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View Murray Rankin Profile
View Murray Rankin Profile
2013-05-02 9:40
Thank you. Good morning.
I think I understand that FINTRAC is requesting in the estimates a net funding decrease; however, it's requesting a funding increase of half a million for an economic increase for personnel expenditures. If that's correct, what operations are going to be affected by the net decrease in the amount of funding requested?
Hélène Filion
View Hélène Filion Profile
Hélène Filion
2013-05-02 9:40
The economic impact is small on personnel, small on trips and professional contracts.
Jennifer Stoddart
View Jennifer Stoddart Profile
Jennifer Stoddart
2013-04-22 15:30
Thank you kindly, Mr. Chair.
Good afternoon, Mr. Chair and members of the committee. It's a pleasure to be here today once again to discuss our office's main estimates for this coming fiscal year.
Joining me today are assistant commissioner Chantal Bernier, who as you know is in charge of our day-to-day operations, along with our chief financial officer and director general of corporate services Monsieur Daniel Nadeau.
During my time today I look forward to outlining and discussing some of our major priorities for the year ahead. For our office this is a year marked by both continuity and transition. On one hand our main program activities remain the same. On the other hand we will see change as we move to a new headquarters and have a change in leadership.
I'll start by talking about what remains the same. First of all let me go over planned spending by program area.
Overall we have a planned operating budget of some $29.1 million spread among four key program activities. First we have the program activity of compliance, which includes investigating privacy-related complaints as well as reviewing privacy impact assessments and undertaking audits of organizations. In the coming year this area will account for just over $11.1 million of our budget.
Next we plan to devote some $4.6 million to the area of research and policy development under which we examine emerging privacy issues as well as provide advice to Parliament on the privacy aspects of proposed legislation.
In order to continue informing individuals of their privacy rights and organizations of their obligations under the law, we intend to invest just over $3.1 million in public education and outreach program activity.
Then finally we intend to direct just more than $10.1 million to the area of internal services. These include functions such as human resources management, administration, and asset management. This amount both represents an increase from the last fiscal year and accounts for an overall increase in our budget. I want to take a moment, honourable members, to explain why this is so.
In short, the increase you see is caused by a one-year injection to cover the costs associated with moving our headquarters, something made necessary by a long-term retrofit to our current space.
I'd like to talk now a bit about my concerns regarding an orderly transition in my office. While we are a relatively small organization, relocation comes with expense. Our costs are being covered by a $4.1 million interest-free loan, which we will repay to the Treasury Board Secretariat over the next 15 years. Our move will put us in the same building as some fellow agents of Parliament. We have planned several cost efficiencies through common and shared services, and we're exploring even more.
Already we've made arrangements to share a common reception desk, a library, a server room, and a mail-processing room. This action contributes to our wider commitment to continuously improve our business processes to make the most of our existing resources. This is an important priority for our organization given the current economic environment.
As I noted in last year's remarks, while not mandated to make reductions under the deficit reduction action plan, our office answered the call to adhere to its spirit and intent. As a result we will have implemented savings of 5%, or $1.1 million, per year within our total budget by the end of fiscal year 2014-15.
In sum, while our figures show an increase because of the cost of our move, the resources we have available to meet the privacy needs of Canadians largely remained at the levels set for the last fiscal year. We made the decision to implement savings while committing to maintain the best possible level of service for Canadians. That commitment remains solidly intact for this year and underlines the need to make the most efficient use possible of our existing resources.
I will now move on to the importance of adapting for the privacy landscape of today and tomorrow.
As we look at the present and the future, we can all rest assured that the ever-quickening pace of technological change and its relationship with privacy will remain a constant. This is why we have created the Technology Analysis Branch, a true lab responsible for supporting investigations and audits.
Over the years, as Canadians' interest and awareness with regard to privacy issues have increased, complaints have risen. Years ago, the rise in complaints prompted a need for further funding to deal with a backlog.
Today, I’m happy to say that we have made efforts to maximize existing resources to continue getting the results that Canadians expect and deserve. Last year, we engaged in a project to simplify investigation procedures and reduce the time required to investigate complaints. This year, we plan to implement the improvements that this project identified in order to continue providing Canadians with results at a lower administrative burden.
Going further, we plan to broaden this project to complaints under PIPEDA.
In short, from both a technological and a privacy perspective, to say that the world has changed immensely in 10 years would be an understatement. And the law needs to catch up with the times. As a result, we strongly suggest that action to bring needed change be taken as soon as possible.
With only a few months remaining in my final term, it appears more and more doubtful that a second review of PIPEDA—one that is overdue—will happen before I am replaced. Nonetheless, in the coming year, our office will work to set out a roadmap to address current and future privacy challenges more effectively. It will examine how organizations can be given greater incentive to invest in privacy and information security.
In the absence of such incentives, it's up to our investigation process to bring about needed improvements. And while some companies are very cooperative, the process is generally long, drawn-out and resource-intensive.
