FINA Committee Meeting

STANDING COMMITTEE ON FINANCE

COMITÉ PERMANENT DES FINANCES

EVIDENCE

[Recorded by Electronic Apparatus]

Tuesday, April 11, 2000

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[English]

The Chair (Mr. Maurizio Bevilacqua (Vaughan—King—Aurora, Lib.)): I'd like to call the meeting to order and welcome everyone here this morning.

As everyone knows, the order of the day is Bill C-22, an act to facilitate combatting the laundering of proceeds of crime, to establish the Financial Transactions and Reports Analysis Centre of Canada, and to amend and repeal certain acts in consequence.

For those of you whose first time it is appearing in front of the committee, we usually give our witnesses anywhere between five and seven minutes to make their introductory remarks, and thereafter we engage in a question-and-answer session. Today we'll have a ten-minute round, which means each individual asking questions will have ten minutes.

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We have representatives from the following organizations: The Credit Union Central of Canada; Certified General Accountants' Association of Canada; Canadian Life and Health Insurance Association Inc.; and the Public Interest Advocacy Centre.

We will begin with the Credit Union Central of Canada, Mr. Brian Topp, vice-president, government affairs. Welcome.

Mr. Brian Topp (Vice-President, Government Affairs, Credit Union Central of Canada): Thank you very much, Mr. Chairman. It's a pleasure to be here. Thank you for inviting us.

I'll give a brief introduction. Credit Union Central of Canada represents credit unions across Canada, except in the province of Quebec. Our system manages $56 billion in assets, Mr. Chairman, and we have 4.3 million members. Our sister organization in Quebec, the caisses populaires, manage another $76 billion in assets and have 6 million-plus members. It might interest you, Mr. Chairman, to know that per capita the largest co-op banking sector in the western world is in Canada. One out of every three Canadians is in a credit union or caisse populaire.

Pertinent to some of the comments I want to make today, the credit union system, Mr. Chairman, is the lead or one of the top three business lenders in every province in western Canada, and our sister organization in Quebec is the top business lender in Quebec.

Mr. Chairman, credit unions have no interest whatsoever in being party to money laundering crimes. We support the thrust of the legislation. We have a compliance agreement with the RCMP signed long ago. Credit unions have worked to comply with Bill C-61, which was passed in 1989, and we've worked to comply with Bill C-9, which was passed in 1991, and we're going to try to comply as best we can with Bill C-22.

My purpose in talking to the committee today is to raise a few operational issues to make sure that this new approach works for the government, for the justice system, and for us.

The first point I want to make, Mr. Chairman, is that clauses 7 and 9 establish in very broad strokes—the bill overall is written in very broad strokes, as I'm sure the committee is aware—some definitions of what's required to be reported. It's necessary to read the consultation paper on what that means to understand what the government is getting at with these clauses. It seems pretty clear from the consultation document on the regulations that what the government has in mind is receiving a report from institutions taking deposits on every cash transaction of $10,000 and more or any wire transfer of $25,000 or more. Mr. Chairman, this is a very wide net that is being cast on transactions that are going to be required to be reported under this act. It's a pretty significant change from the status quo.

It is possible, based on the plain meaning of the words that we have before us so far, that this is going to include a number of transactions that on the face of it are clearly not in any way associated with money laundering crimes. For example, cash deposits from big-box retailers, the local Wal-Mart, cash deposits from high-volume restaurants, a cash deposit from a farmer who has done a bunch of harvest sales, a restaurant or a bar or a retailer who is having a great Christmas or a great season, maybe a big church fundraiser—a whole bunch of potential cash transactions would appear in the plain meaning of the words before us to be captured in the regulations in the bill here.

Mr. Chairman, some would have it that this doesn't pose a problem for the federal government because the federal government is going to invest a significant amount of money in FTRAC, the office that's going to manage these transactions. I'm told that they could handle up to 100 million transaction reports in a year, and that's reassuring. It tells us that the government would be able to handle all of these reports. But unfortunately nobody's buying the credit union in Sturgis, Saskatchewan, a new computer. As a result, we are concerned that credit unions are going to be required to report an awful lot of transactions that clearly cannot have anything to do with money laundering transactions.

The first point I want to make is that it might be helpful if the committee recommended that the government consider exempting obvious exemptions from the reporting requirements set out in the bill and in the consultation regulations that are before us. In the alternate, perhaps the government could consider a regime in which members who are going to make regular or predictable deposits could report once, saying, “We are planning to make x number of deposits in the future.” As a result, this would reduce the number of reports we have to make.

Mr. Chairman, the second point I want to draw your eye to is that clause 97 of the bill is a consequential amendment to Bill C-6, which expands privacy regulations and is currently before Parliament. It's a necessary amendment, because otherwise there's a fairly glaring conflict between the tough privacy approach in Bill C-6 and the very wide disclosure requirements in Bill C-22 that I've just spoken about. Because that amendment is there, federally chartered financial institutions are protected. Bill C-6, as it applies to our friends, the banks... they are going to be whole because of this amendment. But I draw your eye to the fact that credit unions and caisse populaires are provincially regulated. Bill C-6 is basically going to drive all provinces to adopt comparable legislation within the next three years. In the event that a similar exemption or amendment is not included in the provincial legislation, there's a potential conflict between privacy legislation and Bill C-22.

