundering and anti-terrorism regime that is consistent with international standards. That is what this bill, Bill C-25, is all about. It amends the existing legislation in order to update and enhance the legislation to better combat money laundering and terrorist financing activities.

To begin with, the measures proposed in the bill will update Canada's anti-money laundering and anti-terrorist financing regime to be consistent with international standards set out by the Financial Action Task Force, which is the international standard-setting body on this issue. These standards were revised in 2003 and all task force members have had to update their regimes. Canada is now doing so with this bill.

The proposed amendments will require financial intermediaries to undertake a number of actions such as enhanced client identification and record-keeping measures. They will also be required to undertake enhanced measures with respect to certain clients and activities, for example with respect to foreign politically exposed persons and their banking relationships.

The reporting of suspicious attempted transactions will also be required.

Bill C-25 also establishes a new registration regime for money services businesses that remit funds in and out of Canada and for foreign exchange dealers, within FINTRAC. This new regime will provide FINTRAC with a tool to increase compliance with the requirements under this act for money services businesses and foreign exchange dealers. Coupled with the registration requirement, a new offence will be created for operating an unregistered money services business.

The exclusion of legal counsel from the regime has been identified as a gap by both the Auditor General and law enforcement. Over the last number of years, the government has been negotiating with the legal profession on how best to include it in the regime. Through regulations made under Bill C-25 and consistent with the Financial Action Task Force requirements, legal counsel will now be required to undertake client identification and record-keeping measures when acting as financial intermediaries.

These measures complement the prohibition on the receipt of cash over $7,500 by legal counsel that is currently in place and enforced through provincial law society rules of professional conduct. These measures also respect the Supreme Court of Canada's Lavallee decision.

Bill C-25 also establishes monetary penalties in addition to existing criminal sanctions. This will allow FINTRAC to impose graduated penalties that adequately reflect the nature of the violation. The monetary penalties, for example, will be particularly useful for offences that are less advertent or egregious.

An important part of Bill C-25 relates to information sharing. Specifically, the bill proposes to allow the exchange of information between FINTRAC here in Canada and the Canada Revenue Agency, and with Canadian law enforcement agencies, to better prevent and detect the use of registered charities for financing of terrorism.

Moreover, to increase the usefulness of FINTRAC's disclosures, the range of information disclosed will be expanded, as well as the list of disclosure recipients. This list will now include the Communications Security Establishment and the Canada Border Services Agency. Also, the agency will be allowed to share cross-border currency reporting information internally for the administration of immigration legislation.

Amendments are also proposed in Bill C-25 to allow information sharing of compliance-related information between FINTRAC and its foreign counterparts. As well, information sharing provisions are proposed between the Canada Border Services Agency and its foreign counterparts on the enforcement of the cross-border currency enforcing regime.

It is important to emphasize that Canada's government recognizes how essential it is to protect the privacy rights of Canadians. That is why Bill C-25 includes a number of safeguards to protect those rights. The bill strikes the right balance in meeting the needs of law enforcement while respecting the privacy rights of Canadians.

I want to outline for the House these safeguards. First, there is an arm's length relationship between FINTRAC and law enforcement and other agencies entitled to receive information. Second, there is disclosure of only key information regarding financial institutions and publicly available information to police and other designated entities. Third, there are criminal penalties for any unauthorized use of disclosure of personal information under FINTRAC's control. Fourth, there is a requirement for a court order by law enforcement agencies to obtain any other than very minimal information from FINTRAC.

With the proposals contained in the bill, the anti-money laundering and anti-terrorist financing regime will continue to strike an appropriate balance, on the one hand providing law enforcement and intelligence agencies with the tools they need to effectively fight money laundering and terrorist financing, while on the other hand taking appropriate and strong steps to respect and protect the privacy of Canadians.

The bill is consistent with the Charter of Rights and Freedoms as well as the Privacy Act.

In closing, I would be remiss if I did not acknowledge the excellent work done by the Senate Standing Committee on Banking, Trade and Commerce. Its insightful report calls for tougher measures to deal with money laundering and terrorist financing. This bill responds to the Senate committee recommendations.

Canada needs a robust and up to date anti-money laundering and anti-terrorist financing regime to ensure security for Canadians on a number of fronts.

Canada must also continue to meet its global obligations. For the year starting July 1, 2006, Canada will chair the international Financial Action Task Force, the international standard-setting body on this important issue. Taking on this responsibility, along with the measures proposed in Bill C-25, demonstrates the solid leadership of Canada's new government that we are showing in the global effort against money laundering and terrorist financing.

I therefore urge all hon. members to accord swift passage to this bill.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I congratulate the hon. member on her speech. This bill flows from quite a number of the previous government's initiatives. I want to congratulate her and her government on trying to put together some form of bill to address this egregious problem.

This bill has a number of commendable features, but I want to ask my colleague a couple of questions with respect to some of the holes in the bill.

Recently I returned from Moscow, where I met with some Russian officials and talked about this very matter. The Russian officials told us that they are most concerned about the conversion of money into things like diamonds, platinum and things of that nature, other businesses, so to speak. That is how terrorism was being financed in Russia. Of course, regardless of what we think of the Chechen situation in Russia, the Russians regard it as a terrorist situation. Bill C-25 will not deal with this problem. It leaves a very obvious gap, one through which even a not so well-informed criminal organization could take advantage.

I wonder what comfort the Parliamentary Secretary to the Minister of Finance can give those who are watching that this form of conversion from a financial instrument to other valuable commodities might be addressed.

The second issue I have is with respect to the compromise with the legal profession. As I read this bill, it seems that lawyers will essentially be obligated to disclose financial records only if they know the identity of the client. This seems to me to be something of a low threshold of obligation on the part of the legal profession, which transacts massive sums of money on a daily basis.

I would be interested in the member's comments on both of these issues.

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, I appreciate my hon. colleague's remarks. I think we can be proud that, no matter what stripe of government we have had in this country, this issue has been taken very seriously and strong measures have been put into place as a priority. I know that the hon. member has much to offer from his recent travels and I look forward to talking to him more about them.

The hon. member will be happy to know that this bill in fact does expand the number of reporting entities, including operators who deal in gemstones and precious metals, so some of the issues he raises will in fact now be included in this regime. We are also having discussions with the Home Builders' Association, because increasingly, investment in real estate now is being used by criminal organizations and terrorist organizations and we want to draw them in.

With respect to the lawyers, this bill represents a step forward in including this important body, which often deals with numbers of issues and entities. They will now be able to have the information that might be required at their fingertips should they be asked for it, under the strict guidelines set out by the Supreme Court in the Lavallee decision. The issue the hon. member raises is being dealt with in the bill in what I think is a balanced way, one that has, generally speaking, garnered the support of the broad base of the legal profession.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I have a simple question for the parliamentary secretary.

As members know, the Bloc Québécois will support most of Bill C-25, but the way banks and institutions have processed their clients' personal information in the past causes us to worry.

I would like the parliamentary secretary to assure us that the personal information of Quebeckers and Canadians will not be used for purposes other than fighting terrorism. We have seen some banks allow the disclosure of information on individuals to other companies when those banks have entrusted that personal information to U.S. institutions. What can the parliamentary secretary say to assure us that the bill will protect the personal information of the people of Quebec and Canada?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, we commend Bloc members on their engagement on this important issue. Also, the member raises a very important issue. Privacy of Canadians and ensuring that it is protected is a high priority for the government and for all members of the House.

The bill provides that financial institutions report directly to FINTRAC. They are not to be giving information to any other entity. That information would only be provided by FINTRAC and FINTRAC provides only very minimal information about any individual, information basically that would be available on the Internet.

If further information is required, a judge must examine and decide that, yes, further information is required. If information is shared outside the country with our international partners, that will only occur if there is a memorandum of understanding with the partner and if a strict protocol followed. The minister must look at each of those requests and personally approve them. We are anxious to ensure that privacy rights are protected.

We have met with the Privacy Commissioner of Canada on this issue and will hold further meetings to ensure that we understand any concerns on privacy and meet them as strongly as possible.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the Ontario Construction Secretariat is jointly funded by the construction industry, the province of Ontario and the Government of Canada, HRDC. The parliamentary secretary will know that undocumented workers in the construction industry, particularly in Ontario, is a very big problem. Indeed, it has been computed that the cost to governments, both provincial and federal, is about $1.3 billion a year as a consequence of these undocumented or illegal workers within the construction industry.

For those areas within the economy which have known abuses and links directly to money laundering and under the table or underground economy activity, could the parliamentary secretary assure the House that attention will be appropriately spent in these areas under the bill, or at least under existing legislation?

[Diane Ablonczy, Conservative, Calgary Nose Hill, AB]

Mr. Speaker, as the member well knows, this was been a difficult issue for his party when it was in government and it continues to be one which needs to be monitored closely. The bill is not the appropriate place, however, to deal with the issue of undocumented workers.

We are discussing with the Canadian Home Builders Association whether it might play a role in ensuring that there are no loopholes for conversion of criminal proceeds into investment instruments or real estate. That is under the purview of the bill. The issue the member raises is not.

However, we continue to be engaged in this issue and in this whole area, particularly to ensure that Canada's economy is not unduly vulnerable to problems that the bill is addresses.

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, the Liberal Party supports the principle underlying this bill. This is not surprising, since we essentially created this bill following the events of September 11, 2001.

I would like to emphasize that my colleague, the member for Willowdale, brought the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) into being. After a certain period of time, we have to amend it. Generally, the amendments proposed in this bill make sense.

I think everyone in the House would agree that while money is not everything, money is a lot, and one of the best ways to choke off terrorism and money launderers is to remove them from their source of money. Essentially, that is the purpose of FINTRAC. The purpose of the bill is to strengthen our ability to act in this area and to bring FINTRAC up to the international norms in terms of money laundering and terrorist financing. However, it is also important that we look at the other side of the coin, and that is privacy concerns and individual rights.

While the pursuit of choking off the sources of funds for money launderers and terrorists is extremely important, at the same time the bill has to safeguard the privacy rights of individuals and prevent a situation in which totally innocent people suffer as a consequence of this bill. I will come back to that point in a few minutes.

Overall, Liberals think the bill is a move in the right direction. We have a number of concerns that we will raise in committee and possibly propose amendments, but we will certainly support the bill for second reading.

The bill proposes to make some necessary changes to the previous government's bill in 2001, Bill C-36, the Anti-terrorism Act. I think changes like this will likely be required every few years as money launderers become more sophisticated and police need new powers to combat them. This is essentially the nature of money laundering and why it is so difficult to combat.

Technological changes occur and money launderers make a few steps ahead. It is always important for the government to react to that so we can be ahead of them, rather than they ahead of us. In that general sense, we fully support the intentions and actions of the bill.

There are three concerns I would like to highlight today. Two of them have been raised by my colleague, the member for Scarborough—Guildwood.

The first of these is that money laundering does not necessarily involve just money. It might involve precious jewels, diamonds and even real estate, as the parliamentary secretary indicated. Therefore, if we are to be comprehensive and effective in our pursuit of terrorist financing and money laundering, then we have to broaden the scope of the act beyond pure cash.

Much of what I am saying, I should point out, has come from a very good report entitled “Stemming the Flow of Illicit Money”, which was presented by fine colleagues from the other place. As they reported, the RCMP believes:

--[a]s stricter regulations are imposed on businesses in the financial services industry, criminals are seeking alternative methods of laundering the money accumulated from criminal activity. Various characteristics of the (precious metals, stones and jewellery) industry make it highly vulnerable to criminal activity.

The RCMP has identified these businesses as likely places for criminals to launder their money. Therefore, there is a good case that the bill require members of this industry to report suspicious transactions in the same way that banks and other financial institutions are required to do. This point was reinforced by my colleague in his conversations with people in Russia.

I know the parliamentary secretary has suggested that in some respects the bill may respond to these concerns, but from my initial knowledge of the bill, it is not at all obvious to me that the bill provides an adequate response to these concerns. This will certainly be one of the areas that the Liberal Party will want to explore when the bill goes to committee.

This as well was mentioned by my colleague from Scarborough. It is the issue of solicitor-client privilege and the need to balance that principle with the need for the government and for Canadian society to get tough and serious with terrorist financing and money laundering.

I am not sure that the compromise that has been reached with the legal profession is the perfect compromise. There may be other means to tighten that up, so the government, the security agencies and FINTRAC can get better information from the legal profession.

I was chatting with my colleague, the member for Vancouver Quadra. He is a lawyer and he has some ideas in this regard. I am sure when the bill gets to committee, the question of solicitor-client privilege and how best to deal with it and whether the law adequately deals with will certainly be one of the areas where my party will want to ask questions and possibly propose amendments.

The third and final concern is that the bill may not adequately address privacy concerns. When the initial law was written, I believe a lot of work was done to create the appropriate balance between on the one hand the need for FINTRAC to share information with law enforcement agencies and on the other hand privacy concerns and the right to protect individuals.

The Auditor General in her 2003 report also commented on this. She said:

The government should assess the level of review and reporting to Parliament for security and intelligence agencies to ensure that agencies exercising intrusive powers are subject to levels of external review and disclosure proportionate to the level of intrusion.

The bill allows FINTRAC to share more information than had been the case before with law enforcement agencies. If we are to preserve the balance, then maybe, in going further in the direction of giving more information to law enforcement agencies, the bill should offer a greater measure of protection due to privacy concerns and a greater level of review, as suggested by the Auditor General, than was in the earlier law.

I know, for example, CSIS and it is also true for CSE, because I dealt with it when I was defence minister, have important civilian review functions. This is designed to monitor the agencies to ensure that nothing unfair or inappropriate is done and to safeguard the rights of individuals and their right to privacy. It may be that some further steps should be taken. I do not know yet what those might be. This will be another issue for the committee.

Of course, the Maher Arar case has brought home to Canadians the importance of this area. I think it could be important as well in the area of money laundering and terrorist financing.

We support the bill in principle, but we have significant concerns in those three areas that I have mentioned. We will want to consider further in committee whether amendments would best be provided to the law. Again, those areas are as follows.

The first is whether the scope of the bill should be broadened to include not only cash, but in a meaningful and strong way also jewels, diamonds and other forms of wealth that can be used as a substitute for cash in money laundering and terrorist financing.

Second, is the issue of solicitor-client privilege and whether the invocation of that privilege has not been so strong in the bill that we are not availing ourselves of information that the legal profession has and could help society track down terrorist financiers and money launderers.

Finally, and perhaps most fundamentally, I have some concerns with the whole issue of the balance between, on the one hand, our need to get tough and track down terrorist finances and money launderers, and on the other hand, the need to protect the rights of the individual and privacy. I believe that balance has been undone by the bill and that the defence of privacy issues will need to be correspondingly strengthened.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I am pleased that my Liberal colleague is finally showing some interest in protecting personal information and privacy. When his government was in power and he was a minister, banks were allowed to exchange personal information via processing centres in the United States. And his government did nothing about it.

My question for him is simple. Is he prepared to support the Bloc Québécois in its effort to protect the personal information and privacy of Quebeckers and Canadians?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I think the issue of protecting individuals and privacy has always been a major concern for our party, both in power and in opposition. That is why I emphasized the importance of that point.

When we were in power, we emphasized its importance and acted accordingly. I would add that we will continue to do so.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, I congratulate my hon. colleague for his excellent speech and for all the hard work he did while he was minister of revenue.

I would ask him to articulate later in the House on some of the things he did while he was in cabinet because a lot of them were repeated by the parliamentary secretary. We notice that the government likes to trot out things that it claims it has done but they are really regurgitations of things that the previous government did. The Pacific Gateway strategy is just one of the more recent examples.

Getting to the root of the issues, one of the issues concerns trafficking. We know that more than 60% of the funds coming through organized crime gangs are funds driven by the illegal trafficking in drugs. We also know the current government does not have a plan to deal with drug policy other than to engage in what is called the war on drugs, which has proven to be an abysmal failure.

I have two questions for my colleague. First, could he again articulate the solution that he championed well in Parliament and on which he did a tremendous amount of work to gain control over the money laundering in our country? Second, could he give us some of his views on the importance of a rational drug policy that works to reduce harm, reduce use and to ultimately reduce the amount of money that is going through organized crime gangs?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, perhaps I was being unduly kind to the Conservative minority government today. It is true that we had done before all of this before. The bill was entrained long before the Conservatives arrived on the scene, so they just plucked the fruits of it, as it were.

Perhaps I was being kind to them today because they had such a terrible day yesterday in terms of the introduction of that environment bill, which was panned by all environmental groups and all opposition parties in the land. They also had the little incident regarding the canine species. Perhaps I was being overly kind in giving them a little more credit than perhaps I ought to have but they are the government and it is appropriate that it be presented clearly. As I said, we do support it in principle.

I agree with the hon. member in terms of drug trafficking and money laundering. We really need to be very serious. I do not know if I have more to add than what I said in my speech but we do need to engage the lawyers to provide the help where they can. Solicitor-client privilege is important but it does not trump all other considerations. That is one way we could be tougher. Getting tougher on diamonds and other non-cash sources of wealth is also crucial.

I believe the bill could be strengthened in a number of ways that would achieve the objectives which the hon. member, myself and, no doubt, all Canadians share.

[Gary Goodyear, Conservative, Cambridge, ON]

Mr. Speaker, we heard the hon. member earlier espousing to all the good things the Liberal Party, I guess wanted to do because in 13 years it never got it done.

Here we are, eight months into the game, and we are absolutely getting it done with a very fine bill. The parliamentary secretary should be proud and we are cleaning up this money laundering thing.

I was here through the entire debate and I failed to hear whether or not the new bill would take care of the money laundering issue that was associated with the Liberal Party during the sponsorship scandal. Could the hon. member tell us if it will or will not close that loophole?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I think the question is a little silly and does not really merit an answer.

I refer to the hon. member's preamble when he talks about 13 years. The impetus for this came following the tragic events of 2001. That was not 13 years ago. It was approximately five years ago.

He is talking about action. The Liberal government acted immediately after the events of September 11 and produced the bill within months to set up FINTRAC which has the powers to take strong action and has taken action to deal with money laundering and terrorist financing.

He talks about 13 years but it has nothing to do with 13 years. Within months of the events of September 11, 2001, FINTRAC was up and running owing to the hard work, the commitment and the sense of urgency of the Liberal government following the events of September 11, 2001.

Now there is a little housekeeping being done and the Conservatives are claiming massive credit for minimal action.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I asked a question earlier of the parliamentary secretary with respect to what was in and what was out and the response I received was that precious metals were in, precious stones were in, jewellery was in, there was talk of real estate being in and things of that nature.

I went back and read the bill. What it appears is that precious metals are in but some of the others are not.

I just had a quick conversation with the parliamentary secretary, to be fair to her, and she said that she would do that by regulation. However, I think it speaks to the member's first and most significant, which is that there is a transmission of funds by means other than merely cash or electronic transmission.

Could the hon. member comment on the inclusion of other forms of valuable transmissions other than merely cash or electronic transmission and whether that should be, from his experience as minister of revenue, included by way of statute or by way of regulation?

[John McCallum, Liberal, Markham—Unionville, ON]

Mr. Speaker, I thank my colleague for doing a little bit of due diligence and actually checking the act because it certainly was my impression that forms of wealth other than cash were not included in the bill, notwithstanding what the parliamentary secretary said earlier. I am glad the member, at least to a degree, confirmed that.

