Thank you, Mr. Chair. You're so kind.
At meeting number 133 on February 14, I asked two questions of Jamie Bell, executive director, international crime and terrorism from the Department of Foreign Affairs, Trade and Development. I remember his being given notice that by this Wednesday we should receive an answer to my questions.
I'm just wondering whether the committee has received an answer. If not, has notice been given that the committee should receive an answer by Wednesday?
Thank you, Mr. Chair. It's a pleasure to appear before the committee as you review the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
My name is Trevor Bhupsingh, and I'm the director general of law enforcement and borders at Public Safety Canada.
With me today is my colleague, John Davies, the director general of the national security policy directorate.
I want to thank the committee for inviting the Department of Public Safety and Emergency Preparedness, the Royal Canadian Mounted Police, or RCMP, the Canadian Security Intelligence Service, or CSIS, and the Canada Border Services Agency, or CBSA, today. Each has an important role to play in Canada's anti-money laundering and terrorist financing regime.
You will recall that a few weeks ago, representatives from the Department of Finance provided this committee with an overview of the regime and the balance it tries to achieve between protecting privacy rights, minimizing the administrative burden, and combatting money laundering and terrorist financing. The committee has already noted the information and intelligence essential to the country's national security.
The RCMP, CSIS, and CBSA are key to the enforcement of the regime. Effective portfolio coordination means working together to ensure that common priorities are established and addressed, and that the regime integrates the perspectives of our portfolio organizations, because they are on the front lines of detecting, deterring, and disrupting money laundering and terrorist financing in Canada. The Royal Canadian Mounted Police is responsible for investigating money laundering and terrorist financing cases, laying charges, making arrests, and seizing funds or confiscating assets. The Canada Border Services Agency is responsible for the administration and enforcement of the cross-border movement of currency or monetary instruments valued at $10,000 or more. The Canadian Security Intelligence Service has a mandate to collect, analyze, and report to the Government of Canada information and intelligence concerning threats to Canada's national security.
The department and each organization contribute to the advisory committee on money laundering and terrorist financing. The proposals brought forward by the portfolio are summarized in the position paper made public by the Department of Finance last February 7 in support of the work of this committee and toward the improvement of Canada's regime.
The second role played by Public Safety Canada in the regime is to contribute to the policy development efforts led by the Department of Finance. This takes many forms and is integrated in the department's core mandate. It is where we would leverage information, research, and analysis to provide evidence-based advice that will assist the Department of Finance in its lead role.
In addition, Public Safety supports the statutory responsibilities to recommend terrorist entities to be listed, pursuant to the Criminal Code. The listing regime is an important element of Canada's efforts to combat terrorist financing, as it allows for the freezing and possible seizure, restraint, and forfeiture of assets of a listed entity. It also sets out severe penalties for persons and organizations that deal in the property or finances of a listed entity.
Mr. Chair, thank you for the opportunity to address the committee. We're happy to answer your questions.
First, I'd like to thank the committee for inviting me to appear before you today. It is an honour to be here representing the 3,000 women and men of the Canadian Security Intelligence Service, who work diligently every day to keep Canada safe. I want to take this opportunity to thank the committee for taking an interest in what we do.
I am the director general of policy and foreign relations at CSIS, and I am responsible for the strategic policy issues that impact our organization, our corporate policy framework, and our foreign partnerships. It is my pleasure to speak to you about CSIS's role in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, in which we are named as the recipient of threat-related information.
The service's mandate is clear. We collect information and intelligence and analyze it, and provide advice to the Government of Canada on threats to national security. These threats include espionage, foreign interference, and terrorism and, by extension, terrorist financing.
When CSIS investigates terrorist activity, financial intelligence can play a role in establishing an individual's capability and intent, as well as providing leads for further investigation. Financial intelligence can also aid in detecting domestic attack planning, or plans for overseas travel in support of terrorism. Current CSIS research on mobilization to violence has identified that financial preparations can be a key indicator that an individual is on the path to violence. Unusual spending patterns related to travel, in conjunction with other intelligence, can provide critical leads in an investigation.
Investigating terrorist financing is very much a collaborative effort. Our intelligence assessments are shared with appropriate partners within the Government of Canada as part of the work to keep Canadians safe. CSIS shares information with partners, including FINTRAC, the RCMP, and CBSA. We share information in support of our partners' investigations and mandated activities.
In the area of financial intelligence, FINTRAC is a key partner for CSIS. FINTRAC proactively provides the service with raw financial intelligence when it has reasonable grounds to suspect that the intelligence relates to our mandate. We are also able to request information in support of specific investigations.
Privacy and the protection of information is something we take very seriously. CSIS is bound by Canadian law, including the Privacy Act, ministerial directives, and a robust set of internal policies. At CSIS, we recognize the important responsibility that we have in keeping Canadians safe. The men and women of CSIS do so proudly every day.