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In order to avoid having this stuff litigated in the courts, I think it would be helpful if the committee urged the government to coordinate carefully with provinces to make sure that existing provincial privacy legislation... As an example, there is very strong provincial privacy legislation in the province of Quebec right now, and there's mandatorily going to be provincial legislation in every province within three years. There's no contradiction between that regime and Bill C-22, with the result that we don't end up in a conflict between our provincial regulators and this bill.

The third point I want to make is that Bill C-22 casts a pretty wide net here, and it's not the only project coming out of Parliament to cast a wide net. As a case in point—and I'm not critical of the initiative but just drawing your eye to the operational consequences—Industry Canada is consulting about a pretty major increase in the amount of detail they want to see reported from financial institutions about small business lending.

When we add it all up and look at the potential paper burden that's going to be imposed by this bill, and the record-keeping, plus some of the other potential consequences of financial institution reform that's coming, the result would seem to be that we're going to come out of this session with a pretty significant increase in the reporting requirements to the federal government. In our system, which is very decentralized, the reporting requirement is going to fall directly on credit unions, some of which are quite small.

I think it would be helpful for the committee, because we're focusing on this bill today, to recommend that a good deal of attention be invested in making reporting as simple and inexpensive as possible, and preferably that reporting is possible through our existing computer systems without requirement for major new investments or re-engineering. The optimal solution would be a nice, simple, clean Internet interface, and it wouldn't be bad if the committee urged other federal departments overall to converge on that simple approach to limit the compliance burden, which is becoming fairly significant.

In the interests of time, I'll just allude to a few operational issues that I think are interesting and that are going to merit talking carefully to the department about as the regulations are developed.

For example, I draw your eye to clause 6, which prescribes in very general terms the kind of record keeping that financial institutions would be required to undertake, and we learn a little bit more about what the government has in mind.

In the consultation booklet, we see, for example, on page 10, a requirement that whenever somebody deposits $10,000 or more in cash, a statement be signed by the individual. Mr. Chairman, that will be impossible if the deposit is made at an ATM. So there are some operational issues, and they're going to need to work on the details of how this is going to be implemented.

To summarize, the bill casts a very wide net indeed, and perhaps unnecessarily so, on the kinds of transactions that will have to be reported. I think this can be managed reasonably well by coming up with a good exemptions list or by looking at that one-time report I alluded to.

There are some potential conflicts with existing and future provincial privacy legislation, and we would urge the government to head those off in advance. This is a piece of the puzzle in significant new reporting requirements, which I think need to be carefully studied operationally to make sure they're not overwhelming, especially for a small credit union. Do think about the good folks in Sturgis, Saskatchewan, and try to keep the reporting burden down.

Finally, there are clearly some operational issues, like this ATM issue I'm flagging, that we're going to need to work through with the government once this is in place.

Other than that, it's a good bill.

The Chair: That's encouraging. Thank you, Mr. Topp.

We'll now hear from the Certified General Accountants Association of Canada, with Everett Colby, Dawn McGeachy, and Mark Boudreau. Welcome.

Mr. Boudreau.

Mr. Mark Boudreau (Vice-President, Public and Government Relations, Certified General Accountants Association of Canada): Thank you, Mr. Chairman.

First, I would like to thank you for having us appear before the committee today. With me is Dawn McGeachy, from our professional affairs department, who is a certified general accountant and a fellow associate from the Credit Union Institute of Canada; and Everett Colby of Colby and Associates. He is also an accredited litigation accountant and a certified fraud examiner.

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Just briefly, the Certified General Accountants Association of Canada is a prominent, respected, self-regulated, Canadian professional body responsible for the education, certification, and professional development of over 60,000 certified general accountants and CGA students in every constituency in our country.

We're going to keep our remarks brief, Mr. Chairman, to about five minutes. I know members of the committee have a copy of our presentation, and I have brought extras if people require or would like them.

I'll turn it over to Mr. Colby.

Mr. Everett Colby (CFE, North American Forensics Accountants; Owner, Colby & Associates): Thank you, Mr. Chairman.

We're pleased to advise that in principle CGA Canada supports the initiatives contained in the proceeds of crime money laundering act, Bill C-22. However, I wish to cover three specific concerns our association has with the bill.

We recognize that money laundering and the cross-border movement of proceeds of crime is becoming increasingly difficult to deter and detect and that traditional means of investigating these activities are proving less effective. The proposals will provide Canada's law enforcement agencies with the tools they need and access to valuable data that they may not otherwise be able to obtain.

First, we recommend that the ambiguous wording contained in part 1, clause 7, relating to the requirement to report suspicious transactions be revised to more properly reflect the true intention, which came out at preliminary discussions we had, that it would apply to a professional who is involved in the business of transacting the moneys—actually involved in the transaction.

Our analysis of the backgrounder to this legislation as well as the consultation paper has identified the potential misunderstanding that entities and individuals acting as financial intermediaries, such as lawyers and accountants, will be required to report any financial transactions that they have reasonable grounds to suspect are related to a money laundering offence merely by becoming associated with the information.

The current reading in the consultation paper is as follows: Section 7 requires every person or entity subject to part 1 to report to the centre every financial transaction where there are reasonable grounds to suspect that the transaction is related to money laundering.

Thus, the current wording would seem to indicate that a professional, during the course of their activities—such as when preparing financial statements—might be responsible for making a report, rather than, as was explained to us during our consultation with the working group, those who are involved in the actual movement of the money. It is not just simply by virtue of being associated with the information.