I definitely agree that this is a critical element. With my experience in banking we all know that these criminals are clever. We need to be one step ahead of them and not one step behind them.

I think it is critical that these other forms of wealth be included in a meaningful and strong way. I would be inclined, in response to my colleague's question, to put them right into the legislation.

However, in part, that is a technical matter and we should hear from the department and the technical experts on that matter. My initial inclination would be that we need to make this a very strong bill. We need to be two steps ahead, not two steps behind the criminal element. Subject to privacy concerns, which I also mentioned, we need to take a very strong, proactive and vigorous stance in this area.

The House resumed consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I am pleased to rise on behalf of the Bloc Québécois to address Bill C-25. I would like to reread the title of the bill, so that Quebeckers and Canadians clearly understand what this legislation is about.

This bill is entitled An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act. As people may have already figured out, I wish to say from the outset that the Bloc Québécois will support this legislation, because of the importance of the fight against terrorist financing.

We feel that this is a major challenge and that such a bill is necessary, particularly since the fight against organized crime has always been a priority for the Bloc Québécois. Hon. members may remember the work done by our colleague Richard Marceau, the former member of Parliament for Charlesbourg—Jacques-Cartier, who succeeded in having this House pass a private member's bill reversing the burden of proof in the case of the proceeds of crime.

As a result of interventions by the Bloc Québécois in this House, the federal government has decided to amend the Criminal Code so that criminals now must prove that the fruits of their labour or proceeds of crime are acquired otherwise, that is, legally. Previously, the onus was on the Crown and the government to prove that criminals' income or assets were proceeds of crime. Today, the onus is reversed, and the accused must prove that he or she worked to acquire certain assets.

Such situations exist in Quebec, and in my riding, I have seen amazing stories that can often turn out to be terrible stories of crime. Reporters and the media have given nicknames such as “Richie Rich” or “Peter Cash” to some criminals, whose personal possessions and equipment include planes, helicopters, luxury cars and waterfront properties. These people were so nicknamed by the community, because others knew that they were involved in illegal activities and had different sources of income from their own. As well, for safety reasons, neighbours do not dare question how some people have acquired certain assets.

Now, when they are charged, the burden of proof rests on them. This is an initiative of former member Richard Marceau, a lawyer who, as the Bloc Québécois critic, introduced a private member's bill and convinced Parliament to reverse the burden of proof in this case. The Bloc Québécois has always been a staunch defender of the interests of Quebeckers, but it has also always fought against organized crime.

Our colleague from Sainte-Hyacinthe—Bagot openly criticized marijuana producers. He even received anonymous calls threatening his life. During the 2000 election campaign, the leader of the Bloc Québécois had to have RCMP officers with him wherever he went because he had received threats after the Bloc Québécois dared to tackle organized crime.

The men and women of the Bloc Québécois will always rise proudly in this House to speak out for citizens who, all too often, are threatened and find themselves powerless in the face of organized crime, the ramifications of which are especially significant since marijuana growing has become an international business supported not only by organized crime, but also by biker gangs and street gangs.

None of that will make the Bloc Québécois members back off from their role as champions or leading experts in the fight against organized crime. Understandably, Mr. Speaker, we will also be championing Bill C-25; in other words, we will be supporting it.

However, in supporting this kind of bill, which deals with terrorist financing, including, of course,money laundering and organized crime, one definitely must respect the privacy rights of citizens. Therefore, it is important to strike a balance between upholding the public interest and fighting organized crime, terrorism and money laundering, while at the same time respecting the rights of individuals, honest Quebeckers who might come under investigation.

That is why it is essential to ensure that any information that may be requested concerning citizens or individuals not be used for any purpose other than the one for which it was requested.

Again, in fighting and defending themselves against organized crime, Quebeckers can be proud to rely on the Bloc Québécois members to stand up for them and ensure that information concerning their private lives will never be used for any other purpose or made public.

We have seen it happen. Earlier, I heard a Liberal member who was a minister in the Liberal government say that the Liberals have always been staunch defenders of interests and privacy. It was under their watch, though, that banks carrying out information processing through subsidiaries outside—

[The Acting Speaker, Royal Galipeau]

The hon. member for Hull—Aylmer on a point of order.

[Marcel Proulx, Liberal, Hull—Aylmer, QC]

Mr. Speaker, I apologize to my colleague.

It seems there are not enough members in the House to proceed.

May we please have a quorum call?

[The Acting Speaker, Royal Galipeau]

Would the clerk please count the members present?

And the count having been taken:

[The Acting Speaker, Royal Galipeau]

I am pleased to inform the House that we have quorum.

The hon. member for Argenteuil—Papineau—Mirabel may continue.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, perhaps my colleague from Hull—Aylmer wanted to ensure that I had a good audience for my speech. Then again, perhaps he asked for a quorum call because I was talking about the Liberal Party, which claimed to be the great defender of citizens' interests because of its fight to protect personal information even though it failed at the task when it was in power.

Under that party's mandate, more personal information than ever ended up in foreign hands, largely because Canadian banks were allowed to do business with affiliates in the United States. Laws protecting personal information are not the same in the United States as they are in Canada.

Honest citizens were sometimes harassed by foreign parties trying to sell them all kinds of products, especially banking services. Canadian banks allowed their American affiliates to make personal information available. This all happened on the Liberals' watch. I hope that the member for Hull—Aylmer wanted more people to hear my speech. I hope it was not because of the part where I said how poorly the Liberal government performed when it was in power.

The Bloc Québécois will support Bill C-25 in order to protect personal information and privacy. Quebeckers and Canadians can count on members of the Bloc Québécois to defend and protect their interests in committee by having the Privacy Commissioner and the Access to Information Commissioner appear before the committee to explain what is good about the bill and what should be added in order to protect personal information. It is all very well to take action against money laundering, terrorist activities and organized crime, but we must also protect honest citizens who could end up under investigation for nothing.

I will provide some background, since Bill C-25 did not come out of nowhere. Despite the Conservative government's good faith, it did not invent the wheel. One thing is for certain, the Conservatives did not invent Kyoto. Everyone agrees on that.

Bill C-25 is a successor to Bill C-22, which was introduced by the Liberal government and broadened the coverage of the act. Bill C-25 amends Bill C-22. In other words, Bill C-22 made it mandatory for federally regulated financial institutions, currency exchange businesses, casinos and other intermediaries to report suspicious financial transactions. Suspicious financial transactions are cash deposits exceeding $7,500.

The former government's Bill C-22 applied to financial institutions, currency exchange businesses, casinos and other financial intermediaries. The Conservative government is broadening this coverage and therefore increasing the responsibility of all agencies which, in addition to dealing in securities, also deal in other financial instruments, and of all persons and entities engaged in the business of remitting funds or transmitting funds by any means or through any person, entity or electronic funds transfer network, or of issuing or redeeming money orders, traveller’s cheques or other similar negotiable instruments.

We can offer our congratulations to the Conservative government for having extended monitoring activities to include not only banks and institutions that transfer money regularly, but also to other entities that are often not openly included. This applies to electronic funds transfers and businesses that sell or purchase money orders, travellers' cheques and other negotiable items. Thus, monitoring activities have been extended. We do not want these organizations used for money laundering. I think we can support this.

It also extends to government departments and agents that sell precious metals under regulation. Members of the Bloc Québécois pointed out that there is some degree of illegal trade in diamonds and gold, among others, which are not necessarily liquid assets, but are precious metals that can be used as currency in money laundering.

I believe that the Conservative government listened closely and covered these potential complaints from various stakeholders.

Previously, all the entities targeted by the legislation had to contact the centre, under section 83(1) of the Criminal Code, which sets out the obligation to inform the RCMP or CSIS of any property that belongs to a terrorist group. The new bill adds section 8 of the United Nations Suppression of Terrorism Regulations. Those entities must therefore contact the RCMP and CSIS.

The new bill prohibits all entities from opening an account for an individual if that person's identity cannot be established. Not only is there no obligation, entities are in fact prohibited from opening a bank account. The bank must then contact the RCMP or CSIS directly to launch an investigation.

Furthermore, the bill states that prior to doing business with a politically exposed foreign person—a judge, head of state, minister or other individual who has held a specific office—the institution must obtain the approval of senior management before entering into any transaction with the individual.

Thus, one cannot do business with exposed persons from another country or who would be likely to carry out types of transfers or financing for terrorist activities. They are required to obtain specific authorizations from senior management of banks.

In addition, if a Canadian organization does business with a foreign bank, it is required to take measures to ensure that the foreign bank is not a shell bank, to obtain senior management approval, and to set out in writing all transactions.

In short, there is an obligation not only to know with whom one is doing business but also to scrutinize the banks with which one is doing business. Consequently, when a client wants to conduct transactions with foreign financial institutions, the bank is obliged to verify the credentials and to ensure that the sales, transactions or other operations are not fictitious. Its responsibility has been increased.

In the case of electronic funds transfers, the bank or other business must include the name, address, and the client's account number or other reference number, whether sending or receiving such transfers.

Electronic funds transfers are very popular now. The old bill was implemented in 2001 by the former government, which, once again, did not do its job. The new bill has been introduced for a reason. The Liberal government did nothing for five years. It did not manage to bring a bill into being. Obviously, things have changed since then, and significant numbers of financial transactions take place through electronic funds transfers. That is why the government introduced this new bill, which covers electronic funds transfers.

This new bill follows the United States' lead by requiring entities to establish a program to evaluate their ability to detect transactions that involve laundering the proceeds of crime and financing terrorist activities.

That is what the Bloc Québécois has trouble accepting. If we want to do what the Americans do, we should not only do what they do right, but avoid doing what they do wrong. That is why the Bloc Québécois is being so careful. This is about the ability to detect transactions that involve laundering the proceeds of crime. It would be nice to have that ability and to intervene, but we have to make sure we protect personal information.

Obviously, we will not be investigating. As we saw with the Maher Arar affair, we have to be careful with our investigations. Even with bank investigations, we have to be sure we have a situation that requires it. We cannot investigate just for the fun of it. We would risk arresting honest citizens who might find themselves under the microscope because we want to be just like the Americans, who figure that while they are at it, they might as well investigate a whole bunch of people. We must also avoid American-style mistakes, like casting too wide a net. They often proceed on the basis of race, religion, gender and so on. We are better off using a case-by-case approach and having really good reasons for investigating. Otherwise it is too easy to make mistakes.

The members of the Bloc Québécois will continue to defend the interests of Quebeckers and ensure that the Canadian government does not make the same mistakes as the American government. Any investigations with respect to detection must be justified, not conducted without good reason. Any evaluation of certain bank transactions cannot be done carelessly, because this could lead to honest citizens being investigated without cause.

Furthermore, we must ensure that no information on citizens who should not even have been investigated is shared with the United States, or any other country. In short, we must ensure that the Canadian government does not make the same mistakes as the Americans. Once again, only the Bloc Québécois can guarantee this to Quebeckers.

Bill C-25 subjects Canadian banks' foreign subsidiaries to the same rules as the Canadian banks themselves. It was high time, because the Liberals made the mistake of allowing our Canadian banks with foreign subsidiaries to share information, even though foreign laws often do not have the same respect for privacy. This is true of American laws.

To that end, Revenue Canada agents will now have the authority to give the Financial Transactions and Reports Analysis Centre any information they receive from another agent, under the Charities Registration (Security Information) Act. The aim of this new authority is to better fight against the financing of terrorist groups through charitable organizations and through businesses that perform electronic funds transfers. Once again, I would like to point out that the registration of charities must be carefully monitored, although charities are normally made up of honest citizens.

That is why the Bloc Québécois will fight tooth and nail for privacy and personal information protection. One may be open to the idea of all categories of organizations being monitored for money laundering, but efforts have to be made to ensure that charities, which bring together law-abiding citizens, not be subject, as they are in the United States, to a systematic analysis of their data bases or have their members subjected to money laundering analyses.

The Bloc Québécois will support Bill C-25, as long as honest citizens, honest Quebeckers are free from undue monitoring by government organizations eager to copy the Americans, who seem to think that, while they are at it, they might as well monitor or investigate just about everyone. We do not want that. That is not consistent with the philosophy of life and values that the citizens of Quebec have chosen for themselves. We want the privacy and personal information of honest citizens to be protected. Once again, they can count on the Bloc Québécois.

[Marcel Lussier, Bloc, Brossard—La Prairie, QC]

Mr. Speaker, I thank my colleague from Argenteuil—Papineau—Mirabel very much for his speech. He touched upon the issue of offshore subsidiaries. I would like to know whether he sees a link between money laundering and certain tax havens.

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I believe that one of the objectives of this bill is precisely to prevent Canadian banks from moving into tax havens and dishonest Quebec or Canadian citizens from conducting transactions and thus engaging in money laundering. I think there is a great willingness to act.

Of course, this is a little complex. We know that the bank network is more complex. Some of our banks feel that they are too small and would really like to merge in order to conquer the world. Often, this is in the interest of shareholders who receive their dividends every three months. However, it must not be against the interests of Quebeckers and Canadians.

I thank my colleague for his question, which is totally justified. He knows that the Bloc Québécois will be able to protect Quebeckers' interests with this type of bill.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I believe I will be splitting my time with the member for Winnipeg Centre.

[The Acting Speaker, Royal Galipeau]

You are under questions and comments. You have the floor to ask a question.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, my Bloc colleague made an important speech. I would like him to talk more about tax havens. Indeed, this bill deals with the issue of illegal activities, but there is something else to consider in general terms. Are his colleagues talking, in some committees, about places where there is tax avoidance?

[Mario Laframboise, Bloc, Argenteuil—Papineau—Mirabel, QC]

Mr. Speaker, I think my colleague is talking about tax avoidance. When we address money laundering we are also addressing tax avoidance.

I agree with her, this bill is not going to resolve the problem of tax avoidance. Every committee in charge of reviewing products from the Canada Revenue Agency and the Department of Finance must make an additional united effort to fight tax avoidance, which causes money losses.

We often wonder why the Conservative government decided to cut programs for the least fortunate and for women, and any program that can help those in need. The government probably felt it needed the money. Maybe it could have kept the programs, and really gone after those who practice tax avoidance and cut the tax credits for its friends the oil companies. This would have been a nice way to show its human and humanitarian side, but instead the government showed its stern side to the least fortunate in society.

The Conservative government cut SCPI programs, programs to fight poverty, programs to help women and support programs for minority communities that want to challenge their government. The government is often in opposition with francophone minorities in Canada.

The government could have helped the least fortunate in society by cutting tax credits or addressing tax avoidance, instead of cutting programs.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I will be splitting my time with the member for Winnipeg Centre.

[The Acting Speaker, Royal Galipeau]

We are still in the first round and in the first round you cannot split your time unless you have the unanimous consent of the House.

Does the House give its consent?

[Some hon. members]

Agreed.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, I thank the House for allowing me to split my time with the member for Winnipeg Centre. I see that some members were in a bit of a quandary as to whom they would rather hear. Given that we are in neighbouring constituencies, we have the common characteristic of speaking vociferously and at length about issues of concern to us.

I am pleased to speak to second reading of Bill C-25. Anyone watching this debate will wonder what the debate is about. We are using a lot of acronyms, short forms and technical language. Really this issue comes down to something that is very important for all of us: money laundering. Often we think of that in terms of criminal activity and organized crime.

I am glad that the Bloc raised another dimension to this whole issue. It is pretty hard to deal with questions of money laundering and money lost to governments and to our revenue source without dealing with tax evasion, without dealing with the presence in our society of tax havens, something that has been a problem throughout the last decade of Liberal rule and now does not seem to be on the agenda of the present Conservatives. That is a matter with which we must deal.

We cannot continue to allow Canadians' hard-earned dollars to leave the country by way of tax loopholes and tax havens. I would hope that the government and the Minister of Finance would be prepared to come back to this chamber with some more definitive answers to questions we have been raising for a long time about why the former prime minister, the member for LaSalle—Émard, closed some tax loopholes and tax havens but he did not close the Barbados. He did not choose to definitively deal with the issue. Instead, he provided apparently avenues for some of his numbered companies to continue transactions through such tax havens. He continued to find a way through his steamship company to change the flags conveniently in order to avoid paying taxes and to avoid fulfilling his obligations according to the standards of this country on the environment, workplace safety and proper compensation and income.

Bill C-25 is an attempt to deal with some very serious flaws in our ability as a country to track and deal with proceeds of crime, money laundering and terrorist financing. This issue has been before us for a long time. The Auditor General has been talking about it for a good period of time, specifically since November 2004 when she put forward a report on implementation of the national initiative to combat money laundering. At that time she said that we were far from being able to deal with this problem effectively and she recommended a number of changes.

It is a big problem. Billions of dollars are involved. We are talking about illegal activities and money that could be used to promote illegal activities in this country and terrorist endeavours around the world. It is something we have to address and we need to do it expeditiously.

The Auditor General's report is a very valuable source for analyzing the bill and for determining whether or not Bill C-25 is truly in line with the Auditor General's recommendations. As a side note, it is important to note that the government says that it has respected the wishes of the Auditor General and followed the recommendations through the introduction of this legislation. We will be doing further study and research to ensure that is the case. During the committee process we will be questioning witnesses along those lines.

In addition to that significant study, we now have the benefit of a major study just completed by the Senate. It put a report out this month entitled “Stemming the Flow of Illicit Money: A Priority for Canada”. The study was coordinated by the Hon. Jerry Grafstein and the Hon. David Angus and it is comprehensive look at the issues of money laundering and terrorist financing. We need to know whether or not this bill actually respects and follows some of the recommendations from this report as well.

I want to note that in the conclusion of this report it states that Canada, as a global partner in making the world safer and more secure, must ensure that our anti-money laundering and anti-terrorist financing regime is in line with international standards and obligations.

The study goes on to say:

Crimes that underlie money laundering and terrorist activity financing--including fraud, embezzlement, drug trafficking and trade in arms – have harmful human, societal and economic effects, with domestic and international consequences.

That really sets the context for what we are hoping to achieve with this legislation and why we need to get this bill to committee. We need to begin that thorough scrutiny and thorough analysis to see whether it is in line with the Auditor General's wishes and whether it reflects some of the recommendations from the Stemming the Flow report.

We are prepared to give support to the bill in principle. It may need some changes as we go through it but we certainly believe in its necessity and that it should be studied at committee.

However, a couple of concerns have been identified and I want to put them on the record. First, let me mention the questions raised by Democracy Watch in a release put out on October 12. This important organization, which has been an incredible watchdog for the integrity of our institutions from a democratic point of view, has called on the federal Minister of Finance to deal with a gap in the bill before us. It wants us to add senior Canadian politicians and government officials to the bank account watch list of the Financial Transactions and Reports Analysis Centre of Canada. It says that this change is recommended by the international standard setting task force, the financial action task force and, therefore, if we are bringing our legislation in line with this task force, then surely we must address this particular aspect.

Democracy Watch also says that it has been recommended by article 52 of the UN Convention Against Corruption. It seems that there might be a flaw in the bill that we need to look at very seriously and determine how to amend the bill to bring it in line with these international obligations.

Specifically, I should probably point out that article 52 of the UN Convention Against Corruption states the following:

...each State Party shall take such measures as may be necessary, in accordance with its domestic law, to require financial institutions within its jurisdiction to...conduct enhanced scrutiny of accounts sought or maintained by or on behalf of individuals who are, or have been, entrusted with prominent public functions and their family members and close associates.