With that, I'll conclude my remarks, and I welcome any questions.
It's my pleasure to appear before the committee as part of its review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
As part of our mandate to protect Canada's economic integrity, financial crime has long been a federal policing priority for the RCMP. As such, the RCMP, working in close collaboration with its Government of Canada partners, plays a fundamental role in Canada's anti-money laundering, anti-terrorist financing regime.
In support of its strategic priority on economic integrity, the RCMP works within the regime to prevent, detect, and disrupt crimes that threaten Canada's economy and security, including those involving money laundering and terrorist financing in Canada. In addition, the RCMP works with law enforcement agencies in an international capacity pursuing these types of investigations.
As a funded partner in Canada's anti-money laundering and anti-terrorist financing regime, which is a horizontal initiative led by Finance Canada, the RCMP receives funding to support its mandate within the regime. The planned spending under the horizontal initiative for fiscal year 2016-17 was $11,219,387, all of which was spent in support of the stated objectives of the regime.
The initiatives the RCMP undertakes with respect to money laundering and terrorist financing are dynamic. They are multi-jurisdictional and multi-faceted in nature, and the complexity leads to investigations that can take several months or even years to complete. For example, in 2014, a coordinated effort by the RCMP and Government of Canada partners led to the successful listing of the International Relief Fund for the Afflicted and Needy, or IRFAN, as a terrorist entity, pursuant to section 83.05 of the Criminal Code. By the time it was listed, IRFAN had transferred funds and resources valued at approximately $14.6 million to a number of organizations with links to Hamas, another listed terrorist entity. Listing IRFAN put an immediate stop to these transfers and empowered the RCMP to seize and restrain associated property, including vehicles, trailers, and office equipment.
Further to terrorist financing, over the past several years the RCMP has taken on a number of money laundering and proceeds of crime investigations in which a common theme has been revealed from the gathering of evidence for complex offences. Project FERODE was an investigation into an alleged fraud, drug offences, and associations to organized crime. The suspect had received up to $15 million from 20 investors and had attempted to secure an additional $10 million from Nexus Investments in Vancouver. On January 15, 2014, an individual was arrested on 15 charges, including fraud over $5,000, identity theft, forgery, possession of property attained by crime, and laundering the proceeds of crime. However, only $20,000 of assets was restrained and forfeited, and only an additional $8,000 was forfeited through the provinces' civil forfeiture programs.
The RCMP has had a great deal of success investigating criminal activity linked to organized crime. However, for a myriad of reasons, the RCMP has been hindered by challenges stemming from Canada's anti-money laundering, anti-terrorism finance regime. In other words, while the predicate offence can be straightforward in terms of its investigation and prosecution, due to time constraints, resource limitations, and the efficacy of prosecuting certain charges over others in these dynamic and complex cases, following through on proceeds of crime or money laundering charges is often not tenable.
These concluded cases demonstrate the particular challenges the RCMP continues to encounter when investigating proceeds of crime, money laundering, and terrorist financing. These challenges have led to somewhat inconsistent results, such as successful investigations on the predicate offence, but a limited capacity to effectively and thoroughly investigate and prosecute the related money laundering and proceeds of crime offences.
Based in part on these types of cases and the inherent obstacles, the challenges have been captured in more detail in the consultation paper published on Finance Canada's web page. Specifically, these challenges include finding effective means of sharing vital money laundering information while respecting the privacy rights of Canadians; the exclusion of lawyers and Quebec public notaries from the Proceeds of Crime (Money Laundering) and Terrorist Financing Act; a lack of transparency around beneficial ownership information; the increased use by criminal organizations of professional money launderers who have a tenuous link to any predicate offence; and a lack of specialized resources and training for investigators to undertake money laundering cases, which are often very complex in nature.
Addressing these challenges as part of the parliamentary review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act could assist the RCMP in achieving greater results.
I'd be happy to respond to any questions you may have on the role the RCMP has within this regime.
Good afternoon, Mr. Chair and members of the committee.
Similar to the other witnesses, I would like to begin my remarks by outlining the role and responsibilities of the Canada Border Services Agency under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, or PCMLTFA for short.
As you are aware, the act was introduced to remedy shortcomings in Canada's anti-money laundering legislation. It put in place specific measures to combat money laundering, including the requirement to report to FINTRAC cross-border movements of currency and monetary instruments equal to or greater than the prescribed amounts. The scope of the act was later extended, in 2001, to include new measures under Bill .
The CBSA is responsible for the administration and enforcement of part 2 of the act, which requires every person or entity to report to a CBSA officer the importation or exportation of currency and monetary instruments valued at $10,000 Canadian or greater. These reporting requirements encompass all inbound and outbound modes of travel, including air, highway, postal, and marine, in both the traveller and commercial processing streams.