Secondly, we're concerned with the receipt and management of information being provided to the centre. The bill does not provide for the establishment of regulations regarding criteria for determining what are reasonable grounds to suspect money laundering. Rather, the consultative paper states that the centre will develop guidelines to assist reporting entities to identify characteristics and circumstances that might lead to a determination of reasonable suspicion. The paper further states that the information to be contained in these reports and the means by which the reports are to be transmitted to the centre will also be prescribed by regulation.

As this leaves much to the unknown, we are left with the impression that something will now be designed, it will then be imposed, and we will have to trust that the reporting system will be an efficient and cost-effective process. We would like to see the role of the centre be more clearly defined and that comprehensible information be provided to the Canadian public regarding the accountability of the centre.

Although clause 55 addresses where disclosure by the centre is prohibited, we do not believe the centre should be immune from prosecution in the event the information it provides to law enforcement agencies or others proves to be in error or slanderous.

Additionally, while we agree that the centre should be authorized to provide information to law enforcement agencies, we are alarmed that they are also permitted to disclose this information to the Canada Customs and Revenue Agency, the Canadian Security Intelligence Service, and the Department of Citizenship and Immigration.

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Subclause 55(3) states that the centre must first determine whether it has reasonable grounds to suspect that the information would be relevant to investigating or prosecuting a money laundering offence before disclosure can be made to these other authorities. However, the bill does not state what constitutes reasonable grounds to suspect that the information would be relevant.

What springs to mind is data mining, and the safeguards proposed for the release of information appear at this point to be weak. There are no provisions for third-party review of decisions prior to the release of information. Again, we are in a position of trusting that once the regulations are developed, they will be palatable to the public.

To our association, the most distressing aspect of the proposed legislation is contained in clause 62. This provides the power for representatives of the centre to enter and seize documents from a professional's office without the need of due process. We find this highly intrusive. It also raises the question of whether the legislation is contrary to the provisions of section 8 of the Canadian Charter of Rights and Freedoms, which provides that everyone has the right to be secure against unreasonable search and seizure.

While the creators of the centre seem to have gone to certain lengths to ensure that the perception of protection of individual privacy is maintained, a warrantless search of a professional's office seems to violate the same principle of privacy. There is an expectation by the public that an accountant enjoys privilege, much as exists in a lawyer-client relationship. While such is not the case, it is reasonable to expect that a client's file should not be freely available, thus making receipt of a warrant prior to entry a mandatory part of the process, a natural conclusion.

On behalf of CGA-Canada, I would like to thank you for your time here today. For further details on our association's viewpoint, please refer to our written submissions. Thank you.

The Chair: We'll now hear from the Canadian Life and Health Insurance Association Inc., with Mr. Frank Zinatelli, associate general counsel, and David McKee, associate general counsel, Clarica Life Insurance.

Mr. Frank Zinatelli (Associate General Counsel, Canadian Life and Health Insurance Association Inc.): Thank you, Mr. Chairman.

The CLHIA is the national association of life and health insurance companies, representing over 80 member companies that account for over 90% of the life and health insurance business in Canada.

With me today is Dave McKee, associate general counsel of Clarica Life Insurance Company, who is also chairman of the CLHIA working group on money laundering regulations.

The life and health insurance industry has appeared before this committee several times over recent years, and we welcome these important opportunities to discuss significant issues in the financial services sector. It is in a spirit of constructive cooperation that we offer today our thoughts and observations on Bill C-22 and the proposed amendments to money laundering rules it contains.

I would like to note that as the review of these proposals proceeds, my industry colleagues and I are at your disposal to make further contributions to your committee's work on these matters in whatever way you might find most useful.

Very briefly, let me indicate that the industry generally supports the proposals contained in Bill C-22, and we support the need for a strong regime to allow law enforcement agencies to combat money laundering. I would like to point out, however, that we do have some recommendations regarding the application of the act.

Specifically, we would note that, as written, the act does not cover independent insurance agents or brokers, otherwise known as financial services intermediaries. The result of that is that while life insurers and their employees have express duties and obligations under the act—for example, to obtain client records, to verify the identity of a client, to make suspicious transaction reports—the independent intermediaries do not. In fact, it is these intermediaries who will have the most direct knowledge, perhaps the only knowledge, of facts giving rise to reasonable grounds to suspect money laundering. We have raised this issue with the officials working on the legislation, and we urged them to consult with the independent intermediaries in this regard.

At this time I would ask my colleague Dave McKee to outline some of the steps the industry has taken to fight money laundering and to comment on some of the issues raised in the December 1999 consultation paper on proposed revisions to the money laundering rules.

Mr. David McKee (Associate General Counsel, Clarica Life Insurance; Canadian Life and Health Insurance Association Inc.): Thank you, Frank.

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To begin, Mr. Chairman, I'd like to point out that life insurance companies look at compliance with money laundering rules as an essential part of a company-wide compliance framework. Let me first describe two examples of industry-wide steps taken to combat money laundering.

First, in order to increase awareness of life and health insurers regarding money laundering rules, a few years ago the CLHIA issued a guideline manual in plain language. It discusses the identification of suspicious transactions and, more generally, how insurers should comply with anti-money-laundering rules. The guide also contains practical information for life and health insurers. This book of guidelines was most recently updated in January 1999. For your information, we've distributed copies, in both French and English, through the clerk of the committee.

