Good afternoon, Mr. Chairman. I am pleased to appear before this committee and to answer your questions.
My name is Pierre Gosselin, I am chair of the Canadian International Trade Tribunal. I am accompanied today by Mr. Sandy Greig, Director General of the Research Branch.
Before answering your questions, I would like to give you a short overview of the tribunal's mandate and challenges. It is an administrative tribunal and is part of Canada's system of trade redress mechanisms. It is a quasi-judicial and arm's length organization which carries out its responsibilities in an impartial and autonomous fashion. The tribunal comes under the jurisdiction of Parliament, through the Minister of Finance.
The tribunal is currently comprised of seven members. Each member is appointed by order in council for an indeterminate period. The members of the tribunal are supported by a team of 87 employees. The tribunal's main officers are the Secretary, the Director General of Research, the General Counsel and the Director of Corporate Services.
We have a $10 million budget of which the lion's share is allocated to wages.
Our workload is entirely generated by complaints and cases filed with the tribunal or referred by the Governor in Council or the Minister of Finance. Most of the cases we deal with are subject to very tight legal timeframes.
Our mandate includes investigating complaints and providing our opinion on economic trade and tariff matters referred to the tribunal by the Governor in Council or the Minister of Finance. As part of our quasi-judicial role, we conduct investigations to determine whether domestic industry is suffering hardship due to dumping or the subsidizing of certain products. We hear appeals concerning the Canada Border Services Agency's decisions, the CBSA, pursuant to the Customs Act, and the National Revenue Minister's decisions under the Excise Tax Act.
We investigate complaints lodged by potential suppliers concerning federal procurement subject to NAFTA, the AIT, and the AGP. You know NAFTA. The AIT is the Agreement on International Trade and the AGP is the WTO's Agreement on Government Procurement. We conduct safeguard investigations to determine whether the rapid increase in imports, whether from all countries or specifically China, is hurting our domestic producers. The tribunal's decisions are binding in relation to complaints concerning hardship or appeals of CBSA's decisions and procurement. As far as China-specific or general safeguard investigations are concerned, the tribunal hands down a judicial determination of hardship and, upon request, may make recommendations concerning applicable redress, if need be.
The tribunal also plays an advisory role to government by conducting general investigations on economic matters and references, especially in the following cases: safeguard measure cases where the tribunal finds there is hardship or where the Governor in Council may ask for recommendations on measures to mitigate this hardship; general investigations on economic and tariff matters which are referred back by the government or finance minister and, lastly, in accordance with permanent references on tariffs, investigations on applications made by producers demanding tariff reductions for textiles they import in the course of their production activities.
The tribunal's workload is, for the most part, externally generated. Our main challenge is to allocate our limited resources in such a way as to ensure the statutory deadlines are always met, and that the quality of the tribunal's findings, determinations, and recommendations is not compromised. The tribunal has a single strategic outcome and two activities. The strategic outcome is the fair, timely, and effective disposition of international trade cases and government-mandated inquiries in various areas of the tribunal's jurisdiction.
The first activity is the adjudication of trade cases. The bulk of our budget is allocated to this activity--that is about $9.9 million out of a total of $10 million. The second activity is general economic inquiries, which include inquiries referred to it by the government, or tariff inquiries referred by the Minister of Finance.
Again, the tribunal strives to ensure that tribunal decisions are fair and impartial and published in a timely way.
I would like to give you a brief overview of the legislative provisions under our act which deal with confidential business information and the procedures implemented by the tribunal to protect this information while, to the greatest extent possible, ensuring the process remains open and accessible to all parties and their legal counsel.
Given the nature of the matters we deal with, parties must submit confidential commercial information. If such information were revealed to a competitor, there may be considerable adverse financial ramifications.
The Canadian International Trade Tribunal Act regulates the designation of confidential information and the necessary sanctions in case of disclosure. The tribunal has implemented a system by which only lawyers who table a deed of covenant before the tribunal may have access to this information. These lawyers must, among other things, undertake to not disclose the information they obtain from other parties to their clients and they must destroy all information at the conclusion of a case. Protecting confidential business information is the cornerstone of the commercial redress system. The tribunal ensures that all parties maintain their confidence in the system.
You've been provided with our annual report for 2004-05. The annual report for 2005-06 should be tabled in Parliament before June 30.
I've been asked to address our 2004-05 annual report, and I will add a brief overview of the last fiscal year.
Both 2004-05 and 2005-06 were busy years for the tribunal. In 2004 we had a record number of unfair trade cases, coupled with the receipt of three safeguard complaints. A safeguard complaint typically represents the equivalent of several unfair trade cases in terms of its size and complexity. The range of issues to address are broader, and cases are larger and also require substantial preliminary analysis prior to our making a decision to accept the case for inquiry, and once the safeguard case is accepted, both an injury analysis and a remedy analysis have to be undertaken within tight legislative timeframes.