The agency has a two-pronged mandate. The first one is to facilitate the voluntary compliance of currency and monetary instruments reporting. The second one is to identify and carry out enforcement on potential money laundering or terrorist financing-related funds at border crossings.
The CBSA collects cross-border currency reports on behalf of FINTRAC from travellers and commercial entities based on reporting that occurs at all ports of entry. Officers may help travellers and businesses comply with the reporting requirements of the act and the associated regulations. The completed reports are sent to FINTRAC.
The CBSA also has the authority to search and seize non-reported currency and monetary instruments greater than $10,000 Canadian or equivalent. We continue to seize a significant amount of suspect currency and monetary instruments from travellers and entities. Information related to currency seizures is also transmitted to FINTRAC, which is responsible for the analysis of the reports.
The act also requires the CBSA to disclose information to the appropriate police force, usually the RCMP, when there are reasonable grounds to suspect that the seizure information would be relevant to investigating or prosecuting a money laundering or terrorist financing offence. In situations where the CBSA has seized currency under the PCMLTFA, but it is deemed required for use in criminal proceedings, custody of the evidence is transferred from the CBSA to the RCMP. When the seized funds are no longer required for the criminal process, the currency or monetary instruments are returned to the CBSA to be remitted to the Receiver General of Canada.
However, in most cases, where seized currency is not suspected to be from the proceeds of crime or financing for terrorist activities, the currency is returned to the person from whom it was seized once the penalty is paid. Penalties range from $250 to $5,000. All seizures are subject to appeal to the Minister of Public Safety and Emergency Preparedness and, ultimately, to the Federal Court of Canada.
The CBSA employs a range of detection tools to find currency. We use X-ray mobile units; fibrescopes, or flexible cameras; density meters; and detector dogs. We also have at our disposal a wide range of other technologies and training to assist in the non-intrusive examination of travellers at the border. Since the start of the cross-border currency reporting program in 2003, we've made about a half-million import and export reports that have been received by the CBSA and then forwarded to FINTRAC. Enforcement of the legislation by the agency to date has resulted in over 26,000 enforcement actions involving more than $530 million.
In closing Mr. Chair, we believe that the implementation of the cross-border currency program has successfully contributed to the international fight against transborder crime, specifically money laundering and terrorist financing. As a direct result of the program, more than $80 million in suspect proceeds of crime were forfeited and thus taken out of circulation.
I would be happy to answer any questions the committee may have.
To Ms. Crampton, in your presentation you said a number of things that sounded quite disappointingly familiar to me from my career in the mortgage industry, where in cases of fraud, the difficulty of prosecution, the lack of resources—these kinds of things—have been cited by law enforcement, prosecution offices, and indeed industry as reasons that fraud is not prosecuted in Canada in many cases. I would like you to perhaps carry on and give us a little bit more detail about the barriers to being able to investigate and obtain convictions in fraud.
To Mr. Grewal's question, 53 sounds like a shockingly low number of active, open fraud investigations for a country the size of Canada, where I understand that perhaps as much as 50% or more of all the proceeds of crime is laundered through real estate transactions. That figure is from a perhaps dated study, but it is information that I had learned in my career. Could you expand on the barriers to getting prosecutions and being able to obtain convictions?
With regard to my comment on the number of files, I should have prefaced my remarks by saying that the number I cited is strictly within federal policing by the RCMP. It doesn't include investigations that have started outside of federal policing, with a municipal agency or any other area. Those are very high-level files as well. They are tier 1 and tier 2 files, as we call them, which is a ranking system we have within the RCMP for the complexity and level of sophistication of the file. Although it sounds low, that's likely a small piece of what is actually being investigated across Canada.
I would say the point we see as most important would be the exclusion of lawyers and Quebec notaries from the act. It's a gap that we see within the system. Certainly professional money launderers, as I mentioned, have to be linked to the predicate offence, and that's what a professional money launderer will try their best not to be. They will try to be separate from that predicate offence, which makes it very difficult to investigate and difficult to prove.
Thank you all for being here today.
My first question is for the CSIS and RCMP officials. It has to do with data collection.
Again today, we are hearing about how difficult it is to track beneficial owners, which are often corporations. In recent meetings, we have also heard about the problem posed by complacency laws in tax haven jurisdictions.
When CSIS or the RCMP wants information about people who may be laundering money or financing terrorism, to what extent are tax havens problematic? We are talking about countries that uphold banking secrecy, that are complacent and somewhat complicit in these crimes. How problematic are complacency laws in other jurisdictions for your investigations?
I can answer, Mr. Chair.
On tax havens, I would refer to the Canada Revenue Agency. Unfortunately, I'm not able to answer that part.
When we're looking at beneficial ownership, it's an issue and a concern of ours.
There was a recent article with regard to real estate. It talked about the difficulty of private companies and numbered companies. When we're not able to see who exactly owns the company, it's an issue. It creates difficulties for investigations and I'm sure with my partners, as well.