Secondly, the life and health insurance industry developed and in 1998 formally adopted guidelines on screening life agents for suitability and reporting on suitability. These national guidelines require, among other things, that life insurance agents and other life insurance intermediaries must be reported to the relevant provincial insurance regulators by an insurer if the insurer, following a company investigation, has evidence to support an allegation of money laundering. Again, we have provided the committee with copies of those guidelines in both French and English.

With respect to the proposals for new regulations described in the consultation paper, which is designed to implement the new reporting requirements in the bill, the life and health insurance industry has been working with government officials to ensure that those proposals are both workable and appropriate.

We have raised some technical issues in relation to those proposed regulations. Our key concern is to ensure that the new rules, as much as possible, do not disrupt normal business practices of life companies. For example, the new regulations should not apply to life and health insurance products where there is only minimal risk of money laundering activity—for example, group insurance and health insurance.

As another example, the new rules around verification of identity of an account holder, especially with respect to corporations, should not be unduly burdensome for small business people, who don't have ready access to their formal corporate records.

We look forward to continued consultation with the officials on these issues.

Thank you, Mr. Chairman. That concludes our opening remarks. We look forward to your questions.

The Chair: Thank you very much.

For the final presentation, from the Public Interest Advocacy Centre, we have Philippa Lawson, counsel. Welcome.

Ms. Philippa Lawson (Counsel, Public Interest Advocacy Centre): Thanks.

I am with the Public Interest Advocacy Centre. First, I'll just give you a bit of background on PIAC. It's a national non-profit organization that has been around for 24 years, representing the consumer interest primarily in the areas of public utility regulation and essential services, including the financial sector. We've been increasingly involved in consumer privacy issues over the past decade, and that's what brings us here today.

I'd like to begin by congratulating you and other members of Parliament on the passage of Bill C-6, which we see as a long overdue set of rules to give consumers some control over their personal information in the private sector.

I won't go into the importance of privacy. Suffice it to say that the right to privacy has been recognized by the Supreme Court of Canada as essential to individual dignity, autonomy, and freedom, and to the meaningful exercise of democratic rights.

Before you today is a bill that will significantly erode consumer privacy, individual privacy, in order to achieve its goal of better detection, deterrence, and prosecution of organized crime. This is a classic example of a clash between effective law enforcement on the one hand and individual privacy on the other hand. Both are compelling societal interests: your job is to ensure that any sacrifices of individual privacy made by Bill C-22 are fully justified.

Let me just highlight some of the ways in which ordinary Canadians will be affected by this bill.

Because reporting is mandatory and failure to report results in significant penalties, organizations can be expected to err on the side of overreporting. This likelihood is enhanced, reinforced, by the provision of the bill that removes the individual's right to legal redress in the event of unnecessary and damaging reporting as long as that reporting was done in good faith.

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Large amounts of confidential financial information about Canadians, much of it unnecessary, will be collected by this new agency. Because organizations are required to make subjective judgments about the suspicious nature of transactions, there is a disconcerting amount of room for unnecessary and damaging investigation of individuals. Because so much of the collection, use, and disclosure of personal information by the new centre is covert, innocent individuals will simply not be aware of investigations of them, which may be based on false or misleading information, until it's too late and the damage is done.

In brief, this bill will establish a regime of systemic privacy invasion in the name of improved law enforcement.

The first question you must ask, then, is whether the sacrifice of privacy is justified in a free and democratic society. Is money laundering that big a problem? Are the existing tools we have really inadequate? What's in this for Canadians?

Should you decide, based on the evidence, that we do indeed need a mandatory reporting regime along the lines of Bill C-22, then you must ensure that this particular regime impairs the right to privacy as little as possible.

On this point, I'd like to acknowledge the many protections included in Bill C-22 that serve to limit the privacy invasions authorized under the new regime. These are things we like and we support if you decide the bill is necessary: the establishment of an independent, arm's-length centre to collect and analyse information; the requirement for judicial warrants in order for police to access all but the most general information about suspicious transactions; limits on the use and disclosure of information by the new agency to purposes under the act; making the improper disclosure of information by the new agency a punishable offence; and, of course, making the new agency subject to oversight by the privacy commissioner. These are all good things.

We remain concerned, however, about the potential use of regulations to expand the scope of privacy invasions under the bill. Much still has to be decided and determined by way of regulation, and, as is so often the case, I think the devil here may be in the details.

We remain concerned about accountability within FTRAC, the new centre for data protection. We remain concerned about whether FTRAC officials will be sensitive to privacy issues, and we remain concerned about the lack of public awareness of this new regime. Will Canadians be aware of what's happening, particularly behind the scenes, with their personal information?

We therefore recommend—and I have seven brief points here—that the bill require FTRAC to designate an individual official within the centre, such as a privacy officer, who is responsible for ensuring that the collection, use, and disclosure of personal information by the centre is appropriately minimized.

We recommend that one of the qualities sought when hiring personnel for FTRAC is sensitivity to privacy issues.

We recommend that a process be established to ensure that FTRAC officials, as well as those in the private sector who are responsible for reporting—the clause 5 entities—are properly educated as to the importance of minimizing the collection, use, and disclosure of personal information to what is necessary under the act.

We recommend that measures be taken and resources be allocated by the government to ensure public awareness of this regime, through preparation and distribution to clause 5 entities, for example, of brochures and informational materials for public consumption.

We recommend that clause 5 entities be encouraged, if not required, for example, to place stickers on their windows identifying themselves as reporting entities under the act, something similar to the Canada Deposit Insurance Corporation model of public information.