We also received in 2004-05 two textile references from the Minister of Finance. We received 62 procurement complaints, as well as 149 appeals.
In 2005-06 we received somewhat fewer unfair trade cases, but we worked on two large textile references. We also continued our work on the two safeguard cases we had received the previous fiscal year and considered two new safeguard complaints received in the fiscal year. We received 58 procurement complaints and 96 appeals.
As a final point, I would like to mention some initiatives the tribunal is taking to improve accessibility and to reduce administrative burden to the public.
We publish and archive all our decisions--in fact, beginning in 1989--as well as our statements of reasons, on our website. The site is equipped with a search engine to allow people to search the precedents.
All notices are placed on our website, and subscribers are advised by a “what's new” type of e-mail. Our questionnaires, which are the main instrument we use for collecting information in a case, are available on our website, and parties will soon be able to use a secure electronic channel to complete those online. We will shortly also be making a public version of cases available to the parties involved. That file will also be searchable and constantly updated throughout the case.
Those are my opening remarks. I'm prepared to answer questions.
Thank you, Mr. Chairman.
Members of the committee, I am very pleased to appear before you and talk to you about the work we are doing at FINTRAC.
My name is Sandra Wing; I'm the senior deputy director for FINTRAC. Joining me today is my colleague Alfred Tsang, who is the assistant director for finance and administration, and Paul Dubrule, who is general counsel for FINTRAC.
I will begin with a short presentation that will provide a high-level overview of FINTRAC. The first slide is a presentation overview. I'll cover who we are, what we do, our main estimates, our results, and I'll make some remarks on the challenges that lie ahead.
FINTRAC was established in 2000 to facilitate the detection and deterrence of money laundering and terrorist activity financing in Canada and around the world. FINTRAC is an independent agency, reporting to the Minister of Finance, who is accountable to Parliament for the activities of the centre. We are Canada's financial intelligence unit, or FIU, and our mandate is to receive financial transaction and other information, analyze it, and, when appropriate, provide financial intelligence to law enforcement and other investigative agencies, as well as foreign financial intelligence units.
We call our financial intelligence product disclosures. We are required to operate at arm's length from those agencies to which we disclose financial intelligence. This independence ensures balance between the need to safeguard the privacy of personal financial information and the investigative needs of law enforcement and security agencies.
We receive, analyze, disclose, and ensure compliance. The act places obligations on certain individuals and entities to keep records, identify their clients, and report certain financial transactions to us. These reporting entities, as we call them, include financial entities, deposit-taking institutions, banks, credit unions, accountants, casinos, money services businesses, foreign exchange dealers, securities dealers, life insurance companies, and real estate brokers and agents.
Reporting entities must report suspicious transactions related to money laundering or terrorist activity financing, regardless of their value; cash deposits of $10,000 or more; wire transfers into or out of Canada of $10,000 or more; and terrorist property holdings. In addition, anyone crossing the border must report to the Canada Border Services Agency movements of cash or monetary instruments of $10,000 or more into or out of Canada. All such reports are sent to FINTRAC by the Border Services Agency. We also receive from the Border Services Agency reports of any currency seizures.
What do we do with this information? FINTRAC's analysis of financial transactions can be initiated in a variety of ways: by a transaction report, or series of such reports, a voluntary information report from law enforcement or CSIS, by open source information or by information provided by a foreign financial intelligence unit. Whatever the starting point, analysts search through the centre's database using specially designed technological tools to uncover patterns of financial transactions that suggest a suspicion of money laundering or terrorist activity financing or other threat to the security of Canada.
Our analytical success is closely linked to our technological capability. When, as a result of its analysis, FINTRAC has reasonable grounds to suspect that the information would be relevant to the investigation or prosecution of a money laundering or terrorist activity financing offence, the centre must make a disclosure to the appropriate police force. In cases where there are reasonable grounds to suspect a threat to the security of Canada, including terrorist activity financing, FINTRAC must disclose to the Canadian Security Intelligence Service. In some cases, we must also disclose to the Canada Revenue Agency and to the Canada Border Services Agency; however, in these instances we must meet a dual test. The information contained in our disclosures includes details about the financial transactions, where they took place, when they took place, the individuals conducting the transactions, and any accounts, businesses, or other entities involved.
Another key function of the centre relates to our mandate to ensure that reporting entities comply with the act and regulations. We have established a modern and comprehensive risk-based compliance program that includes activities such as providing outreach and assistance to reporting entities to ensure that they are aware of and understand their obligations under the act; assessing the risk of non-compliance for all of the reporting entity sectors; monitoring the quality, timeliness, and volume of reporting; verifying compliance through examination; and disclosing cases of non-compliance to law enforcement for criminal investigation and prosecution.
I'll turn now to our main estimates.