Perhaps the government is leery about going this far, ensuring that actual politicians are included in this part of the legislation.

I would conclude by saying that there are many issues to discuss. I thank the House for its attention to this matter.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, the substance of hon. member's speech was actually well within the bounds of reason but the preamble to her speech seemed to be totally off side.

I do not want to leave a misapprehension. The hon. member, in her preamble, was complaining about transactions in offshore jurisdictions, transactions which are frequently treaty obligations and treaty supervised transactions.

I want the hon. member to say quite categorically that the transactions that she referred to in her preamble are neither terrorist suspicious transactions nor organized criminal transactions. I want her to clarify that for the purposes of the record because I do not think she wishes to slander all of the Canadian companies that conduct business around the world.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, obviously I have struck a raw nerve with the Liberals.

If the member had listened closely to my speech, he would have heard that I made a clear distinction between money laundering as an illegal activity and terrorist financing, separate and apart from my concern about activities which I consider should be illegal but are not at the present, and that is the flow of money offshore to tax havens so companies do not have to pay taxes.

If the member is so sensitive about this issue, perhaps he will support our efforts and the efforts of the Bloc over the past number of years to have this matter brought before the finance committee of this House and to this chamber. We are talking about the loss of billions of dollars to our public coffers that would go a long way toward meeting the needs of Canadian citizens.

I would suggest that the member participate with us in getting to the bottom of this very serious issue that was not addressed by the Liberals when they were in government and which, in fact, may have been advanced and enhanced by their wishes to keep tax havens in place for the purposes of escaping taxes and moving money offshore.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I just want to ask my colleague to flesh out perhaps a bit more what some of our concerns are about what that side of the House calls tax motivated ex-patriation and what we call sleazy, tax cheating loopholes. I wonder if she could comment on why his government tore up 11 tax treaties with different tax haven countries and left only one, the very country where the former prime minister and current member of Parliament for LaSalle—Émard happens to have his offshore tax haven companies.

[Judy Wasylycia-Leis, NDP, Winnipeg North, MB]

Mr. Speaker, my colleague from Winnipeg Centre raises the precise point that we have been pursuing throughout this Parliament in different ways, and that is the continued existence of a tax loophole, of a tax haven, left in place by the former Liberal government to apparently provide an offshore place for people like the member for LaSalle—Émard to flow his money from his steamship companies and thereby avoid paying taxes. If that is not the case, then why are we having this study and why are we dealing with it in this place?

This reminds me of another important loophole. We had a case before this House that the Liberals refused to deal with, which was the project loophole case. It dealt with a prominent family in this country that was taking $2 billion out of this country and flowing it offshore and avoiding paying taxes on any of that money. Officials in the Department of Finance at the time, under the Liberal government, condoned that, defended that and supported that. If anything, we need to get to the bottom of that kind of mentality and deal with it once and for all.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Winnipeg North for sharing her time with me so I too can enter into the debate on Bill C-25 dealing with money laundering and the funding of terrorists, a very pressing issue.

I am glad Parliament is seized of the issue because it is something my constituents and people I know have raised with me, especially stemming from the recent information we have had. We were horrified to learn that research has recently identified that $256 million worth of illegal funds have flowed through Canada to terrorist groups. That is just what we have been able to identify and that we know about for a fact. No one is disputing those facts either, so we can attest to the veracity of those figures. Something has to be done urgently.

Although my colleague has identified some reservations about the bill, I support aspects of the bill, one detail of which I would like to dwell on somewhat, and that is the issue that the proceeds of crime could be seized from someone who has been convicted of a crime. If someone is part of an illegal organization, whether that is an illegal criminal organization or an illegal terrorist organization, the government should have the right to demand to know if the things that person owns are the proceeds of crime. If that person cannot demonstrate by a reverse onus that those items were purchased with other resources, then the government should be able to seize those proceeds of crime and use that money to further resource the criminal investigation of other criminals and terrorists.

That is a good idea and it is a bold idea. The NDP government in my home province of Manitoba is seeking to introduce the very same concept. Somehow we need to make it abundantly clear that crime does not pay. Law enforcement officers have conceded to the fact that under the current regime crime does pay because the burden of proof on the government, the courts and on the police is very onerous at times. Even though we know that some person is up to no good and has no other visible means of support, it is tough to prove that the luxury home in which the person lives or the luxury cars in the driveway are in fact the proceeds of crime.

I say that we should give more tools to the law enforcement agencies and act on the side of the Canadian people in this case and shift that burden of proof onto the crooks. They should be telling us how they bought that luxury home when they have not had a job in 20 years. If a rich uncle died and left it in his will, then they should show us the will. If they cannot show us any other visible means of support, then we want to know how they are able to live in a mansion with all these luxury cars in the garage. We should seize those assets, send the message that crime does not pay, sell those assets and give them back to the law enforcement agencies so they can go out and bust more criminals. That is a good idea.

I should point out that this would be law in Manitoba today were it not for the two solitary members of the Liberal Party in the Manitoba legislature who blocked and opposed the legislation. I do not know what problem the Liberals have with this. I do not think it is any great infringement on civil rights to ask the legitimate question of where a person received the money to pay for the luxury home. If that simple question cannot be answered, then we should seize it.

I have a few other points to raise and I will do so in a way that I hope does not inflame the passions of the Liberals opposite. This idea of offshore tax havens has a broader context than just wholesale tax avoidance. The same logic that allowed these offshore tax havens to flourish gives licence or gives opportunity for people to funnel ill-gotten gains with less ability to track offshore as well.

In the context of the bill, as we go through Bill C-25 and its goals and objectives of limiting money laundering and trying to curb the financing of terrorist activity, we should be revisiting the tax treaties that have allowed Canadian businesses to avoid taxes on a rampant basis. Whatever tax regime we put in place, let us make it fair, let us make it balanced and let us make it favourable to business if we like, but at least let us make businesses pay their fair share once we have established what that rate of taxation shall be.

It is such a contradiction to hear the Conservative government say that it will cut back on $1 billion worth of social spending, but then show this wilful blindness to $7 billion worth of lost tax revenue by allowing, what I call, tax fugitives to avoid paying their fair share of taxes in our country.

There is a polite term for it, and I know my colleague from the Liberal Party is an economist. The polite term is tax motivated expatriation. The street name for it is sleazy, tax cheating loophole. There is only one place we can still do it and it just happens to be where our former prime minister had his companies, his shell companies, his dummy companies, established so he could avoid paying his fair share of taxes in Canada. It is appalling. A Canadian prime minister should be proud to fly the Canadian flag on his ships and to pay his taxes in our country. I cannot understand the thought process that would lead him to believe otherwise. It is beyond comprehension.

My colleague from the Liberal Party is helping me grope for the words to put some kind of definition to this appalling practice of tax avoidance.

The logic, though, about the proceeds of crime element is that any person convicted of an indictable offence at the direction of or in association with any criminal organization must demonstrate that every item of property owned by that person is not the proceeds of crime. That is just common sense to me. That is a burden with which no one in this room would have any difficulty.

If I were driving a luxury car that cost $100,000 and I had no visible means of support for the last X number of years, it is not unreasonable to ask me where I got that car. If I cannot say that I either inherited the money, or I found the money, or I dug it up in the cabbage patch or whatever story, if I am not believed, if I do not meet the test, that should be seized from me. That sends a profound message throughout the community of those who would break the law for their own personal advantage or those who would break the law in order to fund terrorism, which is even worse, that crime does not pay, at least not in Canada. I do not view that as heavy-handed or an infringement of a person's civil rights whatsoever.

Bill C-25 gives us an opportunity to finish a job that was started in previous parliaments. I should recognize and pay tribute to the work done by my colleague from the Bloc Quebecois, Richard Marceau, who is no longer an MP. He managed to get this concept into the House of Commons in the 38th Parliament through a private member's bill. I believe, even prior to that, a Canadian Alliance member, Mr. Paul Forseth, a former colleague of ours, introduced this notion into the 37th Parliament.

It has taken approximately 10 years for us to mature in our thinking about this concept or to be able to embrace this concept and not be threatened or feel afraid of this very worthwhile idea.

When Bill C-25 deals with the proceeds of crime, it also deals with issues pertaining to the Canada Border Services Agency, which permits the new centre of financial transactions and report analysis, FINTRAC, to exchange compliance related information with its foreign counterpart. That, too, is a necessary and commonplace measure if we are to curb the international activity that does threaten our national security. That as well is a concept that we should be able to embrace and not feel threatened by.

My colleague, the member for Winnipeg North, cited some of the reservations NDP members have about Bill C-25. To summarize our view of it, we have to give law enforcement agencies the tools to do their jobs to make the point that crime does not pay in Canada to fund terrorism or self-enrichment.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I am honoured to speak today on Bill C-25. The bill will strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to ensure that Canada continues to be a global leader in combatting organized crime and terrorist financing. This is just another example of Canada taking the threat of terrorism seriously.

Once passed by Parliament, these changes will make Canada's overall regime consistent with international standards. The bill targets either the financial rewards from underlying crimes, such as drug dealing, prostitution and extortion, or by stopping the flow of funds to terrorist groups.

Money laundering and the financing of terrorist activities are serious crimes that affect all Canadians. Criminals are constantly changing their tactics and finding new ways to avoid and evade the law. Therefore, we need to make laws that will keep up with criminals and, in fact, stay ahead of them.

The National Post has reported that Canada has long been a fundraising base for international terrorist groups, from the IRA and Hezbollah to the Iranian MEK. This can simply not continue.

The background on this is that the foundation of this tax regime was originally set out in the Proceeds of Crime (Money Laundering) Act and then adapted to the changing global reality of terrorism. It was renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act in 2001.

I would like to touch on the government's four key amendments that it has set out to accomplish the updating of what it needs to do.

First, we are enhancing information sharing between the Financial Transactions and Reports Analysis Centre of Canada, more commonly known as FINTRAC, law enforcement and other domestic and international agencies. In fact, this group reports regularly through the House's finance committee and did so just this past month.

Second, we are creating a registry for money service businesses. This really speaks to ensuring we have some accountability within that registry.

Third, we are enabling legislation for enhanced client identification measures. We need to ensure we know who we are dealing with.

Fourth, we are creating an administrative and monetary penalty system to better enforce compliance with the act.

There is a need for why we need to do it. Financial Transactions and Reports Analysis Centre of Canada reported in early October, as I mentioned, to the finance committee that terrorist groups funnelled an estimated $256 million through our country last year. This is up from $180 million the year before and $70 million the year before that. We are starting to identify and the bill enhances what needs to be done.

There are up to 34 terrorist financing networks operating within the country. Another $4.75 billion was laundered by crime groups, which is up from the $2 billion in 2005. Recently there was the case of four Canadians with links to the University of Waterloo accused of funnelling money to the Tamil Tigers. This shows that Canada has a responsibility to its international partners to continue to crack down on terrorist financing. Canada will not be a safe haven for those who support terror.

How did we come to this legislation? As a founding member of the Financial Action Task Force, we are committed to implementing its regulations, including new ones released in 2003, which require this update to be made. Canada has committed to implementing the 40 recommendations of the FATF on money laundering and 9 special recommendations on terrorist financing. The bill brings our standards in line with the Auditor General's recommendations of 2004 and the Treasury Board report of 2004.

Finally, it also fulfills demands of the interim report of the Senate committee on banking to implement tougher measures on money laundering and terrorist financing.

In Canada there is a need to balance increased vigilance and monitoring with the fundamental need to protect the privacy of Canadian citizens. This is an issue we take very seriously in Canada.

As we did with this legislation, we will continue to consult widely with Canadians. In the future, we need to ensure that a better system does not come at a price of a loss of privacy for all of our citizens.

As a prelude to the bill, the Department of Finance issued a consultation paper entitled, “Enhancing Canada's Anti-Money Laundering and Anti-Terrorist Financing Regime” in June 2005. Over 50 submissions from stakeholders were received followed by further face to face consultations.

As a result, the proposed bill contains amendments that seek to address industry concerns and minimize the compliance burden by tailoring wherever possible proposed new requirements to existing business practices.

The proposed legislation serves to meet Canada's international commitments to combat money laundering and terrorist financing while ensuring that our domestic regime remains robust and up to date.

Those who benefit from crime and steal hundreds of millions of dollars should not be allowed to drive armoured vehicles full of money and waltz over to their local banks. That is the last thing Canadians want in their country.

Criminals who are laundering money should do one thing. They should stew in jail about it. The government and its law and order package and its agenda will help prevent organized crime and terrorism from organizing in any of our communities.

Speaking to that, I come from a riding that is very close to three access points on the border. One of the commitments that we have made, both before the election and since we have taken government, is to ensure that security, whether it be RCMP or our security officers at the border, is funded, prepared and supported in order to ensure that Canadians, both in Niagara and across the country, are safe.

[Maria Mourani, Bloc, Ahuntsic, QC]

Mr. Speaker, if the objective of this measure is, among other things, to fight money laundering, the government will have to close all the restaurants and bars in Canada, and also a number of other businesses.

I now come to my question. In my riding, I met a person who told me about a Lebanese bank called Byblos. That bank has branches all over the world, except in Canada. Why? Simply because that bank is based in Lebanon. That is as simple as that. Why? Because, in Lebanon, there is a group called Hezbollah, and in Canada that group is deemed to be a terrorist group.

So, that bank, which is not run by Hezbollah, cannot open branches here because it could potentially have Hezbollah members among its clients.

So, we are preventing a perfectly legitimate institution, which has branches all over the world, from doing business here in Canada simply because it is based in Lebanon, where there is a group called Hezbollah that is considered to be a terrorist group by Canada.

What does the hon. member think of this whole situation? Is it not rather strange?

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I appreciate the context in which the member makes her point. Part of the reason we are updating and presenting Bill C-25 is to ensure that we take into account the fact that times change, people change, organizations change.

What criminals want to do is ensure they stay one or, as far as criminals are concerned, two steps ahead of the law.

To get directly at the question, the structure of the bill and how those four pillars enhance it pay particular attention to the member's concerns. They enhance what we are already doing. Since 9/11 and the experience we have gone through, it is incumbent upon us, the House of Commons for the country of Canada, to ensure that we continue to update and ensure that we stay ahead of those who want to and who do criminal activities and laundering money in our country.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Mr. Speaker, I do not think there is much doubt that the House, in a general proposition, is in favour of this bill. By and large, I think, speeches have been in support of the bill. Every once in a while the NDP members wander off the rail, but they are prone to do that anyway.

The genesis of this bill lies in the tragedies of 2001. Bill C-36 was passed. There was a significant court case in 2003, which opened up an avenue for lawyers. Then, in 2004, there were a number of inquiries, none of which have at this point resulted in any convictions.

First of all, I am interested in the hon. member's views with respect to the compromise position between the government and the legal profession, which is essentially a “know your client” proposition. I am interested in knowing whether he feels that relieving the lawyers of the obligation to report in the same fashion as other institutions would be required to report is adequate in the circumstances, and whether he thinks that their merely keeping a list of the relevant information will fill this very significant hole in this regime.

I want to make it clear that I am not criticizing the government in this particular instance. This is a very difficult issue of balancing solicitor-client privilege with the right and the need of government and law enforcement agencies to know what is going on in financial services.

At one point in another life I practised law and I know that on any given day we would be flushing literally millions of dollars through our trust accounts. I also know that there were times when I did not know my client and times that my colleagues did not know our client. They had come in for a particular real estate transaction or a corporate transactions or things of that nature. They appeared to be who they were. When asked, they presented verifying information with respect to who they were, but in truth, I am not a police officer and I was not a police officer, nor are my colleagues who are practising now. I had no way of verifying information that appeared to be legitimate on the face of it.

I am interested in my hon. colleague's comments with respect to whether he thinks this apparent opening in the legislation has been adequately addressed.

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, I certainly appreciate the comments from my colleague on the finance committee, who also in early October had a chance to hear FINTRAC's presentation in terms of where things have gone to this point and how we are actually getting better.

It gets back to these points. Where do we start? Is that enough? Do we continue to ensure that whatever legislation we are doing we get back to the point of ensuring that legislation stays one or two steps ahead of those who are intent on finding ways of breaking the law and laundering money?

To his point specifically about his past career in the legal profession, I can understand his concerns around whether or not he or his colleagues knew their clients, or whether all lawyers are in the process of understanding their clients, knowing their clients, or in some circumstances perhaps not knowing their clients. One word comes to mind in that respect . All of us as parliamentarians understand that we can introduce legislation but we cannot introduce accountability and ethics. Part of being professionals is knowing and understanding when something is going to happen or has happened, and we have or may have played a role in illicit and illegal activity, that we need to identify it.

[The Acting Speaker, Royal Galipeau]

I should point out to the hon. member for Lévis—Bellechasse that there is less than one minute left for the question and answer.

[Steven Blaney, Conservative, Lévis—Bellechasse, QC]

Mr. Speaker, I wish to salute the work of our Minister of Finance, who is doing a great job for Canadian taxpayers. His excellent work helps them, while also allowing us to fight money laundering.

My question for the hon. member, who made an excellent speech, is: what does he see in terms of concrete impact in his riding, considering that there are contact points when it comes to money laundering?

[Rick Dykstra, Conservative, St. Catharines, ON]

Mr. Speaker, one of the things I certainly would like to do is talk a bit about the strength of our local economy, the strength of the St. Catharines community, and the strength of where we are going and what we need to do to become a more vibrant economic part of the Niagara region.

However, we are close to the border. I appreciate my colleague's question, because it points to exactly why we need to implement this legislation. It does not just work here in Ottawa. It works in the member's community, my community of St. Catharines and all of our communities.

[The Acting Speaker, Royal Galipeau]

It being 1:30 p.m., the House will now proceed to the consideration of private members' business as listed on today's order paper.

The House resumed from October 20 consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pleased to participate in the debate on Bill C-25.

A number of members, when they hear money laundering, probably will hearken back to discussions they have had on the subject, whether they be with regard to the underground economy or organized crime. As a matter of fact, I just received a report from the Ontario Construction Secretariat, which calculated that approximately $1.3 billion of federal and provincial government revenue was forgone as a consequence of the underground economic activity within the construction industry.

It is an issue which has been around for some time. A lot of people probably do not know how money laundering works. If someone is paid under the table, the money is received from somewhere but it is not recorded on the books because that money has to be paid out to someone else. It is not reported, nor is a T4 slip issued, nor is any kind of other payment indicated so that paying taxes on it can be avoided.

When 9/11 occurred all of a sudden this entire area, including organized crime, expanded into an enormous consideration. It led to the development of the Anti-terrorism Act. It also led to the creation of a significant variety of jurisdictional bodies and government bodies to look into the aspects of financing terrorists.

I wanted to give credit to the Senate of Canada, which we do not do often enough in this place. In May and June of this year, the Senate conducted a special review and provided an interim report on the subject matter now before us. The report is called, “Stemming the Flow of Illicit Money: A Priority for Canada”. It is a parliamentary review of the proceeds of crime, namely money laundering and the terrorist financing act.

Usually when I look at a report, I look at the beginning and the end of it to find out why the issue was raised, and so what. In looking at the introduction, there was a paragraph which I thought properly characterized the reason we were looking at this. It states:

While witnesses were not able to provide the Committee with consistent or precise estimates of the amount of money that is being laundered each year or the costs of money laundering and terrorist activity financing, we believe that it is probably in the tens of billions of dollars. The human and societal costs associated with money laundering and terrorist activity financing must also be remembered, since the costs are not simply economic. Clearly, the costs are significant, and we must ensure that Canada has the best possible anti-money laundering and anti-terrorist financing regime in place, consistent with the protection of privacy, for the sake of Canadians, the sake of citizens worldwide and the sake of legitimate commerce.