We recommend that the five-year parliamentary review required under clause 72 of the bill be made perpetual, that there be a continual five-year review, the same as exists under Bill C-6 right now.

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Finally, we recommend a continuation of the open public process followed to date with respect to the drafting of this bill and the regulations under it.

Thank you very much.

The Chair: Thank you very much, Ms. Lawson.

We'll now proceed to the question-and-answer session. It will be a ten-minute round, and we'll begin with Mr. Abbott, followed by Monsieur Loubier.

Mr. Jim Abbott (Kootenay—Columbia, Canadian Alliance): Thank you very much.

Welcome to all of you. We do appreciate the time that you've taken to share your ideas and your expertise with us. I don't have a lot of questions. I think your presentations are very self-explanatory.

I just have one very gentle challenge to Mr. Topp—and I mean in all seriousness that it's a gentle challenge. I'm wondering about the example you used of the $10,000 limit vis-à-vis ATMs. Perhaps we're unaware, but it strikes me that it would be highly unusual to be dropping $10,000-plus cash into an ATM. In fact, if a person was regularly doing so, because it is unusual, that would be a flag in and of itself. I wonder if you could comment on that.

Mr. Brian Topp: Well, you're quite correct. If somebody's dropping $10,000 through an ATM, especially if it's in nice, crisp, old, and now withdrawn $1,000 bills, it would raise an eyebrow somewhere in the system and would probably be reported as a suspicious transaction. With respect, though, that's not what I was flagging. What I was mentioning is simply that under the regulation about security required in the record-keeping requirements under the act, such a deposit would be accompanied by a signature from the individual. I was simply pointing out that as a technical proposition, a signature is not obtainable. When we get into the going-forward detail of the regulations, then we need to be alert to those kinds of issues, particularly given the penalties prescribed in the bill. We want them to be all executable.

Mr. Jim Abbott: The reason I gave you that opportunity to clarify is that some of the representations that have been made to me—along with other editorial comment—have said this is too far-reaching and that too many innocent people will be sucked into this vortex. As a result, I appreciate your clarification.

Ms. Lawson, on the question of whether money laundering is that big a problem, as the Solicitor General critic for Her Majesty's official opposition, I would suggest that I would concur with the government, and that the opposition would concur with the government, that indeed it is that big a problem. This is therefore a very clear way of tracking illegal, illicit, dangerous activity that is occurring within our community, and it is quite essential.

That having been said, I rather like your idea of, number one, the perpetual five-year review of clause 72. I would be inclined to agree with that, as I think it would be very useful. It could be either a perpetual five-year review, a sunset clause, or something that would cause future parliamentarians to review this legislation in order to make sure we are keeping abreast of whatever the new elements are that organized crime and other people are using.

I also would like to pursue the idea, as I understood it, of a kind of privacy commissioner within the legislation. I wonder if you could expand on that a little bit.

Ms. Philippa Lawson: The idea actually came from Bill C-6, which sets out ten principles of fair information practice, the first of which is accountability. That requires all private sector organizations subject to the bill to designate an individual within their corporation or company as responsible for the protection of consumer data, of the personal information they collect, use, and disclose. The idea is just to apply the same principle to FTRAC, the new centre, and therefore to require that there be an official within FTRAC who has responsibility for ensuring that the collection, use, and disclosure of personal information in the course of the activities of the centre is appropriately minimized.

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Mr. Jim Abbott: Would that satisfy your concern? In other words, if we are really suspicious of this legislation and have serious reservations about this legislation, would the inclusion of a capacity like what we just vaguely described as a privacy commissioner really satisfy the deepest skeptic in regard to this legislation?

Ms. Philippa Lawson: Not at all, and I will admit that in the private sector scheme, one of the main purposes of having that designated individual is that it's someone the consumer can go to, can make complaints to, and can ask for access from.

In this scheme, of course, much of what's going on is covert; the consumer doesn't know what's going on. So the advantages are more limited in this respect. It's also much more important that the existing privacy commissioner have oversight over the regime, as he or she does under this legislation. It's just one little step that highlights the importance of privacy. I think it's more important that the individuals working within FTRAC are sensitive to the issues.

Mr. Jim Abbott: But you can't legislate that.

Ms. Philippa Lawson: Exactly—and that's why we suggested what we did.

Mr. Jim Abbott: Your answer would seem to indicate, perhaps, that rather than inserting a privacy commissioner, there should be more access for existing privacy commissioners—access to the centre and to the information—so that there is an external overview. Wouldn't that be more of an answer than just having an extra body there?

Ms. Philippa Lawson: That's already there. The privacy commissioner already has supervisory powers. So we support that. To ensure that the centre has privacy in mind when it's doing its daily operations, we just thought it might help to have someone in charge, someone responsible within the centre.

Mr. Jim Abbott: I'm just wondering about redundancy.

Ms. Philippa Lawson: The issue we're thinking of here is internal, not external, because the existing privacy commissioner is external. He has investigatory powers and so forth, but he's not necessarily going to know what's going on in the day-to-day operational basis. I think it is important that internally there be some accountability.

Mr. Jim Abbott: Thank you very much, Mr. Chair.

The Chair: Thank you, Mr. Abbott.

[Translation]

Mr. Loubier.

Mr. Yvan Loubier (Saint-Hyacinthe—Bagot, BQ): Thank you, Mr. Chairman.