I'd like to pick up on a subject that was raised earlier, crypto currencies.
The CBSA said that the money crossing the border, in a variety of ways, was cash, real money. Conventional electronic funds, international bank transfers and such, are easier to track because financial institutions automatically send FINTRAC information on those kinds of transactions. In the case of crypto currencies, who monitors transfers exceeding $10,000? The money is somewhat in limbo and can't be traced. Does one of your organizations look into crypto currency transfers outside the country?
It's not something anyone seems to be paying attention to. We are not talking about cash. Crypto currency transactions don't have to be handled by a financial institution, so transfers happen outside the conventional system.
I'd like to use my remaining time to discuss prosecutions with the RCMP official. As the committee chair briefly pointed out, provincial and municipal authorities are the ones enforcing the act. In some cases, they prosecute criminals for a variety of Criminal Code offences, which may include money laundering.
When money laundering is involved, do provincial and municipal authorities pass that information along to the RCMP? Do they share that information with you, since you are the ones responsible for handling those types of offences?
Thank you all for being here. Feel free to answer my questions in the language of your choice.
As witnesses, you are all here of good faith. You may not know this, but the members around the table have finally realized that something needs to be done about this. We aren't here just to approve a report without discussing it. We are here to get something done and fix the problem on our hands. With that in mind, I'd like you to speak honestly and set aside the habit people tend to have here, in Ottawa, of sticking to their own area of expertise and refusing to comment on something they do not know inside and out.
I'd like to commend you, Ms. Crampton, for pointing out that serious challenges stand in the way of fixing the problem.
You said in your opening statement that there are some challenges, and that one of them is sharing vital money laundering information while respecting the privacy rights of Canadians.
If you could imagine that we didn't have privacy concerns, what type of information would you be looking for? Could you respond quickly?
We're hearing a lot about blockchain technology. Some suggest this technology is a solution for the problems of corruption, money laundering, etc. I understand that some foreign governments, for example, are putting land registries on blockchain systems so they can protect those registries from corrupt officials who may alter ownership records and to ensure that people can have security of title. On the other side, blockchain technology is used for cryptocurrencies, and we hear continuing suggestions that cryptocurrencies are tools of money laundering, illicit drug dealing, etc.
Can any of you discuss your evaluation of whether blockchain technology is a friend of transparency or an ally of corruption?
Sorry, I misunderstood your question.
The investigation of financial crime falls to our federal policing sections across the country. These are specialized investigators who work specifically on financial crime, drug investigations, national security, and other areas that fall under federal policing.
In the last few years, we've been working more and more with private partnerships and public partnerships to gain the expertise we need rather than creating it all from within. We're recognizing the value of working with partners, working with the banking industry. We've been hiring people from external areas to work with our financial crime units to provide the expertise we need to move forward, in addition to the training I've mentioned.
It sounds as though the ability to review it is there but that there is no systematic review to make sure the intelligence that's collected is actually going places, or being investigated or not. It's only if the Privacy Commissioner does a review every two years, and maybe the new committee as well. That might be a recommendation that this committee could look into.
Going back to the CBSA, cash is something we've talked about a little bit as committee members. There seem to be a lot of cash transactions happening in Canada, especially in the housing market in Vancouver and in the GTA. I have a question, and maybe it's naive. At some point that cash is coming from somewhere and going somewhere, or at some point it's going into the bank somewhere. The suggestion to me was that no, it's sitting locked up in places, essentially. I'm assuming this is coming from overseas in a lot of instances.
If I heard you correctly, you talked about almost half a million seizures. or at least investigations.... It was 26,000 investigations, but I guess there were over half a million reports of cash. Do you have any idea how much is being missed? Are we collecting more, or are we tracking more than we're missing? Are we missing more than we're getting?
Of course, the reason it wouldn't be declared is that they wouldn't want the $10,000 limit to then be tracked and the information to go to FINTRAC and all the other places. There would be a reason why you wouldn't declare.
Obviously I understand that you can't know what you can't see, but that then tells me that you are not receiving information on the other side from banks, real estate agents, and so on regarding cash transactions. This cash is coming from somewhere, and if it's not coming out of a Canadian bank, then it's coming from somewhere via a person from somewhere else. That tells me that you don't have the data on the other side regarding how much cash is entering into our system, especially in the real estate market. Then you would be able to somewhat understand what's being missed. Obviously there would be nothing precise, but you would have some ability to understand that there is a lot being missed if it's coming in over the border, essentially.
You don't get that information from banks, do you? Banks don't tip off CBSA and say, “We just had this large cash transaction.”
Welcome, everybody, and thank you for your comments thus far.
I'm trying to think about where I want to start. At our last session, I referenced The Globe and Mail and will do it again today because they seem to be doing all the work. This time it's with regard to the sale of fentanyl and its proceeds being recycled into the B.C. real estate market, which has obviously gotten the attention of the attorney general. They lay out the steps in doing it.