That one introductory paragraph really encapsulates many of the details which hon. members have spoken about in the debate thus far.

I said at the outset that I look at the beginning and the end of a report. I wanted to look quickly also at the conclusion. I can see from the list of witnesses that this touches a broad range of areas. Finance Canada, Justice Canada, and Public Safety and Emergency Preparedness Canada appeared before the committee. The Superintendent of Financial Institutions was involved, as was the Financial Transactions Reports Analysis Centre of Canada, commonly known as FINTRAC. In the speeches on this bill we are going to hear that name. It is an institution which deals with financial transactions and reports. The Royal Canadian Mounted Police were involved, as were the Canada Border Services Agency, the Office of the Privacy Commissioner, the Office of the Information Commissioner of Canada, the Canadian Bankers Association, the Certified General Accountants Association, the Canadian Life and Health Insurance Association, and the Federation of Law Societies of Canada.

Canadians should know that when a study is done in the House or in the Senate, we have the tools to call some of the most important people involved to provide some input. They will be able to tell us not only where we are and how things have evolved, but also how to respond because terrorists and those who finance terrorist activity are like viruses in that they tend to mutate. In order to be resistant, viruses will change into other things. They become moving targets. Terrorists and those who finance terrorist activity also have the tendency to continue to be moving targets. It is vital that we know the techniques and the tendencies that occur within terrorist financing. On behalf of the Parliament of Canada, the Senate has done a very important service by consulting and issuing its report.

I will get to some of the recommendations that were made, but I want to read into the record the Senate's conclusion in this excellent report. Some members may want to include it in their householders. This is a very good report. It lets Canadians know that these are significantly important issues for parliamentarians to deal with on their behalf. It says:

As a global partner in making the world safer and more secure, and as a member of various international fora, Canada's anti-money laundering and anti-terrorist financing regime must meet not only our domestic needs but also reasonable international obligations. Crimes that underlie money laundering and terrorist activity financing--including fraud, embezzlement, drug trafficking, and trade in arms--have harmful human, societal and economic effects, with domestic and international consequences.

The Committee believes that Canada should be an example worldwide--particularly as Canada assumed the presidency of the Financial Action Task Force on Money Laundering in July 2006 and as we undergo a mutual evaluation review by the Task Force in 2007--

It says also:

This regime must respect several principles: the appropriate entities and individuals must be required to report; the appropriate types and values of financial transactions must be reported; and the appropriate balance must continue to exist between providing law enforcement and other agencies with the information they need to do their jobs effectively and efficiently on the one hand, and ensuring that the privacy rights of Canadians are protected on the other hand.

Members have heard this before. When do privacy issues relating to Canadians have to be balanced with our need to deal with problems like terrorist financing? Places have been identified where it can cause some difficulties. The Senate committee made some recommendations in its report to deal with this balancing act that they have to go through. These recommendations are not in the report itself, but are on the website. I will mention some of the key recommendations here.

The first recommendation was the introduction of a reporting requirement for dealers of precious metals, stones and jewellery when transactions are greater than $10,000. The RCMP pointed out that as other avenues become less attractive for money laundering, avenues such as precious metals, stones and jewellery are becoming more attractive. We have always been addressing cash, but other commodities of value are becoming part of this whole activity.

The second recommendation says that there has to be an increase in two-way information sharing. We have heard this often with regard to other areas, even with regard to security on Parliament Hill between the Senate and the House of Commons. In this regard, the committee suggested that FINTRAC should not only be able to disclose more information to government agencies such as the RCMP, but also should provide feedback to the disclosing entities about the usefulness of the information they send to FINTRAC. This was also a recommendation in the 2004 Auditor General's report.

Another recommendation of the Senate committee was that white label ATM machines work with law enforcement and the industry to address the potential money laundering risks associated with white label ATMs, i.e. machines that are not owned or operated by banks. The concerns with these ATMs arise from the possibility for owners or operators to self-load the machine with cash. This is an opportunity for laundering money.

The fourth recommendation was that FINTRAC only disclose Canadians' personal information to authorities in countries which have privacy legislation that is consistent with the Privacy Act in Canada. We are looking at almost like a reciprocity or the same or similar protections in countries that we deal with.

Recommendation 5 was that we increase the ability of Parliament to scrutinize FINTRAC. Currently it is responsible through the Minister of Finance and delivers an annual report in the fall. This is too important to wait for an annual report. We should have the scrutiny process going on more frequently to engage Parliament more fully.

I would think that gives a pretty good idea of the issue we are dealing with. This particular bill actually had its genesis in the last Parliament. The Liberal government started to put this together and now it is before us. Of course, I do not think there is any question in this place that the bill is a significant bill that should get prompt scrutiny by the House of Commons and in the other place so that these laws are in place and we can do the job properly.

In looking at some of the details, I note that Canada's financial intelligence agency reported $5 billion worth of suspected money laundering and financing of terrorist activities last year. That total is more than double what it was a year earlier and $256 million of that was tied to suspected terrorist activities. We have a significant growth. That is why it is important that we deal with this quickly. This is becoming more and more sophisticated. It is a moving target. Our legislation and the tools available to our financial institutions, our government agencies, and the policing authorities and so on, have to be as flexible as possible, again keeping that balance or that respect for the privacy rights of Canadians.

Of the 143 reports FINTRAC made to law enforcement agencies, there have been no convictions. The Auditor General in 2004 suggested that allowing more information to flow to law enforcement authorities would help in investigating these suspicious activities, and the bill before us, Bill C-25, provides those powers. Members probably will be a little concerned to note that there were 143 reports by FINTRAC of suspicious activity and not one conviction.

The bill before us, Bill C-25, has seven broad objectives. I am not going to get a chance to go into all of them, but perhaps I can highlight them.

The first is to enhance client identification and record keeping measures for financial institutions and intermediaries.

The second is the reporting of attempted suspicious transactions. Just to amplify on that, I will note that all reporting entities currently report suspicious transactions, but they would be required to report suspicious attempted transactions. There is a subtle difference, but the experts who were before the committee seem to think that this will give more latitude because it will provide more information.

The third area is the registration regime for money services businesses, referred to as MSBs, and foreign exchange dealers. The proposed amendments would create a federal registration system for individuals and entities engaged in money services businesses or foreign exchange.

The fourth area in the bill is enhancing the information contained in the FINTRAC disclosures. This was recommended in 2004 by the Auditor General. At the urging of law enforcement agencies, the proposed amendments enhance the information FINTRAC can disclose to law enforcement and security agencies on suspicions of money laundering or terrorist financing.

The fifth area relates to creating an administrative and monetary penalties regime. Currently the act only allows for serious criminal penalties if the act is contravened. This was also a recommendation of the Auditor General.

The sixth area relates to reintroducing requirements for legal counsel. The government is working with the legal profession, including notaries in Quebec, to finalize requirements for client identification, record keeping and internal compliance procedures for legal counsel when they act as financial intermediaries. This bill removes the obligation for legal counsel to file suspicious transaction reports or other prescribed transaction reports.

The seventh area relates to expanding the sharing of information between federal departments and agencies, including the Canada Border Services Agency, the RCMP, et cetera.

Having reviewed these, it is the view of those who have prepared the bill and who are speaking today on behalf of the bill that banks and financial institutions should be supportive of this bill. It does not encroach on or somehow provide any significant burden that will not help us all, as vested stakeholders, with the opportunity to protect assets and indeed to protect Canadians. The Liberal caucus certainly will be supporting Bill C-25 when the vote takes place at second reading and hopes that it will receive prompt activity.

I will close by reiterating a couple of points about the concerns Liberals have with regard to the bill, which I believe can be addressed by the committee. The first is whether the scope of the bill should be broadened to include not only cash but other commodities like jewellery, diamonds, et cetera. The bill does not provide that. The Senate committee did, however, recommend this. I believe it probably should be seriously considered by the finance committee when it has the opportunity to address Bill C-25. It should take to heart the testimony before the Senate committee and of course the substance of the recommendation it made in regard to non-cash commodities.

The second issue of concern is that of solicitor-client privilege and whether the invocation of that privilege has not been so strong in the bill that we are not availing ourselves of information that the legal profession has and which could help society track down terrorists and money launderers. This is a very complicated area. It is an area in which I do not have expertise, but as we know, parliamentarians cannot be experts in all things, although we certainly have the tools and resources to bring them forward through expert witnesses in committee, who can advise us on whether these are the kinds of things we can do without compromising the privacy principles we have embraced in our privacy legislation.

Finally, probably the most fundamental item of concern is the balance between, on the one hand, the need to get tough and track down terrorists and money launderers, and, on the other hand, the need to protect the rights of the individual and privacy. I believe the balance has been undone by this bill and that the defence of privacy issues will need to be correspondingly strengthened.

Let me repeat that. It appears that the bill may have sided a little too heavily on getting after terrorist financing, and it may have either inadvertent or unintended consequences where in fact privacy principles may have been pushed to the point where it may be inappropriate. We have to examine that much more carefully. It is an important principle and I hope all hon. members will agree. We have to make sure that this balance is appropriate. We have to make sure that we use all the tools and resources we have and the experts we have to come before the parliamentary committee to give us the information we need so that, in accordance with our prayer, we make good laws and wise decisions.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Mississauga South for sharing with us his views on Bill C-25 and am interested in the summation of his speech, wherein he made reference to the idea that we should explore the concept that it should not be just the cash or bank accounts that may have been developed by ill gotten gains that we should be looking at, but perhaps we should be looking at other assets as well.

I would like to share with him that I believe strongly that we, the government and the law enforcement agencies, should in fact be able to seize other ill-gotten gains if it is in the context of this bill, which says it can be done if the person has been convicted and is known to be a member of an illegal or criminal organization. In those circumstances, if they happen to have what is ostentatious wealth, I suppose, and if they cannot show any proof of where those assets came from, why should we not be able to seize them and put the reverse onus on that individual to prove to us that the assets were in fact purchased through work?

I do not believe that is an infringement on anybody's civil rights. It is simply asking the question. If a person is living in a million-dollar mansion, has had no visible means of income for the last 20 years and is known to be associated with the Hell's Angels, then that person should show us where he got the money to buy that mansion. If it was from some rich uncle who died and left the money to the person, then he should show us the will. It should not be that difficult. We would take the person's word for it. But why should we not be able to seize that mansion, sell it for a million dollars, put that money back into law enforcement and use the resources to bust more criminals?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I am pretty sure that in one of those television programs I learned a lot about circumstantial evidence, and it does make cases weak. I would suspect that because there have been recommendations made with regard to the penalties regime, these are some of the important points. We are at second reading.

This is to agree in principle. I think there is agreement in principle of the House with regard to making sure that our laws are as appropriate as possible given what we know today, but that they allow us to keep it growing or developing. Committee is where these kinds of items can be discussed. We want to be sure that we do not create draconian legislation. It should be just and fair.

The member may be prepared to make such representations in committee about the reverse onus, which is that, unless someone can prove to the contrary, we are going to assume that everything the person and his or her family have is a result of that person's illegal activity. I think that is something the lawyers may want to have some discussions about.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I simply would ask my colleague from Mississauga South if he does not agree with the fundamental principle that we have to send a message that crime does not pay. The frustration that law enforcement officers have is that, in the current situation, crime does pay. Law enforcement officers know full well that an awful lot of people who are up to no good have the luxury homes, the speedboats, the luxury cars in their driveway, the tricked-out Escalades. A lot of people have really good reason to believe, just short of meeting the burden of proof, that these are the proceeds of crime.

I do not think that reversing the onus is a bad idea in the narrow scope of this bill and its two caveats, which are that if the person has been convicted of a crime and if the person is a known member of a criminal organization. Is there something wrong with saying that crime does not pay? Is there something wrong with saying that we are going to seize all the toys, sell them and use the money to put more cops on the street to bust the criminal and his friends in the future? I think it is a popular idea that we should be able to embrace without too much reservation.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, this raises a lot of interesting points. The rule of law has to be respected. The rights and freedoms of the individual must also be respected. We have to be careful and look at those things. Privacy has to be respected.

I do not disagree with the thirst that the member has to get anyone who is anywhere near to it, to take them and expose them totally and make an example of them. I am not sure that the retribution part is a good starting point for us because there are some very important fundamentals.

The example I would give to the member if he would like to apply that would be, for instance, the underground economy in the construction industry in Ontario. We know that in Ontario the Ontario construction secretariat just reported $1.3 billion of lost revenue to the federal and provincial governments for all kinds of things. We know it is there, but there is a very careful approach being taken, I believe, not to paint all with the same brush, and not to put people out of business and to destroy jobs and people's security.

There are sometimes some unintended consequences, so we have to be extremely careful. That is why I want to limit my comments and my reaction to this. The point is going to be raised in committee and we should seek the appropriate responses from those who are experts in these areas.

[Brian Murphy, Liberal, Moncton—Riverview—Dieppe, NB]

Mr. Speaker, in my province of New Brunswick there is a proceeds of crime unit made up of a prosecutor and a member of the RCMP. It is adequately resourced but with further resources, money laundering and the proceeds of crime extrapolation of money back to the community could be better had.

I wonder if the member would have a comment on the government's general disregard for resourcing many of the bills and statements it makes under the hyperbole of a just and fair society. Many of the bills introduced by the government, and this may be an example of one, sound great or good, but we do not see the ledger side of it.

I know the member for Mississauga South is a money guy, an accountant, and looks at the p's and q's of finances. Is the money here to back up the claims of the government that in this bill in particular, but in other justice bills, that it is providing a more just and safer society?

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, the point is well taken. I have often heard the argument that should policing authorities seize drugs, cash, property or whatever, that those resources should be available to them, so that they can continue to do their job.

I also understand the other argument which is that they are organizations, institutions or authorities which have funding available. I would be a little concerned if those who went out hawkishly and started going after all of the big ticket items, they may not be looking at those that are not so big and then all of a sudden someone is going to have a greater share of the resources, when in fact our policing ability in enforcing the law and protecting Canadians is at all levels of jurisdiction right across the country.

There is an important balance here, but I do understand and agree that in principle, the proceeds of crime should be in the pool of resources that are available to all levels of government where they enforce the laws.

As the member knows, we as legislators at the federal level may establish the Criminal Code in Canada, but it is up to the provincial and regional governments, and to some extent other municipal type policing authorities, who have to apply those laws. So it is not simply the RCMP. It is a combination of all of the policing authorities across the country because they are there to provide support, protection and service to all Canadians regardless of where they live.

I appreciate the question, but I would hesitate to say that whoever finds the criminal gets the money. It may not well serve the system.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, I appreciate the opportunity to speak to Bill C-25 at second reading.

The bill proposes to update legislation that will help fight those who would use our financial system to launder money and then divert that money to fund terrorist activities.

We have, unfortunately, seen so many horrible examples of how far terrorists can reach and how close to home they can get. We saw what happened in New York City, London, Madrid, Dubai and Toronto.

We were all shocked this past June when our RCMP, CSIS, the OPP and other Canadian police forces combined their forces to arrest a number of alleged members of a terrorist cell here in the greater Toronto area. The accused are alleged to have been planning a series of major terrorist assaults on targets in southern Ontario, targets that are alleged to have included the House in which we now sit.

Activities like this threaten our safety, our security and very much our own way of life. Canada is a country on the move. We are a country with a G-7 leading economy and under this government a steadfast commitment to meeting our international obligations. We take our global responsibilities very seriously. We know that terrorists need money and that is why we are introducing this bill to make it harder for them to get it.

Canada's financial sector is internationally recognized as stable, safe and sound. Our Minister of Finance knows that it is his responsibility to ensure that it continues to stay that way. That is why we have introduced this bill. The amendments it contains would strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to ensure that Canada continues to be a global player in combating organized crime and terrorist financing.

This year Canada assumed the presidency of the financial action task force, the intergovernmental body that develops and promotes national and international standards to combat money laundering and terrorist financing.

Holding the FATF presidency is another example of Canada's commitment to national and international security. The financial action task force plays a critical role in stopping terrorist financing activity and money laundering by promoting policies designed to starve these organizations from the funds they use to fuel them.

Terrorist and criminal organizations are becoming increasingly sophisticated in their attempt to move, conceal and launder funds through financial systems and other means. Despite the safeguards in place, terrorist organized crime and other criminal elements continue to find ways to take advantage of our financial system. That is why we are debating Bill C-25 today. The proposed amendments in the bill would improve the government's ability to act quickly and decisively against potential abuses of the Canadian financial sector.

I can assure the House that Canada's new government is being relentless in its efforts to combat money laundering and terrorism financing. One of the tools that we are using is FINTRAC, a system that is widely considered to have leading edge, analytical and technological capacity. This agency receives, analyzes, assesses and discloses financial intelligence on suspected money laundering, terrorist financing and threats to the security of Canada.

Since FINTRAC began making disclosures in early 2002, it has provided law enforcement and intelligent agencies, key financial intelligence on money laundering, the financing of terrorist activities, and the threats to Canada's security by analyzing financial transactions, reports and other sources of information.

FINTRAC recently released its annual report and revealed that it has tipped off law enforcement in Canada and the Canadian Security Intelligence Service to more than $5 billion in suspicious deals last year. It is more than double the figure of the year before. FINTRAC has only been in existence for two years, but it is obvious that its work is paying off.

FINTRAC is a member of the Egmont Group of Financial Intelligence Units whose purpose is to enhance cooperation and information exchange in support of the anti-money laundering and terrorist financing regimes in member countries.

The establishment of the Egmont secretariat in Toronto is yet another example of Canada's commitment to national and international security, collaborative solutions to global threats, and the need for the international cooperation and institutions.

Since taking office, Canada's new government has made safety and security of our citizens, and of global citizens, our priority.

In our first budget in May the Minister of Finance announced significant new funding to enhance the work being done by Canada's financial intelligence unit, the financial transactions and reports analysis centre in Canada, the Royal Canadian Mounted Police, the Canadian Border Security Agency and the Department of Justice.

Bill C-25 would build on these measures and make Canada's overall regime consistent with international standards. The proposed measures in this bill would make Canada's anti-money laundering and anti-terrorist financing regime more effective by making it consistent with the new FATF standards.

Canada has committed to implementing the 40 FATF recommendations on money laundering as well as nine special recommendations on terrorist financing. The hon. members will know that the interim report of the Standing Senate Committee on Banking, Trade and Commerce is calling for tougher measures to deal with money laundering and terrorist financing.

Bill C-25 responds to the Senate committee recommendations. The proposed measures in Bill C-25 would respond to recommendations made in the 2004 Auditor General's report and the 2004 Treasury Board evaluation of the regime.

One of the most important amendments proposed in Bill C-25 is a proposal to enhance client identification and record-keeping measures for financial institutions and intermediaries.

Under this legislation, these institutions would be required to undertake enhanced monitoring of high-risk situations. For example, businesses such as banks, insurance companies, securities dealers and money services would be required to identify and monitor the transactions of foreign nationals who hold prominent positions, along with their immediate families.

Amendments in Bill C-25 would require the reporting of attempted suspicious transactions to FINTRAC. The bill would create a registration regime for money services businesses.