I agree with Mr. Abbott, but I would like to address the issue from a slightly different angle. Ms. Lawson, you mentioned the importance of privacy and suggested that there be someone responsible within the Centre. In money laundering, you are dealing with organized criminals. In the drug market alone, $10 billion is laundered each year, in addition to 7 or 8 billion dollars for other illicit activities. Criminals have a lot of means at their disposal to influence the outcome of a situation.

If the Act is a bit too permissive, these people will be able to get involved in the normal process. If there is an internal commissioner who acts as a privacy watchdog, you can imagine that this person will be under significant pressure from organized crime. They have the means, the tools. We call them the scorpions. These are people who wear white shirts and ties to work and they influence many senior officials, police officers, lawyers and accountants.

Do you not think that not spreading this responsibility among all officials at the Centre, but instead placing it all in the hands of one person, the privacy commissioner, could be dangerous and that it would be a huge responsibility for this person, who would single-handedly take on all privacy-related responsibilities?

[English]

Ms. Philippa Lawson: That's an interesting idea. First of all, the bill does make every individual within the centre responsible by making it an offence to improperly disclose information, so I think we have that there. We are simply proposing that there be one person designated, for the reasons I've already explained, not to remove responsibility from any other officials but just to have someone who is more responsible than anyone else, I guess, for that issue, and who can maybe give seminars internally to their colleagues.

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I would also expect that if the nature of organized crime is as you described, probably the identity of individuals working for FTRAC may need to be confidential or not public and not easily determined as to who is who and who is responsible for what within FTRAC. I don't know if that addresses the concern you've raised.

[Translation]

Mr. Yvan Loubier: It would be difficult, because the individual you appoint as senior complaints commissioner, for example, would receive complaints from citizens. So the individual would necessarily be identified as the privacy watchdog. I'm just making this comment off the cuff, because people who launder money are not choir-boys. They launder the money primarily for criminal biker gangs. They have enormous means at their disposal. I think it is rather delicate to place such a huge responsibility in the hands of your senior commissioner without his being known. At some point, if he receives complaints, he will necessarily be known, since he will play an official role and hold an official position.

I just wanted to make a comment on that. If I have understood the bill correctly, spreading the responsibility out is very important: responsibilities are to be spread among all people, all commissioners at the new Centre.

I have another question, this time for the chartered accountant. You talk about the services of insurance intermediaries. Can you give us some examples that could complement the bill, that could identify these intermediary services and that could make the bill more efficient in the fight against organized crime?

[English]

Mr. David McKee: Yes, I believe that question is properly for me. The concern was that the bill doesn't directly apply at this point to insurance agents, to insurance brokers, and I guess potentially to other financial intermediaries and other aspects of the financial services, in that in the absence of that... They're the ones on the front lines who would be most likely to have suspicious transactions come to their attention. Thus, if they aren't obligated to report, there are going to be suspicious events going on in the marketplace that don't get reported and should be reported.

Having the obligation just on the financial institution itself isn't going to get the job done, because those issues aren't going to necessarily surface to the attention of the head office of the financial organization.

[Translation]

Mr. Yvan Loubier: Thank you, Mr. Chairman.

The Chairman: Thank you, Mr. Loubier.

Mr. Cullen.

[English]

Mr. Roy Cullen (Etobicoke North, Lib.): Thank you, Mr. Chairman.

Thank you to all the presenters. I have one question for each of you, if I may.

Mr. Topp, you're probably aware that the bill provides for the exemption of certain reporting transactions. The centre would make a determination and, through regulation, certain routine transactions would be exempted. That's the process of consultation that's going on now.

I'm wondering if you have any advice on the types of transactions or the types of entities that should be exempt. You mentioned, for example, churches: if a church would come to a credit union and deposit an amount over the regulated amount, you were suggesting, I think, that we should exempt churches. Could you expand on that or maybe give us the flavour of the kinds of exemptions you would see as appropriate?

Mr. Brian Topp: You are quite correct that the bill opens the potential for an exemptions list, but the regulations heretofore and in some of our discussions with the department would suggest that there's some thought being put into not doing an exemptions list, that they're first going to see what comes in and then work on an exemptions list in the future.

We would prefer an approach whereby we would anticipate some of the obvious and egregious exemptions that are there. Probably the biggest volume is regular retail deposits in the retail sector. I gave the example of a big-box retailer or a restaurant. I throw out the church example. I don't know how many churches raise $10,000 in cash every fundraiser. Some of them do. A big cathedral would. That's captured in the act. It's obviously not the volume issue; the volume issue is in the business sector.

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It would seem clear that somewhere along the line pretty soon, unless the FTRAC is proposing to accumulate an extraordinary amount of utterly useless information and keep it forever, and keep the credit unions and other financial institutions generating enormous volumes of reporting that will never be used, we're going to need an exemption list that exempts regular deposits from retailers.

I threw out four examples that I think are good places to start: high cash volume retailers, high cash volume restaurants that are making regular deposits, farmers at harvest time who are engaged in routine transactions, and seasonal deposits from restaurants and bars, etc., that are foreseeable. That's a good place to start.

Mr. Roy Cullen: I take your point and I'm glad you raised it. Every time you do that, of course, it creates an opportunity to exploit openings in the system, but I take your point.

I'd like to refer a question now to Mr. Colby. You mentioned that the intent of the act is that it's only if accountants are involved in a money laundering activity. I think you make a good point that maybe we need to clarify that in the act. If an accountant in the conduct of a normal accounting engagement or audit engagement comes across something that looks suspicious, it would need to be reported. It would be an interesting idea, but I don't think it's workable. It would put accountants in a pretty tenuous position. I appreciate that comment.