I'm assuming that everybody is aware of that issue. It may not impact, say, CBSA directly. But what tools are we lacking that would stop these individuals selling something that we know kills people in Canada, and putting those proceeds back into the Canadian real estate market, which is obviously not a good thing for middle-class Canadians trying to buy their own home? I can't think of one good thing about it, actually.
What tools are we lacking in order to stop this?
Could we have just a few seconds each, please?
I have a follow-up question. In reviewing all the documents we've been provided, Canada underwent an FATF peer review in 2015, which was published in September 2016. Some of the recommendations about strengthening our AML/ATF framework are as follows—if I can just read them, it might be easiest:
|...could be strengthened by expanding the scope of the legislation to cover finance and leasing companies as well as unregulated mortgage lenders, and to apply new obligations to the designated non-financial businesses and professions sector in relation to politically exposed persons (PEPs), heads of international organizations and beneficial ownership information requirements.
Now we know the , along with his provincial counterparts, in December of 2017 came up with a framework to look at beneficial ownership, so we are working on that.
The other comment they had was, “The regulation of bulk cash transfers and of certain activities of lawyers and accountants and enhanced access to beneficial ownership information would assist in this pursuit.”
I'll put this as a general question. Out of these recommendations that were reported from the FATF peer review process - which we are obviously a core member of - what would you recommend as the most important or most effective aspect we could look at as soon as possible that would make a dent in money laundering and any associated terrorist financing activities in Canada?
I'd like to ask a related question, quickly, if I may.
Ms. Crampton, I want to pick up on your recommendation about the exclusion of lawyers and Quebec public notaries from the act. I'm from Quebec, so it's of interest to me. I wonder how lawyers and notaries would react to new obligations under the act, if such amendments were made. I'd like you to tell me what they would be required to do under the act. Would they have to report any transactions over $10,000, or would they have to demonstrate vigilance and flag any suspicious transactions?
As you know, notaries and lawyers, notaries in particular, handle numerous real estate and corporate transactions. Further to your recommendation, what would be required of them?
I'd say simply what Mr. Bhupsingh has mentioned. Because they have such involvement in those types of transactions, I think it's really important they be included within the act as other agencies and organizations are.
We did an audit from July 2013 to June 2017 looking at 51 financial crime cases that were of that higher level I mentioned before that federal policing was looking at, and over 75% involved lawyers as either a direct suspect or someone identified during the investigation, but they were not pursued in terms of a subject of interest.
Lawyers are certainly a significant part of those investigations, whether at a suspect level or certainly engaged in activities that are surrounding it, and wittingly or unwittingly engaged within these types of investigations and files.
My other question is a very important one, but I'm not sure which of you is best-suited to answer.
We hear a lot about real estate transactions in Canada. However, many of the documented money laundering cases involve the purchase of property abroad, sometimes—if not often—in jurisdictions with more lax laws. Fraudsters buy hotels, casinos, and big-ticket properties.
Do you run into problems when it comes to accessing information related to foreign real estate transactions?
As a follow-up, I'd like to know what kind of co-operation you get from foreign countries in your efforts to collect information on money laundering committed using this strategy?
Does anybody want to answer? The floor is open.
I think they talk in their discussion paper about the discussions that are already going on with the legal community.
With that, we'll have to go to the next panel, which is the Department of Justice and the Office of the Director of Public Prosecutions.
Thank you all. I would say that if any of you have further information that you think may be valuable to the committee, send it to the clerk or give one of us a call. I think, as you can note, we're trying at the moment to find a way through the fog of this issue as well.
With that, we'll adjourn for three minutes and bring up the next panel.
Thank you very much.
Welcome to our guests.
We will continue dealing with the statutory review of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
With us are witnesses from the Department of Justice and the Office of the Director of Public Prosecutions.
Before we start, I'll point out we will have a vote in the House. Bells are at 6:15. We have two motions that we need to deal with in camera before we go to that vote so that we have the financing in place to deal with this issue. I'm suggesting we do a hard stop at about 10 after six, or thereabouts.
With that, I'll turn it over to our witness from the Department of Justice, Mr. Saint-Denis, senior counsel, criminal law policy section. I understand you don't have an opening statement.
I'll be very brief, owing to the time. I know the committee wants to get to questions.
I am pleased to appear before the committee today.
The Public Prosecution Service of Canada has two roles: to provide law enforcement agencies with legal advice to ensure that evidence is gathered in accordance with the rule of law and, as such, is admissible for the purposes of subsequent prosecution;
and to prosecute fairly and impartially so the cases can be decided based on the admissible evidence. We apply the common law and the statutes when we're advising the police at the investigative stage.
Our test for prosecutions has two parts.