As we know, these businesses are largely unregulated. With the passage of the amendments in this bill, FINTRAC would act as a registrar and would maintain a public list of registered money services businesses and foreign exchange dealers.

As recommended in the 2004 Auditor General's report, and at the request of law enforcement, this bill would enhance the information contained in FINTRAC disclosures to law enforcement and security agencies on suspicions of money laundering and terrorist financing. This would increase the value of FINTRAC disclosures, ultimately leading to more investigations and eventual prosecutions.

Bill C-25 proposes to strengthen penalties in order to allow FINTRAC to better enforce compliance with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

While current legislation only allows for criminal penalties if the act is contravened, Bill C-25 proposes to create an administrative and monetary penalty system where fines could be applied for lesser contraventions of the legislation. Another component of the regime is the reintroduction of client identification and the record-keeping requirements for legal counsel.

The government is working with the legal profession, including notaries in Quebec, to finalize the details of these requirements and to ensure adequate compliance and enforcement. Information sharing is crucial in the coordinated fight against money laundering and terrorist financing.

Bill C-25 proposes to expand FINTRAC's ability to share information with the Canada Border Services Agency, the Canada Revenue Agency and the Communications Security Establishment. In addition, FINTRAC will now be able to receive terrorist property reports under the United Nations Act regulations.

All of these steps and all of our efforts add up to a better and a safer world for all of us, a world where our financial systems are used as they were intended, to create better opportunities for our citizens and a greater prosperity for our nations.

Criminals do not stand still, so neither can we. As they adapt, we must adapt and as we adapt they do adapt. We must be vigilant and relentless in our pursuit of ideas, innovations and ways to cut them off to make it harder for them to finance their activities.

Through more funds, improved legislation and a relentless resolve to shoulder our global responsibilities, Canada is serving notice that we will put these criminals out of business at every chance we get. I urge all hon. members to accord this bill the quick passage that it deserves.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, I find the point of view of my colleague from Burlington to be very interesting. I have a question for him. I gather he thinks that information sharing is the best way to track terrorists' money. He was talking mostly about money laundering.

I would like him to explain how he plans to stop money from going through the tax haven? We can talk about a single tax haven since the former government kept one. How is he really going to eliminate this money that comes from tax havens or the tax haven? How will this legislation stop the money that passes through in containers?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, there is no question that information sharing will lead to better cooperation among different agencies to improve the tracking of alleged criminal activity through the laundering of money. We also need to look at the offshore involvement in which some of these people may be involved.

However, we could be doing many things here at home, things we need to get serious about. The legislation would go a long distance in addressing the issues surrounding the laundering of money within our borders. Much of the money that is stored offshore at some point comes into this country. There are tracking measures. The legislation begins to address those issues.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I would like my colleague to go a little further in his views on Bill C-25 than just the speech that he was given to read, which I think represents his party's views.

I would appreciate his own personal views on this idea. In the last Parliament and, in fact, in the Parliament prior to that, a private member's bill was floating around dealing with the seizing of assets that were the proceeds of crime. I believe it was under the name of my colleague from the Bloc the last time, Richard Marceau, and prior to that it was a Canadian Alliance member, Paul Forseth.

Those were good ideas in that they would have allowed the government to not only seize bank accounts full of ill-gotten gains, but seize the actual proceeds of crime that may have bought all the toys, the trappings of crime that we see a lot of the high profile criminals use.

Would the member agree that Bill C-25 should be extended to allow this concept, that where it can be clearly demonstrated that the person is a member of a criminal organization, such as the Hell's Angels, Hezbollah, whatever is on that list of criminal organizations, and the person has been convicted of an offence, why should we not be able to seize their assets and put the reverse onus on them that they should need to prove that they did not get it through the purchase of ill-gotten gains, that they had a legitimate means of income? Would that not be a good idea?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, I do believe that criminals who are found to be involved in terrorist activity or in some type of activity that would define them as being in contravention of the law. We do need to investigate what we do with the property that they own.

Like many Canadians, as I am sure we would both agree, criminals should not be able to retain the proceeds of crime. I do not know if Bill C-25 is the right place to put in that measure but I would be supportive of a measure that would require criminals who could not prove that they got the assets in any other way to give up those things.

I believe this government is championing the reverse onus. We have seen it in the dangerous offenders legislation. We are thankful for the member's support on that legislation which would require criminals to prove they will not continue to involve themselves in this type of activity.

The Conservative government has been very active on the file of getting tougher on crime, putting the onus on the criminal and protecting the citizens of our country. The measures the member talks about would protect the citizens from any future types of those activities. I also agree with him that we need to ensure that crime does not pay any more.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Speaker, I listened to my hon. colleague's speech with interest and he noted that the government's funding in the last budget had increased for the Department of Justice, the Border Services Agency, the RCMP, et cetera. It brought to mind that this is in an overall context when we deal with terrorism and crime.

I would like the member to comment on a couple of things from a general policy perspective because they end up dealing with terrorism. The first one deals with drug smuggling and the associated activities with it. We look at how it funds terrorism in places, particularly Colombia, and we see that the Taliban are now getting a lot of its funding through the heroin trade.

The other question I would like him to comment on is how the government's overall package on law and order in totality is helping to deal with the issue of terrorism in general, things such as more RCMP, et cetera, even if they are not directly targeted at terrorism, how they are helping the justice agenda on this file.

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, there is no question that in the last number of years we have seen that many of these terrorist organizations, which have come under fire, were funded through illegal activities, whether it be arms dealing, drug trading or any number of things. What Canada needs to do, and it is something this government has committed itself to doing, is to ensure we are not part of the problem.

We have done it through this legislation but we have also done it by cracking down on the things that come into this country. We have improved our border security and the inspections at the border regarding the illegal drugs and whatever else comes across our borders and is traded for money, which is then laundered out of the country to fund these types of organizations. We have started to put in the necessary measures to stop these things from coming into the country. That is something to which we are absolutely committed.

In the finance minister's budget of this past year, a substantial amount of money was given to improve RCMP services and to put more RCMP officers on the street. We have seen a number of measures, including arming our border guards. Of course there was a financial requirement to do that. We have heard from the minister responsible for public security that the border guards are now receiving these arms.

These measures are all important as we try to move toward a safer and more secure nation within a safer and more secure world. We do have a role and a responsibility to ensure that we have a safe country here but we also need to implement some of these measures to ensure the entire world is a safer place.

I do believe we are on the right track but we have a long way to go before we crack down on all the illegal activities that are happening in our own country. We are in the process of cleaning this up and the investment that we have made into crime prevention will go a long way to begin that process.

[The Acting Speaker, Royal Galipeau]

Questions and comments. The hon. member for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup. We have one minute left for the question and the response.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I will proceed very quickly.

We support this bill overall. I believe it will improve how we manage the fight against terrorism. However, we must ensure some degree of balance.

My question is as follows. Are the government members open to having certain witnesses, for example, the privacy commissioner, testify at committee hearings to ensure that there are no more errors like the one committed by the RCMP in the Arar case, and to ensure that, despite the bill's best intentions, it will not have any loopholes that would allow for the violation of human rights?

[Chris Warkentin, Conservative, Peace River, AB]

Mr. Speaker, the hon. member talks about striking a balance. The committee will do its work to ensure this is a balanced bill. However, as Canadians we do need a balance. We need to get tough on crime to ensure that criminals do not have the same rights as law-abiding citizens in terms of being able to continue to involve themselves in many of these things.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I rise today to speak to Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act.

As I speak today, I am thinking about the reality we have faced for the past several years, that is, the increase in terrorist activities and the tools we have tried to put in place to fight against terrorism. As we all know, the Bloc Québécois took up a major challenge in the past regarding the fight against organized crime.

I would remind the House of the battle waged here, led by the Bloc, to enact anti-gang legislation. Many individuals have continued that battle, including the leader of the Bloc Québécois and hon. member for Laurier—Sainte-Marie and the hon. member for Hochelaga—a young child in his riding was unfortunately a victim of organized crime warfare. My former colleague, Michel Bellehumeur—who is now a judge, but who was the justice critic at that time—successfully led one offensive after another, as did Richard Marceau, regarding the elimination of the $1,000 bill. The Bloc Québécois' credibility is well established here, as it is in many other areas.

We have led battles and we have helped to develop the best laws possible. Today, we are discussing legislation that the Bloc Québécois will support because it will enable Canada to comply with the recommendations of the financial action task force on money laundering. This is a group that was created by the G-7 to examine in depth the issue of the financing of organized crime world wide. The group can make recommendations to all countries on ways of countering criminal use of money. It has been said that money is the sinews of war, and it is the same in the fight against terrorism.

There is a real battle that can be fought on the ground in terms of propaganda, but there is also the whole issue of financing. Let us hope that we can do our share in a meaningful and concrete way.

However, at the same time—this will be a continuing concern for the Bloc—during the committee stage, we must ensure that in the application of the law we are not faced with the excesses we have already seen, such as in the case of the treatment of Maher Arar by the RCMP. We know that the RCMP slipped through the cracks in existing mechanisms to end up accusing Mr. Arar and that he suffered unacceptable treatment. In the final analysis, Mr. Arar suffered harm that will be very difficult to repair.

In the previous instance, it was the case of an individual. Today, we are dealing with the financing of terrorism. We must ensure that in the application of this law that there is no similar hole in the legislation.

I am referring, for example, to the fact that under the law an official of the Department of National Revenue would have the power to forward information that was sent by another official under the provisions of the charities registration act. That information could be forwarded to the Financial Transactions and Reports Analysis Centre of Canada.

This could be done in good faith and be completely legal. It could involve the forwarding of relevant information; however, we must ensure that there are safeguards to prevent excesses.

After they have debated the actual principle of this bill and its general appropriateness, the committee members should pay particular attention to the issue of protection of personal information. I would like the privacy commissioner to appear before the committee so that she could say how the act for which she is responsible applies to the reality of Bill C-25 and to the regulatory framework defining how to track the financing of terrorist groups so that such financing is clearly opposed and minimized, and how at the same time the rights of individuals will be respected.

We should recall that Bill C-22 was the forerunner of Bill C-25, which we have before us. It was tabled on behalf of the Minister of Finance in 1999 and intended to counter money laundering. That was Bill C-22. It was very similar to Bill C-80, presented in May 1999, but died on the order paper when the House was prorogued.

The general objective of the bill was to correct the shortcomings of Canadian legislation respecting money laundering, as they were identified in the 1997-98 report by the FATF, the financial action task force on money laundering, created by the G-7.

In addition, the FATF recommended in its report that any provisions respecting reports in Canada—which at present are voluntary—be made public and that a financial information unit be created with the responsibility of gathering, managing, analyzing and distributing reports of suspicious operations and other relevant information. So it was an international committee that made the recommendations and the 1999 bill was designed to put them into force.

That bill was passed. Since then it has been mandatory for regulated financial institutions, exchange offices, casinos and other financial intermediaries to report suspicious financial transactions. Another of the bill’s objectives was to put in place, together with the Canada Customs and Revenue Agency, a system for reporting large cross-border movements of currency. A lot of money changes hands. We will see a little later that the quantities of money are very significant.

Furthermore, the bill provided for the creation of a new independent agency, namely the Financial Transactions and Reports Analysis Centre of Canada. This centre receives and administers the information reported. Bill C-22 was enacted on June 21, 2000, and replaced the Proceeds of Crime (Money Laundering) Act then in effect.

The Conservative government is proposing to amend Bill C-22 with Bill C-25, which we are debating today. This new bill is designed to increase financial institutions' duties to keep records and report suspicious transactions, with a view to eliminating funding for terrorist organizations. The idea is to achieve greater transparency in the circulation of money. Banks are institutions that are responsible for the quality of their work. In my opinion, in the fight against terrorism, they need much clearer and more specific guidelines and instructions. Let us hope that this bill will clarify the situation.

First of all, the bill extends the application of the act to all organizations that, in addition to dealing in securities, deal in other financial instruments. Targeting securities alone does not go far enough, in light of terrorists' investment methods. The act also applies to persons and entities engaged in the business of remitting or transmitting funds by any means or through an intermediary to electronic funds transfer companies or of issuing or redeeming money orders, traveller's cheques or other similar negotiable instruments. In other words, the framers of the bill became aware of all the actions and the financial and monetary transactions that the bill needed to cover to try and control the circulation of money used to finance terrorist activities. The people who sell prescribed precious metals will be subject to Bill C-25.

The new bill prohibits any entity from opening an account if the bank cannot establish the identity of the client. The bank must be certain that it knows the identity of the client. Furthermore, the bill ensures requires any institution that does business with a politically exposed foreign person, foreign judge, head of state or minister, to obtain the approval of its senior management before entering into a transaction. Thus, safeguards are established. Such requirements apply to all sectors. For example, in the case of electronic funds transfers, the bank or other business must include the name, address, account number and all client reference numbers, whether sending or receiving such transfers.

This is where we must consider the issue of authorization given to officials of the Canada Revenue Agency to disclose information to the Financial Transactions and Reports Analysis Centre of Canada. We will have to be very vigilant to ensure that we do not erode the right to protection of personal information and to establish an appropriate balance so that the legislation falls within the desired framework.

Of particular concern is the laundering of proceeds of crime, which is the conversion of the proceeds of criminal activities into goods making it difficult to trace the proceeds to their criminal origins. It consists of hiding proceeds of crime by making them seem legitimate. It is money laundering. A large portion of these goods and assets are derived from the illegal drug trade and others result from criminal activities such as burglary and cigarette smuggling. The criminal activities that they seek to hide are, by their very nature, clandestine activities. It is difficult to have a precise idea of the extent of money laundering operations.

Experts estimate that, overall, some US$300 billion to US$500 billion in criminally derived funds enter international capital markets annually; $300 to $500 billion is a lot of money.

In Canada, the federal government estimates that between $5 billion and $17 billion in criminal proceeds are laundered in this country each year. There was therefore a need to take action and find a way of shedding light on these transactions in order, at least, to reduce them as much as possible.

There is also the problem of the financing of terrorist organizations. We know that terrorists were going so far as to take advantage of charitable organizations and ultimately use them for purposes other than those they were intended for. We need to re-consider things in this regard as well to be sure that we can also follow the financial transactions.

The financial action task force on money laundering established in 1989 is an international organization which wants to ensure that the different countries around the world have legislation for dealing with this problem. However, we have seen a major increase in terrorist group activity over the last few years. I think that we need to move faster and provide more support. The FATF’s mandate was renewed in 2004 to run until 2012, and it will continue to monitor the situation.

Through the mandatory reporting of suspicious transactions, this bill will ensure that we do not suddenly find ourselves in a situation where a whole series of suspicious transactions have to be identified because they were not being followed. The mechanism being put in place will hopefully take care of this.

In regard to the reporting of major cross-border currency movements, the bill will ensure that certain precious metals are also regulated and included in the currency to be reported.

There are two provisions authorizing customs officers to search people or the vehicles of people when the officers have reasonable grounds for suspecting that the people are hiding on or near their persons currency or monetary instruments that were not reported in accordance with the act's regulations. Finally, a new provision makes it possible to conclude cooperation agreements between Canada and the customs agencies of foreign countries that have similar requirements to report cross-border movements of currency and monetary instruments.

The comparison I made with the Arar affair also applies here. We must ensure that we are not creating a ripple effect by inadequately protecting personal information. When we give information to a foreign agency, we must ensure that we do so in accordance with the law and that the other country uses it in accordance with the law. We must not damage people's reputations because of incorrectly conducted transactions. In this case, it might not end with the kind of torture Mr. Arar suffered through, but it could damage reputations. We must be vigilant in ensuring that, if necessary, this bill is amended in such a way as to guarantee the protection of personal information.

The third important element is the creation of the Financial Transactions and Reports Analysis Centre of Canada covered under clauses 40 to 72. This is the framework, the organization, the structure that will ensure the implementation of this legislation. We hope the centre can operate because it will be responsible for analyzing and evaluating the reports it receives, as well as other information. If necessary, it will provide information to law enforcement organizations. It will also be responsible for making recommendations to the Department of Justice, the RCMP or other organizations. Here, too, we must be vigilant to ensure that the management and analysis of personal information are done correctly.

Bill C-25 sets out guidelines concerning individuals and groups eligible for registration with the centre. Any person whose name appears on the list of terrorist groups, who was convicted of terrorist activity or of participating in, facilitating, instructing to carry out or inciting to commit terrorist activities, who was convicted of participating in organized crime activities, or who was convicted once on indictment or more than once for fraudulent transactions or for an offence under the Controlled Drugs and Substances Act, except for consumption, is eligible to register.

Clearly, what we are seeking is a comprehensive framework that will allow for proper intervention regarding cash flow linked to terrorists. Accordingly, the Bloc Québécois believes that this bill deserves our support.

It also includes serious offences so that criminals are well aware of the seriousness of their actions.

To conclude, I refer back to my comment on privacy. I would like to see this bill passed as quickly as possible, given the study that will be required in committee. Indeed, it must be carefully studied to prevent individual cases from slipping through security and, above all, to prevent honest, law-abiding citizens from being penalized by such legislation.

Significant amounts of money circulate in this area of activity and this legislation could, in due course, have implications for human life. Terrorist activities funded at the source by this type of monetary flow often lead to the deaths of innocent bystanders.

It is a fine idea to create tools to stop this money from circulating, but we must strike a balance with the protection of privacy.

The Bloc Québécois supports the principle of this bill. We will see if, through amendments, we can adapt it more to the reality of these people and make it more compliant with the Privacy Act.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

Mr. Speaker, I congratulate my colleague for Montmagny—L'Islet—Kamouraska—Rivière-du-Loup on his speech to which I listened with great interest. I would like to take this opportunity to ask him a question about the ideological winds that are blowing these days in this House with the minority Conservative government. Of the 30 or so bills introduced by the government, a dozen concern law and order.

[An hon. member]

There are 17.

[Raynald Blais, Bloc, Gaspésie—Îles-de-la-Madeleine, QC]

There are 17.

In my opinion, that is also the case for this bill. I understand and believe that it is important to bolster our system because of terrorism. That being said—and my colleague mentioned this in his speech—we must be careful that this does not lead to unfortunate situations such as those experienced by Maher Arar. Perhaps others have had similar experiences.

I would like the member to comment on the ideological winds that we hear, feel and sense coming from the Conservative minority government. It is fortunate that they are in the minority.

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I wish to thank my colleague for his pertinent question.

The current government is quite taken with the issue of public order. It often believes that it can resolve situations by, for example, increasing sentences for certain criminal activities, investing fewer resources in rehabilitation, and believing that stiff punishment will lead to an automatic change in behaviour. This causes resistance to adoption of these bills. We can feel it in the House. All opposition parties, at one time or another, have shown their opposition. This leads us to realize, in my opinion, that this vision does not correspond to the values of Quebec society nor the values of Canadian society at large.

For this reason, each bill must be assessed individually. That is the practice that the Bloc Québécois has adopted. When a bill is advantageous for Quebec, at the very least, we support it, we promote it; when it is not, we do not support it.

Obviously, the Bloc Québécois will oppose this wind from the right and not support any government initiative to tighten the Criminal Code and, for example, criminalize younger and younger people, including children and adolescents. The Bloc Québécois will stand up to the government and make sure that such bills are not passed and that they are subjected to every possible parliamentary test before returning to us, when we in the Bloc Québécois will clearly show our opposition.

I remember that we opposed the Young Offenders Act in the past, and we were proven to have been right at the time, and now we are opposing other bills.