You mentioned search and seizure. The section I'm familiar with is clause 62, with respect to accountants and professionals, which would be germane to accountants. It's only in relation to a part. If there's a suspicion that some entity that is meant to be reporting under part 1 isn't reporting, someone from the centre could go to that accountant's office, for example, and ask to see various records. My understanding is that they couldn't seize records, but they could make copies of information.

I suppose, being the devil's advocate, that if the bill says certain entities must report, there needs to be some way of establishing a way of acting on a suspicion that they aren't reporting. You mentioned seizure, and seizure does not apply to that section. That's the way I understand it. How would you suggest then that government ensure that there is compliance with part 1 of the act if you don't do that?

Mr. Everett Colby: Well, we actually gave this some thought, because there was an understanding that there does need to be some compliance measures. A suggestion is that, similar to the Income Tax Act, which most accountants in public practice are certainly accustomed to dealing with, a request be made in writing to provide whatever relevant information was used. That would provide a report or, if they had suspicion from some other source, they would be able to clearly identify to us what records they were seeking and could in a sense make a written request for that information.

This is so broadly defined that if they suspect I'm not reporting, they can just come and look at all of my records. It doesn't say it limits it just to those records that they have reasonable grounds to believe, due to information they're getting from some other source, I might not be reporting on. They could just decide to do spot audits to make sure that accountants are reporting in general, without necessarily looking at any specific company.

Mr. Roy Cullen: I'm not sure that's how it reads there or that's the intent, but I hear what you're saying.

Finally, Ms. Lawson, you mentioned that a five-year review of the act would be a beneficial thing. A colleague opposite, Mr. Abbott, talked about that as well.

In clause 72 of the bill it says:

72. Within five years after this section comes into force, the administration... [of it will] be reviewed by the committee of Parliament that may be designated

etc. Were you contemplating something else? Does this not do it for you?

Ms. Philippa Lawson: We were contemplating a perpetual five-year review. The similar clause in Bill C-6 states that the act shall be reviewed every five years after it comes into force.

Mr. Roy Cullen: I see. Thank you.

The Chair: Mr. Topp, did I hear you correctly? You wanted farmers exempted from the provision?

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Mr. Brian Topp: I'm not proposing a general exemption for all farmers in all their transactions. What I'm suggesting is that particularly larger, commercial farms, ones that are engaged in direct marketing, would be an example of a business that could have a regular cash business in excess of the franchise. For such a member, if they're making regular deposits of $10,000, $12,000, and $15,000 a month—

The Chair: Regardless of what they're growing?

Mr. Brian Topp: I'm just a simple banker, Mr. Chairman. Could you explain to me what you're alluding to?

The Chair: I was just trying to make a point.

Mr. Pillitteri.

Mr. Gary Pillitteri (Niagara Falls, Lib.): Thank you very much, Mr. Chairman. I thought you were going to lead right into me. I thought that was very appropriate.

Mr. Topp, maybe I can relate to what you said more than anyone else around this table, being a businessman. I do know the problems we have to go through sometimes. As it stands right now, anytime you make a deposit of over $10,000 in cash, you have to have that signature. I think that is ludicrous, to say the least, because all you have to do is make a deposit of $9,900 and you don't require a signature; you don't report it. The only thing it does for me is make me make two or three deposit slips. And sometimes for those people who only deposit, which they do—they deal with a lot of cash—it creates more paperwork more than anything else. I don't think that is really... because all of a sudden you are bunching together what you call a money laundering element with regular business people.

I think as we have evolved and moved on as a society, those numbers are not really that hard to come upon for some businesses, some restaurants, in just a day. Every day they do that type of business. Actually, instead of getting out of the businessman's hair, I think we're getting more into it.

When you talk about creating a list, and when we think that we have some 78,000 charitable organizations, I wonder how many different churches we have in there and if there might be a run on people trying to buy churches as an exemption so they will not be checked.

I'd rather not look into that. I'd rather look into finding some way in this bill, through people like yourself, through lending institutions and chartered accountants, to come up with methods and ideas so that instead of creating more work for that business person, and it's “all of a sudden I hear that maybe we should have an individual who has that signing authority”...

Let me put it this way, business people are coming to a point where we have to scale down in order to stay afloat. We don't have to create more jobs and more positions. We're trying to scale down in order to stay afloat because of the expenses we incur. I wonder how we could at this late stage make some amendments or corrections in this bill in order to accommodate legitimate business.

I think we should be looking toward prevention, rather than trying to look at boxes of individuals, what they do, and putting them into categories. I think we should be looking, maybe within our regular system, to see who could be laundering, rather than taking a look at individuals making deposits.

Let's be serious here. Anyone who is laundering money is not going to go and make a deposit of $10,000. That's stupidity to say the least. In laundering money there are many more ways... If I can say, heck, I'll make two deposits instead of one, surely that individual has many ways of getting around the banking system and legitimizing that money.

We have a world today that is open. Ladies and gentlemen, we're not looking at Canada by itself. When you buy through the Internet, when you're buying and selling in smaller amounts, you could be circling the globe and you could actually launder $10 million in 10 minutes.

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So I think what we've done here is just created a jungle of paperwork for legitimate business people. I don't know if you have any answer to it.