While I certainly can't speak for the committee, I think most can agree that it shouldn't be Canadian taxpayers footing an unnecessarily large bill to fund the privacy improvements of businesses.
In addition, I want to remind everyone here about the work we undertook in the past calling for reform of the Privacy Act. The committee supported that reform. The act was written during a time when information was stored in fixed filing rooms, rather than on USB sticks and portable hard drives.
Staying with the Privacy Act for now, I would be remiss if I didn't take a moment to note the concerns Canadians have registered in the form of complaints stemming from some large-scale federal data breaches over the last few months.
This is a concern our office shares with federal departments, with Parliament, along with Canadians. In the coming months we hope to provide information to Parliament from our investigations into the loss at HRSDC of both a hard drive and a USB key in separate incidents, containing the personal information of more than half a million Canadians.
In addition to exploring systemic challenges related to the use of portable electronic storage devices by federal organizations, we plan to begin an audit in this regard.
Further on this year, we will be releasing reports on audits of both FINTRAC and the Canada Revenue Agency. Audit findings provide recommendations for subject organizations to follow. They can serve as guidance for other departments to improve practices. Our office also seeks to provide guidance to the private sector, and especially to smaller businesses.
In the year ahead our office will continue our proactive approach towards identifying and exploring emergency privacy challenges. Some of these include mobile payments, facial recognition software, intergovernmental information sharing, and consent for obtaining personal information online.
In conclusion, Mr. Chairman, let me underscore that my management team is wholly committed to ensuring that this year of transition, both to our new location and to new leadership, comes with no effect on service to Canadians. In the last year of my mandate I plan to do everything I can to ensure an orderly and a positive transition to new leadership upon my retirement in December.
I think all members around the table can agree that privacy issues are challenging and increasingly closer to home for more and more Canadians. In order for this office to continue functioning as efficiently as possible throughout the course of the year, we are now working with officials from the Privy Council Office to begin the competitive process to find a new commissioner in the near future.
As you all know, Parliament has a key role to play in the process of approving a new privacy commissioner, so I wish you well in your future deliberations on that matter.
With that, I conclude and I look forward to your questions.
Steven Blackburn
View Steven Blackburn Profile
Steven Blackburn
2013-03-21 8:54
Thank you, Mr. Chair, and good morning.
It's a pleasure to be with you this morning at this hearing of the Standing Committee on Finance. I commend you for undertaking this study on tax havens, which is clearly an issue for all members of Parliament.
My name is Steven Blackburn, and I am the vice-president and chief AML officer for CIBC.
As many of you know, CIBC is a Canadian-based financial institution. Through our three main business units—retail and business banking, wealth management, and wholesale banking—our 42,000 employees provide a full range of financial products and services to more than 11 million individuals, small businesses, commercial entities, corporate entities, and institutional clients in Canada and around the world. CIBC was recently named the strongest bank in North America, and the third strongest bank in the world by Bloomberg Markets magazine.
In my role I am responsible for all aspects of CIBC's anti-money laundering and anti-terrorist financing regime, including our AML program, our policies and standards, inherent risk assessment, AML training, effectiveness testing, and reporting to the Financial Transactions and Reports Analysis Centre of Canada, otherwise known as FINTRAC, as well as to law enforcement agencies.
CIBC has implemented procedures to ensure that all relevant regulatory obligations with respect to client identification and reporting of suspicious transactions, large cash transactions, electronic funds transfers, and cross-border movements of cash and monetary instruments are met in each jurisdiction in which we operate.
In addition to running CIBC's financial investigations unit, I provide advice to business units with respect to the application and interpretation of AML law, our policy and standards, and the application and interpretation of Canadian and American sanctions. I also assist individual business units with the development, implementation, and monitoring of policies and procedures under our AML compliance regime, including the regular testing of their effectiveness in partnership with CIBC's internal audit group.
I know that our appearance here today is a small part of your larger study, and I'm aware that the Canadian Bankers Association presented a broad-based financial services sector perspective to you a few weeks ago.
I look forward to answering your questions this morning, along with my colleagues, and I hope we're able to provide some clarity and useful commentary as you consider this important subject.
Thank you.
Scott Bartos
View Scott Bartos Profile
Scott Bartos
2013-03-21 8:57
Thank you, Mr. Chairman.
Good morning. My name is Scott Bartos, and I am the senior vice-president and chief compliance officer for HSBC Bank Canada. I'm the senior executive responsible for the oversight of HSBC Canada's regulatory and AML compliance program.
Just to give you some context about HSBC, we are a Canadian chartered bank operating under Canadian law and regulated by the Office of the Superintendent of Financial Institutions. Our bank is a member of the global HSBC group, and a subsidiary of HSBC Holdings PLC, U.K., one of the largest financial institutions in the world.