The first part is a reasonable prospect of conviction. Every prosecution service in the country has basically the same test. There's a slight variation in British Columbia.
The second part of the test is common among all prosecution services as well, and that's the public interest: is there a public interest in undertaking the prosecution?
We're evidence driven. The police use intelligence to help guide their investigation. By the time we are involved our focus concerns evidence and evidence gathering.
Our considerations are not political nor are they contingent on whether a law is appropriate. We apply the public interest to the second part of the test, and if there's sufficient evidence, the ordinary rule is that you go ahead with the prosecution. When you get to a point of public interest, the public interest criteria are spelled out in our deskbook: what you can and can't consider.
We are not investigators. Law enforcement agencies independently select the individuals they investigate and determine the scope of that investigation. At the investigation stage, our role is to provide advice, so our communications with law enforcement are subject to solicitor-client privilege.
We also assist them in obtaining judicial authorizations, including search warrants, restraint orders, special search warrants, production orders, and wiretap applications.
What does that mean in relation to the proceeds of crime and money laundering? We have no control over the types or number of cases under investigation or referred to us for prosecution.
We're independent of the police throughout the whole process, just as they are of us. They're both important constitutional principles. At the prosecution stage we'll consult them, but at the end of the day, the decision is ours to make independently.
The DPP and the prosecution service have no reporting relationship with the . Our role, as I said, is on the prosecution side. We're often consulted about policy matters and will offer our operational view on the implications. But the wisdom of a law, whether it should or shouldn't be made, is not our domain. Our domain is to assist with the operational impacts and to provide that advice.
Finally, we're one of 11 prosecuting services in the country. Parliament has given that responsibility to the provinces and to us. There is some limited overlap in areas like organized crime—we deal with organized crime touching on drugs—and market fraud. We also have joint jurisdiction on terrorism, although to date all terrorism prosecutions have been undertaken by the PPSC. There's considerable co-operation on an operational level among all the jurisdictions, but we are distinct. We prosecute all the federal statutes, including the Criminal Code as it relates to organized crime and terrorism. The provinces will prosecute the Criminal Code on such offences as fraud, as I said already. In the northern territories, the PPSC prosecutes all criminal offences, both the drug offences and the Criminal Code offences that you would normally think of.
The Public Prosecution Service of Canada is responsible for prosecuting money laundering and possession of proceeds of crime when the offence is under federal jurisdiction, as well as terrorist financing offences. The service is also responsible for prosecutions under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
I would now be happy to answer your questions.
I'm going to start with the Department of Justice, but if either of you wants to jump in, please go ahead.
Certainly, one of the biggest issues we've heard about already involves the legal profession and reporting based on the Supreme Court decision in 2015, I think it was. In a lot of the reporting that's been done since then, the Department of Justice is working on how, basically, to reframe or rephrase some of the legal definitions to comply with the Supreme Court, and to allow reporting to FINTRAC, for example, or some of these other agencies.
What is the department doing? Where are you in terms of complying with the Supreme Court decision and in trying to close this massive gap, which almost everyone we've heard from has acknowledged, in terms of the legal profession essentially being exempt from a lot of the reporting standards?
The Federation case, which is what you're referring to, set out a clarified and formalized principle of fundamental justice, which is the solicitor-client relationship. It's not just the solicitor-client privilege but also the relationship. The client has to believe and know that the lawyer is four-square in his corner, and that he will not be acting indirectly or directly as an agent for the state.
That makes it difficult for the PCMLA reporting requirements to apply to lawyers, because if a lawyer is taking information from his client and then reporting some of that to a federal agency, the client would be right to think that maybe there were some things that they shouldn't be telling their lawyer because those might get back to the state in which case it might hamper the lawyer's ability to properly defend his client.
We're certainly aware of the bind, if you wish, that puts the PCMLA in, in the context of fighting money laundering. Obviously, lawyers play a key role in a number of areas relating to transactions, to setting up corporations, and so on. The Department of Justice, along with the Department of Finance and FINTRAC and other departments are looking at potential avenues of trying to set up a system whereby if the lawyers cannot report, at least the lawyers would maintain certain types of records which then might be available to FINTRAC by way of a compliance mechanism. I don't want to prejudge the final results, so I can't say that we will or we will not come up with a regime or a method by which lawyers will be able to report on their clients.We are looking at all of the possible avenues, and I'm afraid I can't go into any further details at this time.
That's somewhat contradictory to some of the reports, and the media reports, in the sense that the idea was that after that court decision, I think the response from Justice was that it would of course review the decision, and then a look at how best to either reword or rework the act to satisfy the Supreme Court decision in regard to privacy issues and client-solicitor privilege, while upholding the intent of this legislation. It sounds like, based on your response, you're not looking at new wording or new recommendations for the legislation to work with the Supreme Court decision. You're looking at different mechanisms after the fact, but that's certainly very different.