In this case, it is a bill that refers to laundering proceeds of crime. The Bloc Québécois led the war on organized crime in the past, to reduce organized crime and make sure it can be dismantled.

Consider the anti-gang bill. There is a very clear difference between this type of bill, which is designed to ensure better, fairer treatment in our society, and all the bills that criminalize young people in particular and, in my opinion, do not reflect how we want things to work in our society in future. The Conservative Party has a minority government—fortunately, as my colleague said—and will have difficulty getting these bills passed.

In the end, the next time we face the voters, we will have seen, this year, that the Conservative government is borne along by the right-wing current coming from the United States, but more from the Alliance and Reform parties that preceded the Conservative Party. Nevertheless, the Conservative members from Quebec have been asleep at the switch all this time. And when the next election is called, these people will have to answer to their constituents for the bills they passed or supported that ran counter to the values of Quebec society. They will have to answer to the people.

We are already seeing it in the polls, which show the Conservatives at 16% to 18% of decided voters in Quebec. They will pay the price if they do not alter their policy on these issues.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, small branch credit unions, of which I am a member in my riding, have difficulty with administration costs and making ends meet because they do not have the resources of large banks and larger institutions.

What does the member think of the issue of credit unions having to monitor and carry the burden of the investigation process with respect to criminal activities and the hardship of that for them?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, I thank my colleague for her question. I myself am a member of the Desjardins Group, the largest association of credit unions in Quebec and in Canada. Desjardins collaborates with international credit union-type organizations.

I understand the argument. This is one of the things that the committee will have to study to ensure that small financial institutions can cope with the implementation of such measures and will not be taken over by larger institutions. This issue is not directly related to fighting terrorism, but it would have an impact on how small financial institutions are run. The committee will have to pay close attention to this. Its work on this bill will be very important.

Earlier, I talked about Canada's privacy commission. It is important that financial institutions, both large and small, appear before the committee so the bill can be amended as necessary and to avoid adding too many additional rules to current regulatory regime. That could penalize the cooperative movement, which is very significant at home and also gaining strength in developing countries.

In Africa, Desjardins' markets are growing significantly. I would also like to draw attention to the Nobel prize awarded to the creator of microcredit lending. These small institutions must be allowed to continue to progress, protected from manipulation by terrorist movements. They must not be crushed under superfluous regulations. I support its ideology and hope that the parliamentary committee studying this bill will look closely at this matter. I hope the committee will hear witnesses who can discuss it concretely, that is, administrators and managers of these small institutions.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I thank my colleague from Kamouraska for his sensitivity to the needs of these smaller institutions and the burden that the bill might place on them.

As I was speaking to the bill, I received an email from a general manager of a credit union on Vancouver Island. He has pointed out that his small credit union may have to deal with costs of up to $200,000 per year just to track, administer and file the necessary paperwork stemming from Bill C-25.

His second point, which I would like my colleague's view on it, is that in a small neighbourhood community institution, he resents that he may have to turn in activities of his friends and neighbours, which may not quite meet the standards or may seem suspect to some from thousands of miles away. He is not comfortable having to report private information to the government in his function as the general manager of a credit union.

My colleague mentioned the Privacy Commissioner. Is he concerned as well that neighbours may be called upon to blow the whistle on other neighbours?

[Paul Crête, Bloc, Montmagny—L'Islet—Kamouraska—Rivière-du-Loup, QC]

Mr. Speaker, that is a good way to illustrate my suggestion that the Privacy Commissioner appear as a witness to reveal what effect this will have on privacy.

We could also study its effect on other individuals within the same community. The Desjardins group is based on the democratization of banking and financial processes. In the beginning, each credit union had a credit committee made up of people elected locally to review credit applications. In small municipalities, this often led to friction. Privacy must be guaranteed.

In this sense, we must also make certain that this does not become an open door for terrorist groups. If we regulate this problem only among the big banks and suddenly open a side door to the smaller institutions, we must ensure that they have sufficient protection, that they are able to deal with this influx, and that tools exist to properly identify relatively ordinary transactions without disproportionate costs. We must not find ourselves faced with the monetary flows to finance terrorist groups taking a new path that is not covered by this legislation.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, I am quite happy to join the debate on such an important subject as Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act.

This enactment amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to enhance the client identification, record keeping and reporting measures applicable to financial institutions and intermediaries.

It establishes a registration regime for money services businesses and foreign exchange dealers and creates a new offence for not registering.

It allows the Financial Transactions and Report Analysis Centre of Canada to disclose additional information to law enforcement and intelligence agencies and to make disclosures to additional agencies.

The bill permits the centre to exchange compliance related information with its foreign counterparts. It also permits the Canada Border Services Agency to share information about the application of the cross-border currency reporting regime with its foreign counterparts. It also includes a consequential amendment to the Canada Border Services Agency Act.

The bill creates an administrative monetary penalty regime, something which certainly seems to be needed.

It also amends the Income Tax Act to allow the Canada Revenue Agency to disclose to the centre, the Royal Canadian Mounted Police and the Canadian Security Intelligence Service information about charities suspected of being involved in terrorist financing activities.

Everyone in the House will likely agree that one of the best ways to fight organized crime and terrorism is to starve those involved of the funds that they need to operate. Stemming the flow of illegal money is of great importance, and it is equally important that we protect the privacy and the charter rights of individual Canadians.

Bill C-25 is a step in the right direction and contains much of what the previous Liberal government was in the process of developing. We will certainly support it in principle at this stage of debate.

The proposed amendments in the bill will make Canada's anti-money laundering and anti-terrorist financing regime more consistent with new financial action task force standards. They also follow some of the recommendations made in the 2004 Auditor General's report and in the 2004 Treasury Board evaluation of the regime. I will now turn to some of the key features in this bill.

There are enhanced client identification and record keeping measures for financial institutions and intermediaries. The proposed amendments include requirements for reporting entities to undertake enhanced monitoring of high risk situations, correspondent banking relationships and transactions by politically exposed persons. Banks, insurance companies, securities dealers and money service businesses would be required to take measures to identify and to monitor the transactions of foreign nationals and their immediate families who hold prominent public positions.

There is the reporting of attempted suspicious transactions. All reporting entities currently reporting suspicious transactions would be required to report suspicious attempted transactions to FINTRAC. This is the practice in other G-8 countries and is consistent with financial action task force recommendations.

Another feature in the bill is the registration regime for money service businesses and foreign exchange dealers. The proposed amendments would create a federal registration system for individuals and entities engaged in money service businesses or foreign exchange. FINTRAC would act as the registrar and would maintain a public list of registered money service businesses and foreign exchange dealers. These businesses are already covered by the Proceeds of Crime (Money Laundering) and Terrorist Financing Act; however, given that this is an unregulated sector, the registry will assist FINTRAC in ensuring compliance with the act.

The bill refers to enhancing the information contained in FINTRAC disclosures. As recommended in the 2004 Auditor General's report and at the behest of law enforcement, the proposed amendments enhance the information FINTRAC can disclose to law enforcement and security agencies on suspicions of money laundering or terrorist financing. This will increase the value of FINTRAC disclosures, ultimately leading to more investigations and eventual prosecutions.

The bill creates an administrative and monetary penalties regime. Currently the act only allows for serious criminal penalties if the act is contravened. FINTRAC requires the ability to levy fines to deal with lesser contraventions in order to take a more balanced and gradual approach to compliance. The amendments create an administrative and monetary penalty system whereby fines can be applied for non-compliance. This was a recommendation in the 2004 Auditor General's report.

The bill reintroduces requirements for legal counsel. The government is working with the legal profession, including notaries in Quebec, to finalize requirements for client identification, record keeping and internal compliance procedures for legal counsel when they act as financial intermediaries. The bill removes the obligation for legal counsel to file suspicious transaction reports or other prescribed transaction reports.

The bill expands information sharing between federal departments and agencies. The amendments in the bill would expand FINTRAC's ability to share information with the Canada Border Services Agency, the Canada Revenue Agency and the Communications Security Establishment. In addition, FINTRAC would be able to receive terrorist property reports under the United Nations act regulations.

Internationally, the enforcement of the anti-money laundering and anti-terrorist financing requirements would be strengthened by information sharing provisions on compliance related information between FINTRAC and its foreign counterparts on obligations applicable to the financial sector and between the Canada Border Services Agency and its foreign counterparts on the enforcement of the cross-border currency reporting regime.

This bill proposes to make some necessary changes to the previous government's Bill C-36, the Anti-terrorism Act of 2001. Changes such as these will likely be required every few years as money launderers become more sophisticated and police need new powers to fight them. This is precisely what makes money laundering so difficult to combat. No matter how many safeguards and checks we as legislators put in place, the criminal element will always look for new ways to avoid or to counter them.

Canada's financial intelligence agency reported $5 billion worth of suspected money laundering and financing of terrorist activities last year alone. That total is more than double the one a year earlier. Of that, $256 million is tied to suspected terrorist financing. Of the 143 reports FINTRAC made to law enforcement agencies, there have been no convictions. The Auditor General in 2004 suggested that allowing more information to flow to law enforcement authorities would help in investigating these suspicious activities. This bill provides these powers.

This bill is largely derived from recommendations made by the Department of Finance under the previous Liberal government's tenure. Money laundering and terrorist financing have economic and social costs against which we must remain vigilant. In order to achieve this, we must continually re-evaluate how we monitor and disclose suspicious transactions as the nature of these activities changes and continually becomes much more sophisticated. The government must move to stem the tide of money laundering and terrorist financing and at the same time protect the privacy rights of law-abiding Canadians.

Given that both the Auditor General and the RCMP have expressed concern that exemptions for the legal profession leave serious gaps in this legislation, I am concerned with the government's decision to remove the obligation for legal counsel to file reports of suspicious transaction with FINTRAC.

Our colleagues in the other house recently tabled a report entitled “Stemming the Flow of Illicit Money” which made several recommendations, some of which are in the bill and some of which are not. I would also like to see the Senate Standing Committee on Banking, Trade and Commerce recommendations for Parliament to have greater powers to also scrutinize FINTRAC.

One of the main concerns I have is that we are not bringing some of the businesses that currently do not fall under FINTRAC's guidelines into the bill. As the banking, trade and commerce committee reported, the RCMP believe that as stricter regulations are imposed on businesses in the financial services industry, criminals are seeking alternative methods of laundering the money accumulated from criminal activity.

Various characteristics of the precious metals, stones and jewellery industry make it highly vulnerable to criminal activity. The RCMP has identified these businesses as a likely place for criminals to launder money, yet this bill does not require them to report suspicious transactions as financial institutions must. I strongly recommend that all of us in all parties work together to make sure that we amend this law so that it reflects clearly what is needed.

Another weakness that has been identified by both the Auditor General and the RCMP is that lawyers are not required to disclose suspicious transactions to FINTRAC. This is, of course, another delicate balancing act. On the one hand, we need to give law enforcement the ability to track down those who launder money, using a lawyer as a financial intermediary. On the other hand, we have the issue of protecting solicitor-client privilege. This bill strikes a compromise between the two and I look forward to studying whether this compromise is appropriate under the circumstances.

Another major concern with the bill is that it does not adequately ensure that the privacy of Canadians is protected. The bill will allow FINTRAC to share greater amounts of information with law enforcement agencies. This is necessary in order for those agencies to fully investigate suspicious transactions and to eventually prosecute where appropriate.

Another part of the bill that does not work as effectively as we would like to see is to provide increased protection for the privacy of Canadians, such as by creating an independent review commission with the powers and authority to conduct random reviews of an agency's files and an agency's operations. The Auditor General has also recommended that some such commission be created. In her 2003 report, she wrote:

The government should assess the level of review and reporting requirements to Parliament for security and intelligence agencies to ensure that agencies exercising intrusive powers are subject to levels of external review and disclosure proportionate to the level of intrusion.

It is extremely important that be put in place as this legislation goes forward for the review. Essentially, if we are going to give FINTRAC the ability to share more of Canadians' personal information with bodies like the RCMP and the Canada Border Services Agency, then should we not also move to ensure there is sufficient oversight of FINTRAC to ensure that the information that it is disseminating is appropriate?

As I said before, this is by and large a good bill. It has certain omissions and weak points and I feel that we should all work to amend it at the committee stage, but overall it will provide the police and prosecutors with some of the tools they require to combat money laundering and terrorist financing.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Speaker, I thank my colleague from York West for her excellent presentation.

I would like to ask her the following question. Given that, under this law, officials will be able to disclose information to other authorities, does the member not see that there should be a committee of judges or another type of filter so that information that could possibly ruin an individual's life is not disclosed to persons who do not necessarily understand their responsibilities or to certain people who could use the information to undermine another group?

It is possible to imagine that such practices could be used in the Canada of the future. According to the member, what type of filter would suffice in this case?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, clearly that is one of the reasons why we recommend it go to committee and that we all work together as parliamentarians to ensure the privacy of Canadians is respected. There is lots of opportunity for work at the committee level to ensure that is exactly what results by the time it comes back here.

[Catherine Bell, NDP, Vancouver Island North, BC]

Mr. Speaker, I did not hear in the hon. member's speech mention of credit unions, the implications for small institutions and the impact it would have on their budgets.

What does the hon. member think about that and could she maybe comment on the negative situations these credit unions and small institutions could find themselves in?

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, part of the reason we are sending the bill to committee is to ensure we look at a lot of avenues, including how do we ensure credit unions and those kinds of organizations are able to deal with the kinds of changes being recommended in the bill.

Credit unions are have been very successful in the country. I bet if we took a poll of the 306 members here, many of us, at some point or another in our lives, have participated and have been members of various credit union.

As we move forward on the legislation, it is important to ensure that this protection is there and that what we bring in is not so cumbersome it becomes impossible for smaller banks and credit unions to work with and work through. However, we also have to remember how important it is for us to ensure that we do our jobs as parliamentarians, which is to ensure the safety of Canadians and many other people when it comes to financing terrorist activities through a variety of ways.

I am quite sure people would be aware of our trusting attitude toward credit unions and because of that, they would not be watched quite as carefully. We need to ensure we bring things in place that allow us to achieve our goal in terms of money laundering, but that do not become impossible for our various institutions to deal with.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, when my hon. colleague was in government, I know she did a lot of work in this area and provided a lot of constructive solutions to deal with an issue that the RCMP quite correctly said was a major plague within our country and an impediment to its ability to provide justice to Canadians.

I am very interested to know the conundrum that occurs when we try to pursue this, and that is the issue of privacy rights. We need to have a balance, and the member, quite correctly, brought this up in her speech and delved into it. However, I would be interested in knowing her further views on ensuring there is an adequate balance between the rights of privacy for the individual and the rights of our collective to pursue those individuals who are abusing this right in the interest of criminal activity.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, it is always interesting and difficult to have that balance. I have often had people come in and complain because they were trying to send money back to whatever country and they were being asked a lot of questions, and so on and so forth.

It is important that we find the balance. Hence this is the reason the work of the committee on the legislation will be so important. We need to ensure that money is not being sent abroad for terrorist activities. At the same time, we also have to ensure that we do not intrude too far into rights and privacy rights of Canadians.

I believe we all value and share the charter and its protection and that we want to be respectful of people's privacy. It is quite a difficult challenge, with whom is it safe to share information and with whom is it not safe to share information. As Canadians, who do we want the government to share our public information with, and with what agencies?

It is really important that we work carefully on these issues, that we spend a lot of time with this at committee to ensure we do it right and that Canadians understand why it certain parts and amendments will have to go through.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, earlier when I spoke, one of the questions I was asked, and I would be interested in the member's point of view on this, was on the utilization of the proceeds of crime.

As federal legislators, we make amendments to the Criminal Code, but it is up to provincial and regional policing authorities, as well as federal policing authorities, to carry it out. If they do not have the resources to deal with these things, the suggestion was that a greater degree of the proceeds of crime could be made available to those police forces that detected and exposed this kind of thing.

My concern was that there may be some inequities across the country, but I think the principle is probably valid, in terms of ensuring as much as possible those proceeds are available for the policing authorities at all levels of government across the country.

[Judy Sgro, Liberal, York West, ON]

Mr. Speaker, as a former member of the Toronto Police Services Board, we often dealt with this issue. When we are dealing with large urban centres, especially, a lot of policing time goes into apprehending criminals and various items like houseboats, trailers, homes and so on. A lot of money is spent by our local police forces both in the investigative time and numerous other things they have to do to lay charges against individuals.

I have always felt that money from the sale of those individual items should go right into the local police services. It is a much more effective way of acknowledging they put out all this money. Currently they have to wait several years for any money spent as part of an investigation to come back to them.

Granted there would be an imbalance from our large urban centres to some of the smaller centres but, clearly, proceeds of crime, things that can be liquidated, should go back into the local police services so they can have more money to do additional investigations and ensure the safety of our community.

[Keith Martin, Liberal, Esquimalt—Juan de Fuca, BC]

Mr. Speaker, it is a pleasure today to speak on Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act.

At the outset, I will illustrate for a moment why this is so important. Let us look at a place half a world away where our troops our dying. When President Karzai was here, he said “if the poppy crop is not eradicated, then the poppy crop will destroy Afghanistan”. I believe all members remember that. If we do not eradicate the poppy crop in Afghanistan, it will eradicate Afghanistan.

Why is this important and how does this connect to the bill. The poppy crop is a substrate upon which narcotics are made, in particular heroin. That heroin is processed and sold. It goes on to cause untold hardship, pain, suffering and sometimes death within our country and with many other countries in the world. That heroin also enables organized crime gangs to make enormous amounts of mount.

We could put an advertisement on television, “Use heroin and support the terrorists”. If people use heroin, they are providing the money that enables our troops to be killed in Afghanistan.

Drugs are one of a number of products that are used by organized crime and terrorist organizations. They provide the funds that enable them to buy weapons and infrastructure to carry out terrorist activities against us and our allies, which cause untold instability in various parts of the world.

In fact, if we do not get a hold on the poppy crop in Afghanistan, the mission there will never be successful. That is why it is critically important, and we have heard this recently, that the west not change its approach to drugs. However, if we go in and wipe out vast poppy crops, it leaves farmers with absolutely nothing. That is why some of those people are joining what we call the neo-Taliban. This is not the same group of Taliban that was there in 2001-02. It is a new group. Part of that group is made up of farmers who have had their livelihood removed. As a result, they have joined the Taliban and taken up arms against us.

The failure to deal with the poppy crop not only is a failure to deal with the economic wherewithal to engage in actions against our troops and against our allies, but it also is a poison and does not enable Afghanistan to get on its feet. My personal view is that we need to call a regional meeting to deal with the poppy crop. I personally hope the crop is bought, destroyed and other alternative crops are given to those farmers.

Unless we can provide those farmers with an alternative form of living, when we go in there and wipe out their livelihood, then we have left them with nothing for themselves, their families and their communities. If we do not, they go from being a subsistence farmer to abject poverty. With the Taliban holding out its arms and also some money for these farmers, they take up arms against us.

This is the on the ground reality of why the bill is important and why it is important for us to deal with the poppy crop and the drug trade.

Let us look at South America and Colombia where cocoa is produced. Colombia is the primary cocaine producer in the world. The United States spends $800 million a year in its so-called war against drugs. It is a war that will never be won.