HSBC Canada is currently the seventh largest Canadian bank with over 140 branches across the country and roughly 6,000 employees. HSBC Canada is a significant Canadian taxpayer, having paid approximately $252 million in federal, provincial, income, and capital taxes in 2012 alone.
Since my last appearance before this committee in February 2011, events have occurred that have reinforced the need to further strengthen our efforts to combat tax evasion and all other financial crimes. The entire HSBC group, including HSBC Bank Canada, is committed to implementing industry leading controls and best practices for combatting financial crimes and tax evasion.
As a whole, the HSBC group invests approximately $500 million per year to ensure regulatory compliance and combat financial crimes. In addition, the HSBC group has taken a new approach in the industry, and they have appointed, or established, a financial systems vulnerabilities committee, which will be advised by subject-matter experts in money laundering, terrorist financing, organized crime, and tax evasion.
Our anti-financial crime strategy can be described as deter, detect, and disclose. To successfully execute this strategy, HSBC Canada has instituted the following controls and safeguards: to deter, we have instituted controls to ensure that we've verified the identities of our customers and that we understand the intended purpose of their banking relationship with us; to detect, we monitor account activity to identify transactions that do not match usual patterns, or stated customer purposes—any transactions that appear unusual are subject to further review or formal investigation by the compliance team; and to disclose, we file suspicious transaction reports, large cash transaction reports, and electronic fund transfer reports with FINTRAC, the federal government agency. To give you some idea of scale, in 2012 HSBC disclosed approximately 725 suspicious transaction reports, over 96,000 large cash transaction reports, and approximately 600,000 electronic fund transfer reports. In addition, we cooperate fully with Canadian legal authorities with respect to any formal investigations they initiate.
While we're confident that these measures will help deter, detect, and disclose financial crimes and tax evasion, we must always be vigilant. To quote our HSBC group chief executive, Stuart Gulliver, “There is no finish line when it comes to combatting financial crimes. Money launderers, tax evaders, terrorist financiers continuously implement new means of abusing financial institutions. Their efforts represent a threat to the integrity of the global financial system, and to national security. We must always be one step ahead of them. As a steward of the global financial system, we must play a full part in protecting it. In doing so, we will work side by side with governments and regulators.”
I would like to thank the committee for the opportunity to be here this morning, and to share our observations on this important topic. I would be happy to answer questions in due course.
Thank you.
View Shelly Glover Profile
Okay, good.
I have two minutes. I'm going to run out of time.
On reporting to FINTRAC, I want to know if when you're operating offshore all of the countries in which you are operating have an equivalent to FINTRAC and if you are sharing information with them. Are you also sharing information about Canadians offshore with FINTRAC and following Canada's best practices, or are you following the best practices of the country you're in or lack of best practices?
Mr. Richard.
Steven Blackburn
View Steven Blackburn Profile
Steven Blackburn
2013-03-21 10:04
We comply with the regulatory requirements of the jurisdictions in which we operate and, as one of my colleagues mentioned earlier, we are subject to their privacy laws among other regulatory obstacles that will not allow the sharing of information. However, as I mentioned earlier, at CIBC we have a common denominator based on Canadian regulations that we apply across our operations, so if we are to identify any activity, we will report in those jurisdictions.
View James Rajotte Profile
Let me drill down into that, because there are different actors at play here. There are individuals, there are individuals who may have companies, there are governments and government regulatory agencies, and then there are financial institutions.
In the past year, I went into one of your financial institutions to do an investment property. I was filling out a whole whack of forms and complaining about filling out all these forms, and the lady opposite me, who knew who I was, said, “Well, blame yourself, because it's your own laws that have caused you to do all this.”
Voices: Oh, oh!
The Chair: I said, “Okay, touché.”
Her argument was that it was Canadian domestic law, it was FINTRAC, that was then compelling the financial institutions in Canada to put all this onus on me as an individual to prove that what I was doing was a valid investment.
So that's what you have: individual, financial institution, government, regulatory agency. Some may argue that in certain countries, and I think you're hearing some of that at the committee today, other governments are not as diligent as the Canadian government. FINTRAC obviously does not exist in every country. The regulatory agencies are not as active in other countries in terms of making sure that individuals are doing valid investments, that they're not tax evading.
Can any of you address that question or concern that people would raise?
Ms. York, or Ms. Hughes.
Carmina Hughes
View Carmina Hughes Profile
Carmina Hughes
2013-03-21 10:20
If I understand your question, I think it is indisputable that not all countries are as good as Canada is in asking the types of questions that you were asked when you endeavoured to open up an account for an investment property, or whatever it was. There is no question there is not necessarily a level playing field out there in that arena and, as a result, there are many who think we overregulate. I'm not among them.
That's unquestionably the case, so I think that the issue for us as financial institutions is how important it is to us to keep that type of activity out of our bank wherever it exists. From my perspective, from TD's perspective, we have a very low tolerance for risk, as I said earlier. We're going to make sure that wherever we're doing business we are employing the right standards and that we're ferreting this out.
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