One of the areas of concern that I think we've heard is that other jurisdictions, and jurisdictions that have a rule of law not that different from Canada's, are able to have the legal profession, within balance of privacy rights, part of the system to try to prevent money laundering and terrorism financing. So I guess the answer to my question just isn't there. We don't see a legal reframing coming from the justice department, which might now be something this committee has to recommend, or direct the department to do, to ensure some level of compliance with the Supreme Court decision and the intention of this legislation.
The same goes for beneficial ownership. Is the Department of Justice doing anything on drafting language or regulations that it is consulting with all the provinces and territories about? Obviously, they have jurisdiction in some of these areas as well. Is there a legal framework being drafted by the federal government, by the Department of Justice, to deal with beneficial ownership and to have a consistent kind of process across the country?
Let me just clarify the initial response I gave you with respect to the Federation case. We are looking at ways to allow for the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to operate within the context of what the Supreme Court will give us by way of wiggle room. Based on that case, there just is not a lot of wiggle room, but we are exploring all the different avenues. Plus, we will be speaking with the Federation society, as well as the various provincial law societies, to see what's available for us there.
In terms of the beneficial ownership, the Department of Justice is working with the Department of Finance in looking at setting up in the immediate term a method by which corporations would provide for information dealing with beneficial owners. I think in the longer term there's some thought to creating a registry. This obviously involves the provinces. I think at the last federal-provincial finance ministers meeting, as I recall, I think the provinces and the federal government agreed that there should be action taken on that front. In light of the fact that several provinces have legislation allowing for the incorporation of organizations, it's important for us to work with them so that we can come up with a scheme that will allow us to obtain that kind of information—that is to say, who is ultimately the beneficial owner of a corporation that's being set up.
To your immediate question on whether we're drafting something, no, we're not. We are in the process of developing an approach that will then result in our going to drafting.
I took a look to see our statistics in terms of cases where there were money laundering or proceeds of crime alone, as opposed to being tied to a drug offence, and were any of those Jordan stayed, and, no, they haven't been. Mind you, we're still in early days in Jordan. Jordan came in, in July 2016.
I can tell you that overall in our caseload we've had 382 cases implicated in respect of Jordan. Out of those, the court has granted a stay in 21%; the court has refused in 37%; and there are applications pending as of January—our current stats are just coming in, but January this year—16%; and we stayed 26%.
As between the court's and our stays, that was 48% of the cases, but the total is 382 cases, so that represents in our total holding less than half a per cent of our total cases.
We don't have a system whereby we have an automatic cut-off. We look at each particular case to see whether or not this is a case where the time limit, even if it's over 30 months.... We have cases that are over 40, 45 months even, but where some of the delay is institutional and some of it is defence, where we will argue it, and we have argued it, and have argued it successfully where in fact those factors are made out. We don't have an artificial cut-off, but we'll assess. That's definitely part of our assessment, because we have to be able to apply the case law and say, will the court find that in fact this is out of time or not?
What I'm referring to there in particular, though, is from the time of charge, because the time before that, the test is entirely different. It isn't covered by Jordan. One of the things we work very closely with the police on is to make sure that when it's ready to go, it's ready to go, so we've got disclosure in place. We can show up to the court essentially and say, we're ready, we can move this forward.
We instituted a very proactive case management process with respect to our major cases, our high-complexity cases, because they're only 2% of our cases, our drug cases for example, but they take up 30% of our time, so we have to measure them well. We've instituted that in order to make sure that we can get through there, but a significant part of that is making sure you're ready when the thing is going, when the charge is laid.
I hope I've been able to answer your question.
I think that's a policy question. There's no way to avoid evidence-related issues. There are always people, whether they are police officers or members of the public, who look for the magic bullet, but there isn't one. It always comes down to what you can prove. The prosecution in the Chun case is a good example.
Having studied different cases, I can say that, even with the latest technology, it always comes down to evidence. You have to prove who the person is using the money or assets that you want to seize or freeze.
There are some recent cases, for example, that I was looking at involving bitcoin. It's a new and emerging technology. However, at the end of the day, it's still a question of who the person is on the other end using the computer. How do we establish that?
Some of that is going to be done the old fashioned way. In the cases I'm thinking of, it's about surveillance, for example, so that when the person communicates or does something, we can prove that they did something. Those are the connections that we still have to make. Does the technology pose extra challenges? For sure, it does.
Dark web, bitcoin, and cryptography all pose extra challenges. At the end of the day you have to get the evidence. Intelligence can help. I'm sure the police would tell you that it can help direct them where to investigate, but at the end of the day, you have to have a means to get admissible evidence.
Yes, there is a case involving crypto currency, but I will keep my remarks general, so as not to comment on a particular case.
Currently, transactions are made using bitcoin, but there has to be another way for the parties to communicate, other than bitcoin. To traffic in drugs, for instance, you can use bitcoin, but bitcoin alone won't cut it.