In our main estimates, FINTRAC presents a request for $31.1 million. Our budget is fairly straightforward. It relates to staff costs and expenditures in support of our operations. FINTRAC plans to spend approximately 60% of its budget on employees who are located here in Ottawa as well as in three small regional offices: one in Montreal, one in Toronto, and one in Vancouver.
The remaining $12.2 million of our request represents our operating costs. Our operating costs are in support of such areas as information technology, data collection and analysis, compliance functions, communications, as well as IT and physical security. A large percentage of our operating expenditures is somewhat non-discretionary, for example, just over $4 million for information technology. In addition, close to $4 million of our budget is for lease costs to Public Works and Government Services Canada, as well as to other government departments for services such as legal support and translation.
I'd like to take a minute on our key results. Last November, the Minister of Finance tabled FINTRAC's fourth annual report in Parliament. The report documents FINTRAC's results for fiscal year 2004-05, and lays out our priorities for 2005-06. It is important to keep in mind that FINTRAC's success hinges directly on the quality of the financial transaction information we receive. We receive approximately one million financial transaction reports per month. Our reporting entities send virtually 100% of their reports to us electronically. In 2004-05, we made 142 case disclosures of financial intelligence on suspected money laundering and terrorist activity financing: 110 of these related to money laundering, 24 related to terrorist activity financing, and eight involved both money laundering and terrorist activity financing or other threats to the security of Canada. These 142 cases involved financial transactions valued at just over $2 billion.
With respect to our compliance function, we conducted 190 compliance examinations on site in 2004-05. FINTRAC provided feedback sessions to the Canadian Bankers Association, and individually to major banks, casino regulators, and others, over the course of the last two fiscal years. FINTRAC is expanding the feedback sessions to other large reporting entity sectors and associations representing these sectors.
To minimize the regulatory burden on reporting entities, FINTRAC established partnerships with 15 federal and provincial regulators such as the Office of the Superintendent of Financial Institutions. During the 2005-06 fiscal year, FINTRAC made or held close to 600 presentations and/or meetings with reporting entities, their associations, and these reached approximately 15,000 individuals.
Finally, our success in the international community has allowed us to expand our network of relationships with other countries and international organizations. As of March 31, 2005, we had 20 information exchange agreements with foreign FIUs. To date, we have signed 30 such agreements. We continue to develop and enhance our technology and analytical capabilities to ensure that FINTRAC produces reliable financial intelligence for law enforcement and security agencies. In addition, we continue to develop and maintain sound and cooperative working relationships with all our reporting entities, and with law enforcement and security stakeholders.
I'll just take a quick look at the year ahead.
FINTRAC has many accomplishments, particularly when one considers that we've only been operational for roughly four years. However, there are still a number of challenges and opportunities ahead. When our legislation was passed in 2000, the bill included a mandatory parliamentary review after five years. This review has been scheduled to commence later this week. In preparation for the parliamentary review, the Department of Finance released a consultation paper in June 2005 that put forward a set of proposals to enhance Canada's anti-money-laundering and anti-terrorist-financing regimes.
The proposals are designed to respond to what we have learned through the building and operations of FINTRAC over the last few years, as well as to recommendations of our partners, the Auditor General, and others. As well, they are designed to meet revised international standards set by the Financial Action Task Force on Money Laundering. As we move forward, we will work with the Department of Finance and other partners to strengthen Canada's ability to combat money laundering and terrorist activity financing.
I will conclude my presentation here. I hope you have found it useful, and I would be happy to answer any questions you may have.
The Auditor General made a number of recommendations. For those that were government-wide, I'll set them aside for the moment, if I can. For those that were specifically focused at FINTRAC, the Auditor General was critical of FINTRAC's ability, if you will, to disclose more information to law enforcement.
What we did in response to that was to work with law enforcement, security agencies, as well as the Department of Finance to come up with proposals--some were legislative--that if Parliament agrees, would enable FINTRAC to disclose more information to make them more useful to law enforcement.
I don't think they're not useful to law enforcement now, but there are difficulties. They referred to issues that law enforcement may have with disclosures we make for money laundering, where because we're not an investigative agency, we may not, for example, know the predicate offence. For law enforcement to investigate and lay charges, they have to know the predicate offence.
Looking at the financial transactions themselves, we may never know the predicate offence. When we pass disclosures that link money laundering networks to law enforcement, there are some times, for example--and this is a small example--when we can make connections on the basis of something like a telephone number. We cannot now disclose to law enforcement how we made that connection.
So there are proposals--they were put forward in the white paper that was issued last June--and we are looking for some legislative amendments that would make it easier for us to disclose more complete information to law enforcement about what it is we're seeing and how we've made our connections.
There are some things that FINTRAC has done in the meantime. We've taken a look at our disclosure packages and have now included i2 charts with all the disclosures, where we draw the linkages for law enforcement in a picture. We've received very positive feedback from law enforcement on the use of that tool. Instead of just listing the financial transactions and where they took place, we actually include an i2 chart.