Organized crime gangs and terrorist groups are the ones that feed off the products of cocaine, the FARC, the ELN, the paramilitary. Those groups are not ideological groups. They are organized crime groups, organized militias, that make money from the drug trade. Interestingly enough, those groups in South American are also attached to al-Qaeda. They are all connected again to what we are talking about here, which is trade in money laundering, the trade in various products.

Another point I want to talk about is gems. If we look at west Africa and countries such as Sierra Leone and Liberia, where people live in abject poverty, diamonds can be found on the ground.

One will find in these areas organized crime gangs working with various local warlords, so to speak, in order to take those diamonds, pay a small amount of money and earn huge profits from them. The reason why diamonds are used is that they are very easy to move around. They are very difficult to track. It is very easy to sell them for very high amounts of money, with huge profit margins.

That is what these organized crime gangs rely on. They rely on huge profit margins on products that can be bought and sold very easily to make the large amounts of money that are used in their nefarious activities.

According to the police, the most effective way to deal with these issues and with organized crime gangs, which I would put at the forefront for us domestically, is to cut the money supply out from underneath them. That is what this bill does.

My colleague articulated a number of our party's concerns with the bill. It is not that we oppose the bill. We would like to strengthen it.

What the United States did was very bright. The Americans adopted something called the RICO amendments, the racketeer influenced and corrupt organizations charges. What they recognized is that the best and easiest way to undermine organized crime gangs is to go after the money. If we go after the money, we weaken them.

When the Liberals were in government we actually put together RICO-like amendments for our country. We have proceeds of crime legislation. I think it needs to be strengthened and I would encourage the government to look at it to ensure that we have the ability to take away those resources.

I will give members one example. There is one thing that can be done. If people have made vast sums of money and have been charged and convicted of organized criminal activity, then the onus should be upon their shoulders to prove that their large wealth was actually generated from honest, law-abiding means. If we actually make the change that the police have requested, then we will be able to go a long way in removing the resources that tend to continue to circulate through organized criminal activities.

Getting back to trafficking in gemstones, one of the things the Liberals put together, and which the government should look at, is the Kimberley process. Through the Kimberley process, it was the first time we were able to deal with blood diamonds. Not only diamonds are addressed, but other semi-precious gemstones that can be easily trafficked are as well. We have to do a better job of strengthening the Kimberley process so we are able to ensure that legal gemstones are traded, bought and sold but that we stop the illegal trade in so-called blood diamonds and other gemstones.

It is critically important that this is dealt with, because countries like Liberia, Sierra Leone and Angola will never be able to get on their feet unless those natural resources are actually used and bought and sold legally, with the moneys poured back into the countries that produce them. In that way, these countries can build up their primary infrastructure, health care and education for the benefit of the people. If that does not happen, the people of these countries will continue to live in abject poverty and will never be able get out of their current poverty cycle.

The other issue relates to oil and what is called bunkering. What is happening now in west Africa from Angola to Nigeria is that oil is extracted, but ships come alongside where the oil is produced and a certain percentage of the oil is put onto these ships and disappears. Oil is bought and sold illegally and those moneys can then be used to fund terrorist activities. It is a very lucrative area that is not explored, but unless we deal with this, it is going to be a major problem.

A lot of those moneys wind up in Swiss bank accounts and in other areas where the tax regimes are not as transparent as they are in countries such as ours. These regimes are very opaque even though they are those of western countries. I would encourage the government to work with other countries that currently have opaque tax regimes, to put together and establish agreement on a rules based mechanism and standard in which we could have more transparent tracking of these moneys as they wind themselves inexorably through our current international financial mechanisms.

Again I want to emphasize that a failure to do this will ensure that we will never ever get a handle on organized crime gangs, organized criminal activity, and terrorism, because these three areas rely on these transactions, on taking a product that is sometimes illegal, like narcotics and other illegal drugs, selling it for a vast profit and then laundering those moneys through legal means.

That is why Bill C-25 is so important. That is why my party is supporting it to go to committee so that we will be able to make amendments to strengthen those areas that we feel need to be strengthened.

It is important in dealing with this issue that we also listen very closely to the police. In my province of British Columbia, more than 60% of the illegal activity comes from organized criminal activity, and a large chunk of that comes from the trade in illegal drugs. I know that the government likes the approach of the so-called war against drugs, but I would submit that it is a so-called war that cannot, has not and will not be won. It simply cannot be won.

There are now only two countries in the world that officially support the so-called war on drugs approach: Canada and the United States. If we look south of the border and at the objective parameters on where this war has taken the Americans, what we see is very stark and very frightening. For example, the U.S. has a higher use of both hard and soft drugs. The Americans have higher incarceration rates, higher disease rates, higher death rates, higher sickness rates, higher HIV rates, and higher rates of hepatitis B and hepatitis C, both connected with intravenous drug use.

Why is that so? If the war on drugs was so successful, why has this approach, by any objective parameter, been an abysmal failure? Because it does not work.

So where does it work and how can it work? I think we have to take an approach that marries two groups together. The first is the provisions in this bill that could be strengthened to enable us to track, undermine and undercut the trafficking and money laundering associated with these substances. The other is a rational medical approach toward substance abuse. Where can we find that? We can find that in northern Europe. We can find that in Germany. Frankfurt has an outstanding model. The Swiss have some very good models, as do the Swedes and the Finns.

All of those countries have procedures and integrated approaches to substance abuse that are rooted not in a judicial approach but a medical approach. They involve the following components. They involve harm reduction and, yes, safe injection sites. They involve detox and psychiatric counselling. They involve training programs. They involve housing issues. They involve work.

If we take a look at all those components, we will be able to have an effect because, interestingly enough, many of the people who have substance abuse problems, particularly those we find on our streets, have what we call dual diagnoses. A lot of them also have psychiatric problems, so we cannot disconnect the people who have substance abuse problems from those who have psychiatric problems. They are connected.

To take a judicial approach against those people, I would submit, is not only factually incorrect and will be ineffective, but also it is inhumane. These people do not need to be thrown in jail. They need a medical approach that is going to help them and deal with some of the underlying problems they have, problems that can be dealt with.

I would encourage the government, which in my view has taken a very blunt and very ineffective approach against this problem, to open its eyes, deal with the statistics, look at the facts and adopt those solutions that will have an effect. All of us in all of our communities know that this is an issue that affects all of us, and none of us want to see people get into this death spiral with the use of illegal substances that can ruin lives. All of us have seen on the streets in our communities people whose lives have been destroyed, for many reasons, and it does not have to be so.

It is incumbent upon us to work with the provinces, the managers of health care, in order to be able to use and take that integrated approach. I personally would like to see that in my community, in Victoria on Vancouver Island. I would like us to be able to take on this integrated harm reduction strategy and work on the housing issues, the medical issues, the psychiatric issues, the counselling issues, the skills training issues and the work issues that are at the forefront of solutions to address this problem.

In my city of Victoria, this is a very big problem. The police are looking for help. The police recognize that this is the route to go. The police want help on this. Their hands are open, as are those of the community. I would encourage the government to listen to us and work with us to implement those solutions that will work.

In closing, for the sake of our troops in Afghanistan, for heaven's sake let us start to deal with the issue of the poppy crops in Afghanistan, in a rational approach. The poppy crop can be removed, but we have to replace it with alternative livelihoods. Afghanistan and the southern area used to be a very--

[The Deputy Speaker, Bill Blaikie]

Order, please. The hon. member does have five minutes remaining in his 20 minutes, so he might want to pick up where he left off when we go back to orders of the day.

We have now reached the time for statements by members. The hon. member for Peace River.

The House resumed consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to speak to Bill C-25, a bill to deal with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act.

The bill builds on the work that our government did in 2001 when we introduced the legislation, which was passed by the House and the other place, and when the government set up FINTRAC, the financial transactions agency that serves as the financial intelligence unit for various reports that come in from financial intermediaries to track the suspicious transactions that might be laundering activities.

This bill proposes certain amendments to the act and basically builds on a number of themes. The financial action task force, which is the body that sets the standards in the fight against money laundering, came out a number of years ago with 40 recommendations with respect to standards in the fight against money laundering. Given the advent of 9/11 and other events, it added to its 40 recommendations on money laundering a further nine special recommendations on terrorist financing.

What these amendments do in part is they bring the legislation up to date with that but they do a number of other things, and I will be happy to speak to those as well.

Before I do that, perhaps I could talk briefly about the size and the scope of money laundering. People at home might be watching this debate and wondering what money laundering is. Money laundering has many definitions but the one I prefer is the one that says that money laundering is the processing of criminal proceeds in order to disguise their illegal origin.

If someone were a drug dealer or if someone were involved in planning a terrorist activity, the person would be disinclined to take the money he or she had received and put it into a bank account under his or her own name. Criminals try to launder the money through legitimate businesses. They reinvent themselves into some legitimate purpose and deposit the money and try to launder it in that way.

We do not want to have that type of activity in this country, nor is it something we want happening worldwide. It is an international problem of significant scope. In fact, KPMG, the consulting firm, estimates that money laundering is somewhere in the region of $500 billion to $1 trillion annually. I would suggest that is probably on the low side. I think it is probably more than that.

Who are the money launderers? We have basically four major categories. The first one relates to major drug crimes and we are talking primarily about drug related activities. The second category would be terrorist financing, which would be financing done before a terrorist event or after a terrorist event where money would either be accumulated to enact a terrorist event or it would be money that would be used to pay off various terrorists who had committed these offences. The third category is money laundering related to corruption. This is a very serious problem worldwide. The fourth category is money laundering related to tax evasion.

There are many ways and reasons to launder money, which is why our government brought in the anti-money laundering legislation in 2001 and that is why we set up FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada. That organization began making disclosures in the year 2002.

It is quite appropriate for Parliament to review the act. In fact, a committee reviewed FINTRAC in 2005 to see what it was doing, what it was proposing to do, how successful it had been and what kind of changes it wanted to see. There was also a review recently in the other place on money laundering, and the Auditor General completed a report not too long ago.

It is quite timely that the government has introduced the amendments. Generally, I would support the way it is proceeding, but if the bill passes the House and goes to committee, there are a number of issues the committee should examine in some more detail.

We are very privileged that the presidency of the Financial Action Task Force, which is the standard setter in the fight against money laundering, has been assumed by a Canadian, a very distinguished public servant from the Department of Finance, a gentleman by the name of Frank Swedlove. This gives us a unique opportunity to be engaged in the fight against money laundering.

What is FINTRAC? The Financial Transactions and Reports Analysis Centre of Canada is an arm's length agency. It is required to collect all the reported suspicious transactions by financial intermediaries. In 2001 the government defined suspicious transaction as predominantly a cash or near cash type of definition. Any transaction over $10,000 is automatically deemed a suspicious transaction. Then many other types of transactions are covered by guidelines and some of the professional people look at these types of questions. A number of guidelines published by FINTRAC and the Department of Finance define transactions that might be suspicious even though they are below $10,000.

In fact, in its recent report, FINTRAC reported that it had disclosed more than $5 billion in suspicious deals to law enforcement and CSIS last year, which was twice what it had reported in previous years. We are seeing that the laundering of money is not diminishing. It is increasing and it is of particular concern now with the threat of terrorism before us.

I had the great honour, from 1999 to 2001, to serve as the parliamentary secretary to the then minister of finance, our colleague, the member for LaSalle—Émard. I was very proud that we were able to get the support of the House and the other place for the legislation and to establish FINTRAC.

I have also been quite involved with the Global Organization of Parliamentarians Against Corruption. This organization started in Parliament. People from around the world were invited and GOPAC was formed. GOPAC sees its mission as not only being the fight against corruption, but also the fight against money laundering. A large conference was held in Tanzania at which some 300 parliamentarians from 50 countries around the world attended.

I would like to indulge the House, if I may, with the resolutions that came out of the conference with respect to money laundering. I will not read them all. There are six of them. I will highlight some of the more critical ones.

First, it is to seek observer status within the Financial Action Task Force. The request has gone out to Mr. Swedlove to get observer status for the Global Organization of Parliamentarians Against Corruption.

Another resolution was to look at the benefits of an international convention against money laundering and also to encourage GOPAC members of the importance of the 40 + 9 recommendations published by the Financial Action Task Force.

Another resolution was that GOPAC begin a dialogue with the offshore and international banking communities to better understand what the communities were doing to fight money laundering in the financing of terrorism and also to develop protocols specifically on fighting the laundering and recovery of corrupt money and assets. That was done, particularly in the context of GOPAC, which is concerned mainly with the fight against corruption.

In bringing forward this legislation in 2000-01, it was quite a challenging balancing act, balancing the need for Canadians to deal with the blight of money laundering and the risks to which Canadians were exposed while at the same time balancing the privacy needs of Canadians.

There were questions around what kind of information FINTRAC should disclose to law enforcement and to CSIS and on what terms they should disclose it. There were many issues like that.

There was the question of how we define financial intermediaries. We had a lot of presentations by various interest groups, whether they were the lawyers, the accountants, the department stores or the churches. They said they wanted to be exempt because, after all, they were not laundering money.

The tack the government took was to say that it would not create any exceptions, because money launderers being what they are, the money launderers would go to the areas where there were gaps or where exceptions were made. The decision of the government was to set a very big net and basically capture everybody in the sense of reporting requirements, and then, over time, evaluate what could be released and what would not.

As part of this amendment to the bill before us today, there is something that is quite a concern. I am not sure that there are many answers other than what is proposed here, but I think it would be a good discussion within the committee.

So that Canadians understand what is being done here, the lawyers in Canada were included in the reporting requirements of FINTRAC. In other words, any suspicious transactions had to be reported by the legal community to FINTRAC. The law societies of Canada, or whatever organization represents them in this case, took this to court. The court agreed with them that it would create a problem with respect to solicitor-client privilege.

So what these amendments do is take the lawyers out of that reporting requirement. There are ways that the Department of Finance is working to incorporate lawyers, but it is an area of great concern, because once the launderers realize that there are gaps, that is where they will go. We know that, and I will pick this up again--

[The Deputy Speaker, Bill Blaikie]

Order, please. I have the feeling that members are disappointed that the House is about to adjourn, but the hon. member will have eight minutes left in his speech when we resume debate on the bill.

It being 6:30 p.m., this House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6:30 p.m.)

The House resumed from October 23 consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[The Acting Speaker, Andrew Scheer]

The hon. member for Etobicoke North has eight minutes left in his speech.

[Roy Cullen, Liberal, Etobicoke North, ON]

Mr. Speaker, I am pleased to continue. Yesterday across the floor the Conservative members were laughing and heckling on a very important topic, money laundering. I am hoping they will pay closer attention today, because money laundering is not done by ordinary citizens; it is done by criminals and terrorists. It is a very serious matter.

First of all, I should say that our finance critic is generally in support of what is being proposed in terms of amendments. After all, this builds upon the anti-money laundering legislation that our government brought in in 2001. We have now had the benefit of a few years and the government is reviewing the feedback and the experience to date. It is very timely to bring in some amendments.

I would like to touch on one point that I made yesterday which is that one of the amendments actually removes lawyers from the list of those financial intermediaries who need to report suspicious transactions to FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada. This is something that the committee should look at very carefully.

What we contemplated when the government brought in this law was that, for example, a citizen would sit down with his or her lawyer and say, “I would like you to keep this $300,000 in cash in safe keeping for me”. The lawyer under the law as we have it would then say to the person, “Do you realize that I am required under the law to report this to FINTRAC, the Financial Transactions and Reports Analysis Centre of Canada, as a prima facie suspicious item?” The client would either say, “Yes, I understand that. Therefore, I will take my $300,000 back”, or “Yes, you may proceed”.

On that basis the lawyers in this country have challenged that this takes away from solicitor-client privilege and an appeal court has agreed with them. This amendment takes the lawyers out of the loop of the money laundering reporting, the suspicious transactions reporting.

We know that the vast majority of lawyers in this country are honest people. The small minority of people who would take part in money laundering transactions will now find this loophole. The committee should carefully look at that. There are not many realistic options. Finance Canada and FINTRAC are negotiating with the legal profession to see what can be done. This is a serious matter.

There are other amendments. For example, it is a requirement by financial intermediaries to report suspicious transactions to FINTRAC. As it now stands, the law has some criminal sanctions if the financial intermediaries do not report. What these amendments call for is a lesser level of sanction for lesser violations of the reporting requirements under the act. That seems to be a reasonable request.

There is one issue that is difficult and I know that the House committee, the Auditor General and the committee in the other place have highlighted this, and that is Parliament's oversight over FINTRAC. How do we know that FINTRAC is operating within the mandate that it was given by Parliament? How do we know that the privacy rights of citizens are not being violated? How do we know that it is getting results? Has the information that it is providing to the RCMP and CSIS led to any arrests or convictions? That is something the committee should look at as well.

There are other aspects in terms of these amendments that warrant careful examination by the committee. As I said yesterday, when the legislation was introduced, the focus was put on monetary instruments. In other words, all laundered money eventually finds its way or should find its way into a bank account or into cash of some kind. The reality is that the money launderers become more clever and there is a chance that they could be dealing in precious metals or minerals, or items that are not monetary instruments. That has to be looked at. The proposal here with respect to currency traders, for example, is that they be brought under a regulatory ambit that would be managed by the federal government.

The typical exchange dealers one would find in airports, and I am not going to give any commercial names, but many would be familiar with these operations, right now they are required to report suspicious transactions to FINTRAC. They are considered to be financial intermediaries but it is not a very defined or regulated sector. These amendments propose to bring that under tighter scrutiny.

In 2001 when the Liberal government brought in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, we laid out the objectives of the act: to facilitate the detection, investigation, and prosecution of money laundering and terrorist activities financing offences, and to deter money laundering and terrorist financing activities; to respond to the threat posed by organized crime, while protecting personal information; and to assist in fulfilling Canada's international commitments.

One of the issues that was dealt with at the time is the balance of the type of information and the reason that certain information could be passed from FINTRAC to the law enforcement agencies and to CSIS. There is always a careful balance between the need for Canadians to be protected from money launderers but also the need for their privacy to be protected. The amendments proposed here call for an added level of information that could be provided by FINTRAC to law enforcement agencies and CSIS to decide if there is a trend that they want to analyze and pursue further.

The law still requires that if CSIS, the RCMP or other law enforcement wish to take the issue further, they would have to go to a court and get a judge's permission for FINTRAC to release information above and beyond what we call boiler plate information or basic raw data. Those provisions still stand, although there are increasing abilities to provide additional information under the proposals before us.

The other aspect of these amendments reinforces the need for the banks and financial intermediaries to know their customers. Knowing one's customers is key because that is the way to deal with money laundering activities before they begin.

There are some other elements to the amendments, but I have touched on the major ones. Having been involved in a modest way in 2001 in the design and set-up of the original legislation and the establishment of FINTRAC, my view would be that these are worthy amendments. They should be debated and witnesses should be brought forward with respect to some of the amendments, but generally I believe they should receive the support of the House. Certainly I will be voting for the bill to go to committee for further evaluation.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, on behalf of the Bloc Québécois, I am pleased to state our position on Bill C-25, which is now before us.

At the outset, I would reiterate that the Bloc Québécois plans to support this bill. Obviously, we will take all necessary measures, in committee and elsewhere, to ensure that the right of citizens to protection of personal information is respected.

That said, with respect to the principle underlying the bill, the Bloc Québécois has always felt that fighting terrorist activity funding is one of the greatest challenges in fighting terrorism. The provisions in this bill will also apply to the fight against organized crime, which has been a Bloc Québécois priority for a long time now.