There is cash as well. There was a question earlier in the previous session about cash. Cash is a huge amount. Mr. Chun had $600,000.
If you give me an indication, Mr. Chair, of what types of statistics are sought, I can tell you, for example, that in the last five years, we've had 163 money laundering proceeds of crime prosecutions. Those are prosecutions that have drugs in them as well. In terms of standalone money laundering and proceeds of crime, the classic, we've had 46 during that five-year period.
In Canada, the structure that exists is one where one doesn't have to even have a charge of proceeds of crime or money laundering with respect to the money that is generated through drugs, for example. The conviction itself, on the drugs, will be the avenue for purposes of forfeiture. On those we have thousands.
I can indicate, for example, that with regard to proceeds of crime cases during the last five years, we've had a total of over 20,000 files. Of those, there have been findings of guilt for the proceeds of crime or drugs, because that can also lead to the forfeiture, in 11,000 on those files. That accounts for approximately 63%.
If one were to take out of the picture those cases where there was insufficient evidence or a determination was made that it was not going to proceed to a prosecution in terms of a withdrawl or stay, then the convictions are approximately 84% on average during those five years.
It's a complex mix in Canada, because of the arrangement with respect to the substantive offence. I focus on drugs, because drugs are a significant part of our area. I'm sure if the provincial attorneys general were speaking to you, they would talk about other matters, for example, like ordinary frauds.
That 84% represented the cases that had either proceeds of crime or money laundering in them, and other offences as well—drugs. That represents that. When you take out of that figure the withdrawals and stays by the crown, putting aside judicial stays, because those are a different concern or matter, that's what that referred to. If you left them in, it's approximately 63%. That's for that.
With respect to the stand-alone—I didn't give this figure—money laundering and proceeds of crime cases, there were 46 of those. If you take out the stays or withdrawals, the conviction rate is 78%. Again, each case is on its own evidence. As the crown, our responsibility is to fairly and vigorously put forward the evidence that we have before the courts and to get a determination on the merits. In that context that's what occurred. The 46 are stand alone. The ones that are money laundering and proceeds of crime, with some other charges, those are the 163.
I can provide those statistics for the committee so that you're not having to write them down.
Thank you very much, Mr. Chair.
As a matter of fact, again, to follow up on what the chair said, it would be great to have that example of a money laundering case. It would also be very helpful to get back to Mr. Sorbara's point that if we had a list of all the successful prosecutions of money laundering cases—notwithstanding the distinction you made, but just money laundering cases, if it were at all possible over the last five years—that would be very helpful as well to understand the flow there.
I would like to come back to a couple of reports ago. The Senate banking and commerce committee did the first study on the 2000 legislation that started to include the anti-terrorism financing act. Also, in the review in 2013, the same committee pointed out the gap that exists in what happens with the legal profession and whether or not we can identify an official ownership or understand what is going on in those transactions.
For the last 15 years now, we've been talking about the same issue.
Mr. Saint-Denis, you said that you were discussing the issue but had not come up with any solutions. When will the discussion with the members of Canada's legal profession and Quebec's notaries finally come to an end?
I don't think I can say precisely when.
We'll have to figure out what is possible in light of the Supreme Court's decision in the federation's case, and that isn't easy. If you read the decision, you'll know that it leaves very little leeway for requiring information from lawyers or compelling them to provide information on their clients. We have to explore the limited possibilities available to us, in consultation with our charter experts, to determine whether the options we are considering are indeed possible or, conversely, whether we would still face a constitutional challenge, one that we would lose. The goal is to find something that will work, after all.
That said, we do a lot of work with the Department of Finance and FINTRAC. As I said earlier, we hope to work with the various provincial bar associations to figure out whether they can obtain certain information that we, at the federal level, cannot. The bar associations are governed by provincial legislation, but with their co-operation, we may be able to obtain information that could be useful to us later.
As for when that will be done, I would say as early as possible, but I can't give you an exact date.
First of all, we do have a presence, of course, in the Northwest Territories. My part of the organization is actually responsible for our offices in the three territories. We do not have and we have not had significant money-laundering proceeds of crime cases there. Part of the reason for that is that even the drug portion is not the primary portion of what is occurring there, although there is definitely an increase happening. There's an increase in terms of both the quantity and the severity of what is occurring, including such things as fentanyl, a scourge that everyone has mentioned a number of times.
With respect to the other offices across the country, the issues are, again, how to get the evidence and, from our perspective, how we advise the police in order to assist them, so that investigatory decisions they're making will help them to get admissible evidence. The challenge, whether with respect to technology, cryptography, or privacy issues with respect to computers and hand-held devices, is getting information and meeting the threshold for production orders, which is the reasonable grounds threshold, like a search warrant. It's getting the evidence from all of those various pieces.