We have introduced a number of bills to make things more difficult for organized crime. As you know, one of our colleagues in this House, the member for Saint-Hyacinthe—Bagot, has been working for a long time now to protect Quebec farmers who have been taken advantage of by organized crime groups that used their land to grow illegal crops. We will continue to pursue our long-standing fight against organized crime.

We also think that this bill will enable Canada to comply with the recommendations of the Financial Action Task Force on Money Laundering.

I will begin by providing some background on the bill to put it into context.

On December 15, 1999, the then Secretary of State, the hon. member for Willowdale, tabled, on behalf of the Minister of Finance, Bill C-22, to combat money laundering. It was quite similar to Bill C-81, presented earlier in 1999, which simply died on the order paper when that session of Parliament prorogued.

The broad purpose of the bill was to remedy shortcomings in Canada’s anti-money laundering legislation, as identified by the G-7’s Financial Action Task Force, FATF, on Money Laundering in its 1997-1998 report.

In addition, the FATF recommended that reporting requirements in Canada be made mandatory—rather than voluntary, as is currently the case—and that a financial intelligence unit be established to deal with the collection, management and analysis of suspicious transaction reports.

Bill C-22 was passed and since then it has been mandatory for regulated financial institutions, exchange offices, casinos and other financial intermediaries to report suspicious financial transactions.

Another of the bill's objectives was to put in place, together with the Canada Customs and Revenue Agency, a system for reporting large cross-border movements of currency. The bill also provides for the creation of a new independent agency, namely the Financial Transactions and Reports Analysis Centre of Canada, which will receive and administer the information reported.

Bill C-22 was enacted on June 29, 2000, and replaced the Proceeds of Crime (Money Laundering) Act then in effect.

We are now going from Bill C-22 to Bill C-25, with which we will try to go further than we did at the time.

The Conservative government is proposing to amend Bill C-22 with the bill we are debating in this House today to increase financial institutions' duties to keep records and report suspicious transactions, with a view to eliminating money laundering and funding for terrorist organizations.

I will come back to that in further detail later in my presentation, but first, the bill extends the application of the act to all organizations that, in addition to dealing in securities, deal in other financial instruments.

So we are also going to add persons and entities that transmit funds by any means or through any intermediary.

Previously, this obligation to report information was provided for in section 83.01 of the Criminal Code, which stipulated that the RCMP or CSIS should be notified of the existence of property belonging to a terrorist group. So we will be going a bit further for any transaction that seems suspicious.

The other new thing in this bill is the prohibition against anyone opening a bank account for a person or an agency if the client’s identity cannot be established; this seems logical. Under this bill, any financial institution dealing with a politically exposed foreign person—I shall come back to this a little later on—should make sure that senior management has given its approval before undertaking a transaction with this type of individual.

We will take the necessary steps to make sure that, if a Canadian bank is dealing with a bank or another institution, it is a real bank, not a fictitious one, a shell bank. That too seems to be quite an appropriate precaution.

Bill C-25 requires foreign subsidiaries of Canadian banks to comply with the same rules as Canadian banks. So we are going to try and extend our actions to the limit of our powers.

Finally an official of the revenue department will now have the power to transfer any information transmitted by another official under the Charities Registration (Security Information) Act to the Financial Transactions and Reports Analysis Centre of Canada. This power is designed to more readily combat the financing of terrorist organizations through so-called charitable organizations or through electronic funds transfers.

To continue this scenario, we must also talk about money laundering. Money laundering occurs when the revenue arising from criminal activity is converted into goods whose origin is difficult to trace, and has, in fact, been deliberately hidden. Thus proceeds of crime are disguised in an attempt to make them look legitimate.

Generally these are goods or assets arising from the illegal drug trade or other criminal activities, such as cigarette smuggling, burglaries and so on.

Since money laundering and the criminal activities it attempts to camouflage are clandestine in nature, understandably it is fairly difficult to get an accurate idea of the situation. The experts estimate, however, that between US$300 billion and US$500 billion worth of criminal funds enter the international financial markets every year.

The federal government estimates that between $5 and $17 billion is laundered in Canada every year. This is a significant amount of money. Although it is difficult to know the exact amount, given the source of the money, this gives us an idea of the seriousness of the problem.

The repercussions of organized crime go beyond mere economic consequences and the violence it causes. The social costs involved are also very high.

Obviously, regarding this area of the problem, we will try to resolve the issue of funding terrorist organizations. Terrorist groups are resorting more and more to the use of charities to ensure funding. Under the guise of charitable organizations, terrorist groups successfully accumulate the funds they need to plan and execute terrorist acts.

Furthermore, since the implementation of measures aimed at fighting large, structured terrorist organizations, such as al-Qaeda, we are now faced with several independent, separate cells. While larger organizations need enormous amounts of money to finance their operations, weapons purchases and international movements, the new wave of terrorism does not need as much money to achieve its ends. Thus, there is a greater need to develop means to fight against this type of funding.

The Financial Action Task Force on Money Laundering—or FATF—was created in 1989 at the G-7 summit in Paris. Its primary objective is to fight money laundering and the funding of terrorist activities. The task force now exists and has 33 members.

I would now like to talk in greater detail about the provisions that amend Bill C-22.

The first thing that Bill C-25 amends in Bill C-22 is the mandatory reporting of suspicious transactions in clauses 5 to 11. Under Bill C-22, the reporting of suspicious transactions, which is currently voluntary, would become mandatory. The obligation to report would extend to non-banking financial institutions and certain other businesses. Therefore, the reporting requirements would apply to regulated financial institutions, casinos, foreign exchange traders, stock brokers, insurance companies and persons acting as financial intermediaries, such as lawyers and accountants.

Bill C-25 will add to the list all organizations that make electronic funds transfers, issue or redeem money orders or traveller's cheques or deal in financial instruments. Departments and agents of the government that sell prescribed precious metals will also be subject to the legislation. These persons and institutions would be required to report certain prescribed categories of financial transactions as soon as they have reasonable grounds to suspect that the transactions are related to a money laundering offence.

Bill C-25 includes a measure pertaining to what are called “politically vulnerable” individuals. An institution will not be able to do business with this category of individuals without first obtaining the approval of senior management. Who are these politically vulnerable individuals, as defined in the bill? They include heads of state or government, members of the executive council of a government or members of a legislature, deputy ministers or people of equivalent rank, ambassadors or attachés or counsellors of an ambassador, presidents of state-owned companies or state-owned banks, heads of government agencies, judges, leaders or presidents of political parties represented in a legislature and holders of any prescribed office or position. All these people are considered politically vulnerable. Before an organization does business with them, its senior management will be informed and will have to act accordingly.

Bill C-25 also sets out more stringent rules and responsibilities for banking institutions. For any interbank transaction, the Canadian bank shall ensure, under sanction of law, that the corresponding foreign counterpart is not a shell bank, which makes sense. In addition, all foreign subsidiaries of a Canadian bank must follow rules that apply to Canadian banks located in Canada.

According to the provisions of the bill, not reporting this type of transaction will constitute an offence subject to a fine of not more than $2 million or to imprisonment for a term of not more than five years on conviction on indictment and a fine of not more than $500,000 or imprisonment for a term of not more than six months for a first offence on summary conviction. In the case of a second offence, there is a fine of not more than $1 million or imprisonment for a term of not more than one year on summary conviction.

Bill C-25 extends these provisions to all new entities governed by this regulation.

The second major set of amendments made by this bill, clauses 12 to 39, covers the declaration of significant transborder movements of currency. Individuals who import or export large amounts of currency or monetary instruments, such as travellers cheques, must report these to a customs officer. Failure to do so may lead to seizure of the currency or instruments transported unless the individuals decide not to proceed further with importing or exporting them. A mechanism is put in place for that purpose, and we will add, in clauses 15 and 16 for example, provisions authorizing customs officers to search a person or the vehicle of a person if they suspect on reasonable grounds that the person has secreted on or about their person currency or monetary instruments not reported pursuant to the law.

Another provision will make it possible for Canada to enter into an agreement with the customs agencies of foreign states which have similar reporting requirements for transborder movements of currency and monetary instruments.

The third important element is the creation of the Financial Transactions and Reports Analysis Centre of Canada covered under clauses 40 to 72. This bill will create this new government agency, which will be independent and will be responsible for gathering and analyzing the reports it receives under the legislation. The Financial Transactions and Reports Analysis Centre of Canada will be a central repository for information about money laundering activities across Canada.

The proposed legislation authorizes the centre to provide key identifying information of suspicious transactions to the appropriate police force if it has reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence.

It is important to note that the role of the centre will essentially be to gather information, process it and determine the potential problems and suspicious cases that will be passed on to the police forces. They will be in charge of determining whether to take action or not. I had a chance to meet, at the Standing Committee on Finance, someone from an existing organization in Canada that does similar work. I imagine the centre and the agency will join forces to try to identify suspicious patterns in a series of financial transactions.

The centre will also raise awareness among and provide information to the public on this type of problem. It will also be authorized to subpoena witnesses and to make an order for the production of documents.

I would like to close with the offences covered in the legislation in clauses 74 to 82. The sanctions for breaching these requirements are described in these clauses.

Bill C-22 implemented tough criminal penalties for serious offences. Bill C-25 will implement administrative penalties for less serious offences in order to ensure that the rules are respected by all players in the financial system.

[Dawn Black, NDP, New Westminster—Coquitlam, BC]

Mr. Speaker, I listened carefully to the comments of the member opposite. We support the bill and we want to see it come to committee, but we do have some concerns. I have some questions and would like to hear the member opposite's opinion on them.

This will be a tool for our law enforcement agencies to deal with money laundering and terrorist financing, but there are still some concerns around the whole issue of foreign access to the information that we would like to see addressed. What does the member think of that?

We are also concerned that the bill would remove the obligation of the legal profession, of legal counsel, to file suspicious transaction reports. We see that as an important component of any effective money laundering legislation on organized crime. Could I also hear his opinion on that?

Canada's Privacy Commissioner has also expressed concerns that the act is intrusive in regard to some privacy rights, and has called for accountability structures to be put in place.

Finally, one of the issues that is missed in all of this and needs to be incorporated would be a process of civilian monitoring of the legislation and an agency.

Does the member opposite agree with those concerns and does he also feel there should be a civilian monitoring component to this legislation?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I undoubtedly share some of the member's concerns, particularly where foreign access to information is concerned. The bill states that agreements or arrangements may be entered into with foreign institutions or agencies that have policies similar to ours.

We will indeed have to see what that means exactly. Will it allow a two-way exchange of information to better combat money laundering?

Among the points raised by the hon. member, the main one, the one of greatest concern to me personally and to the Bloc Québécois is unquestionably the protection of privacy. As I said at the beginning of my speech, this is a fundamental issue and a very important one.

Naturally, at this stage, we are debating the bill's principle. I think that this is how our colleagues from the NDP see it as well. The principle is good. At committee, we will have to take a more detailed look at what impact the bill could have on people's privacy and see whether it is well balanced in terms of the fine line between privacy, on the one hand, and national security or the fight against organized crime, on the other. If the proper balance has not been struck in the bill as it stands, my colleagues from the Bloc Québécois will work at making or supporting amendments designed to provide greater balance.

[Paul Szabo, Liberal, Mississauga South, ON]

Mr. Speaker, I also share the concerns of hon. members with regard to the balance between the need to deal with money laundering and financing of terrorists with the importance of protecting the privacy rights of Canadians.

However, yesterday in debate, during questions and comments, there was a suggestion that somehow, because of the seriousness of the risk associated with terrorism, there should be some kind of a reverse onus and a tougher view on the proceeds of crime. My concern with that is the basic fundamental rights of all Canadians. Even criminals have rights in Canada. We need to protect the presumption of innocence, the rule of law, the Charter of Rights and Freedoms and the Constitution of Canada.

Would the member agree that we have to be extremely careful not only in balancing the need to deal with these crimes with privacy, but also to be absolutely sure that the rights and freedoms of all Canadians are equally protected? As the member well knows, if the rights and freedoms of one Canadian are not protected and defended, then the rights of all Canadians are not protected and defended.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, I certainly do think that we must be very careful with the balance we strike and we must respect the rights of all Canadian citizens.

My hon. colleague spoke about the rights of criminals. We often hear people accuse us of protecting criminals. The problem is that, at the time when we protect them, we do not know yet whether they are criminals or not. That is why we have the presumption of innocence in our society to protect everyone, including potential criminals, for the simple reason that we do not know in advance if they are or not.

We must therefore always be very careful in this regard and uphold the basic principles of our democracy.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I want to build on the question my colleague, the hon. member Mississauga South, asked. He made reference to an exchange that took place yesterday between he and I about whether we should not expand in Bill C-25 the idea of reverse onus on the seizure of assets purchased from proceeds of crime. Would my colleague not agree that it makes sense in very narrow circumstances?

In the case where a person is a known member of an illegal organization or a criminal organization, for example, the Hell's Angels, and that person has assets such as a luxury mansion, two cars in the garage, the speed boat, all the trappings of luxury, but has had no visible means of income for the last 20 years, why should we not be able to seize those assets and put the onus on him to demonstrate that he did not purchase them with the proceeds of crime? The province of Manitoba introduced legislation like this which would be law had it not been blocked by two Liberal members of the legislature.

Why should we not use this opportunity to give police and law enforcement officers the tools they need to do their jobs? When we see glaring cases of wretched abuse by known criminals, why should the burden of proof be on us to prove beyond a doubt that they bought that luxury home or whatever with the proceeds of crime? Let us put the reverse onus on them and make them prove they did not, that they earned it honestly.

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, as I said previously, I think that at this stage, when we are deciding whether to support the bill in principle, I can say we support it, although I am very aware that a balance must be struck.

This important work should be done in committee. The Bloc Québécois has always absolutely insisted on this. We are not going to sell out our rights as citizens for security reasons, although at the same time, security issues and fighting organized crime are important. They cannot be overlooked. We cannot go entirely in one direction or the other. There has to be a balance, and that is what we want to work on in committee. We will study all the proposals in committee and assess which ones are best for our citizens.

[Pat Martin, NDP, Winnipeg Centre, MB]

Mr. Speaker, I will narrow down my original question. It was a former member of the Bloc Québécois, Richard Marceau, who promoted the idea that we should be able to seize the assets of a convicted criminal, who is a member of a criminal organization, and put the reverse burden of proof on the individual when it was a proceed of crime.

Would he not agree with his former colleague, Richard Marceau, that we should expand Bill C-25 to do that, while we have this opportunity?

[Thierry St-Cyr, Bloc, Jeanne-Le Ber, QC]

Mr. Speaker, unfortunately I have not had an opportunity for a few days to speak with Mr. Marceau. I would have liked him still to be with us here in the House. That would certainly have been good for the people in his riding.

When the proposals are made in committee, we will study them seriously, and if appropriate, we will certainly support them.

[Joe Comartin, NDP, Windsor—Tecumseh, ON]

Mr. Speaker, Bill C-25 would expand programs that we have already. To some degree, from that experience, we are plugging some loopholes and expanding the use of these programs to deal with money laundering and proceeds of money laundering and with terrorist financing.

As has already been expressed by some of my colleagues from the NDP, we will be supporting the bill at second reading. As opposed to a half dozen or more other crime bills that have come from the government, this bill at least makes sense. It would address some real problems in the country with regard to money laundering by organized crime and terrorist financing from either potential terrorist groups in the country and, as often as not, from outside the country who are using Canada, as we know, mostly as a conduit.

Some of the money is raised in Canada but a great deal of both the money laundering from organized crime and from the terrorist groups outside the country is coming from outside, moving through Canada and on into the United States or back to other countries where it is used to finance terrorism in those countries.

We do have some concerns about the bill and my colleague from British Columbia just raised one of them. We do not seem to be able to figure out a way to accommodate the legal community in terms of the lawyers and the law firms having to report either suspicious transactions or large sums of money passing, mostly through their trust accounts but through their offices. That has been an ongoing problem.

The bill originated, I would say, at least two years ago and maybe three, and has been held up all that time because of the ongoing dispute between the law societies across the country and the federal government. The law society, in a previous piece of legislation, actually challenged the government in court and was successful in having itself excluded under the terminology and provisions of that particular law. We were hoping that this bill, which we hope will eventually become law, would have included at least some meaningful reporting from the legal community.

We will explore this more at the committee to see if there is some possibility of that happening and, if not, an explanation as to why not and also what types of negotiations have gone on between the federal government and the legal community, the law societies in particular, to try to resolve this issue.

One of the very good points about the bill is that it does include the foreign exchange shop. We know from a number of reports that we have had from police sources and our intelligence sources that repeatedly, because they are not covered by the existing law, people have gone to foreign exchange shops, exchanged large amounts of money from one currency into Canadian currency and oftentimes go to another shop to exchange that into another currency, oftentimes U.S. currency, and the money moves on out of the country without any formal recording. This will cease with this legislation coming into effect. It is one of the major holes that we have in our system of protections, both against organized crime and potential terrorist groups, and it badly needs to be plugged.

There is also a concern about the cost of the administration of this program as it is now, and that will become somewhat more onerous, because again, we are bringing in more private sector companies which will be responsible for additional reporting.

I know from my colleague from Winnipeg that there has been some expression of concern from small credit unions about their ability to provide sufficient resources, both in terms of technology and in terms of personnel to meet the requirements of this reporting.

That is another matter that needs to be explored at committee, and in particular, to see if the federal government could be doing something to assist smaller operators who are affected by this legislation. It may be by providing them with a software package that would let them track the funds or it may be suggestions on how small financial institutions can streamline their process and still meet the requirements of the act without making it too onerous for them to perform their responsibilities.

I want to raise one additional problem, which concerns how this information is used, and I will do it in two contexts. The Auditor General, Ms. Fraser, issued a report on the central agency, FINTRAC, which is the intelligence gathering organization in this country that sifts all this information and helps identify whether in fact it is coming from organized crime or from some terrorist activity.

In her report, which I believe was for the 2003-04 period of time, she found that although a number of transactions had been identified and had been, as permitted under the legislation, reported to both the RCMP and CSIS, neither of those agencies appeared to have used the information, either for investigation purposes or for laying charges. That appears to be an ongoing problem and it is of concern. FINTRAC was running in that year on a budget of about $31 million annually. If we are spending that amount of money on this intelligence gathering program, we should be seeing some results.

In the two subsequent years of 2004-05 and 2005-06, again there appears to have been limited use made of this. This is something that will need to be explored at committee to ensure Canadian taxpayers receive good results from their tax dollars that go into these services.

The other context where I would like to address the use of this is the issue of privacy and, in particular, the risk that some of this information will find its way into the United States and, under the patriot act, be disclosed to a number of agencies in the U.S. I have not been convinced that we have closed all the loopholes so that this information, the intelligence and results of the investigation which are badly needed in Canada, does not go into the United States.

The House resumed consideration of the motion that Bill C-25, An Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act, be read the second time and referred to a committee.

[The Speaker, Peter Milliken]

Resuming debate. Is the House ready for the question?

[Some hon. members]

Question.

[The Speaker, Peter Milliken]

The question is on the motion. Is it the pleasure of the House to adopt the motion?

[Some hon. members]

Agreed.

[An hon. member]

On division.

[The Speaker, Peter Milliken]

I declare the motion carried. Accordingly, the bill stands referred to the Standing Committee on Finance.

(Motion agreed to, bill read the second time and referred to a committee)