Mr. Brian Topp: Mr. Chairman, it's an interesting “is it not true” question, which gives me an opportunity to speak to a common theme in both that comment and the two questions I received earlier. Remember, Mr. Chairman, that the reporting requirement is governed not only by clause 9 of the bill but also by clause 7. According to the regulations, we are required by clause 9 to report every transaction over $10,000, unless we achieve an exemptions list, and we're also required by clause 7 to report any transaction that is in some way suspicious. So, Mr. Chairman, in your example, if a farmer is growing products that are unorthodox and are not approved by Her Majesty the Queen by right of Parliament, that's basically captured by clause 7. So a lot of the potential leakage you're concerned about in an exemptions list is still captured by clause 7 and the current practices of identifying suspicious transactions.

The point I'm making is that as we study how to go forward with the legislation—and this is essentially your point—we should study how we can get rid of egregiously and obviously inappropriate reporting that is simply going to generate a paper burden and unnecessary data, which is a tough proposition in the credit union system, some of which are quite small.

I offered two ways to do that. One is an exemptions list, which I think is the way that seems contemplated by the bill at the moment, although it's not clear there's going to be one. That raises some of the definitional issues I think you're getting at and what happens if we create loopholes here, although I'd argue they're captured by clause 7. As an alternative, I suggested a regime in which perhaps you could get a one-time registration for someone who's reporting regularly.

For an excellent wine grower in the south of Ontario who is doing $10,000 of business every two weeks and is depositing that in registered accounts, his credit union could register that transaction once, until it deviates in some way or until there's something else in the carefully crafted guidelines, which I'm sure we're going to see from FTRAC soon, that would raise a flag saying this is a suspicious transaction. Then on a going-forward basis we're not required to report every cash deposit by every restaurant and every retailer that's before us, but you're still capturing, hopefully, through the due diligence the bill so aggressively imposes on financial institutions most of the transactions you're really interested in.

The Chair: Doesn't it make sense that since financial institutions are the ones receiving a lot of money all the time, they should be doing that, or is it—

Mr. Brian Topp: I'm sorry, Mr. Chairman, I didn't hear you.

The Chair: It's not far-fetched that because you're the recipient of a lot of money and various types of deposits, the government would perhaps ask you to help with this...

Mr. Brian Topp: Mr. Chairman, we are happy to comply with this business. We are already cooperating with the RCMP and with the existing federal legislation. In no way am I saying that we don't want to assist in this issue.

What I'm drawing your eye to is that there may be an unintended consequence in the way the bill and the regulations are currently shaped. You're going to be forcing us to report to you a ton of information that is completely useless to the mission of the bill. That's the basic point. I believe it could be easily managed in such a way that we don't incur a totally unnecessary reporting burden while the government still gets all the data it needs.

The Chair: Your major point is that through exemptions we can achieve that.

Mr. Gary Pillitteri: He doesn't mean only that. What he means also is to have a list and in effect to register once a year, Mr. Chairman. That way, as a legitimate businessman, he doesn't have to report.

Mr. Brian Topp: There would be an exemption or a one-time report that was appropriately framed so that unusual deviations or other suspicious circumstances would raise the flag.

The Chair: Are there any further comments?

Mr. Gary Pillitteri: No, Mr. Chairman. I think it's much more complex, and I don't think we have the time. But I think a bit more work needs to be done on this.

The Chair: Mr. Boudreau.

Mr. Mark Boudreau: I think part of the problem is consistent with what we've seen with government legislation over the last little while when we're asked to respond to something. At no point did the department come to us and say, we have a problem. We've seen this in a number of issues, and it's concerning us in the sense of what the accountants are asked to do or not to do. They put something before us as opposed to saying, we have a money laundering problem. What do you propose? How could we deal with the issue? They were well on the drawing board when the legislation was coming down before we were even consulted on the issue, as opposed to starting from the basic premise: Is there a problem in Canada? Yes. If so, what do you want to do about it? How can the banks, ourselves, or anybody else who's interested in this issue...

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We all agree that we want to help the government fight the problem at the end of the day. One of the criticisms we have of the department is that they should come to us much sooner. As it is, they say, “Here it is, folks” at the end of the day; “Is this going to work or not work?”

Mr. Gary Pillitteri: Thank you.

The Chair: Point well taken, Mr. Boudreau.

Likewise when industries do have challenges or feel perhaps that money laundering is a problem in Canada, they could also approach the government and raise that particular issue.

[Translation]

Mr. Loubier.

Mr. Yvan Loubier: Mr. Topp, your Credit Union Central of Canada is required, or rather it can, at its discretion, provide reports on suspicious transactions. It is done on a voluntary basis. Have you taken into account the number of voluntary declarations you have made? If yes, I would like some numbers on that.

Mr. Brian Topp: By way of an example, Mr. Loubier—I am not here to represent the Caisses Desjardins, but we can compare notes—I have seen that in the Desjardins system, which is much bigger than ours, the number of declarations is about 358 for the last two years: 141 in 1998 and 217 in 1999. So there are about 200 to 300 cases per year, under the current system where we are looking for truly suspicious transactions. But there is no doubt that the system towards which we are currently moving will benefit transactions that did not come out. There will be a substantial increase in the number of transactions reported.

Mr. Yvan Loubier: Do you have any idea what that represents in terms of an amount?

Mr. Brian Topp: No, but I could look that information up, Mr. Loubier.

Mr. Yvan Loubier: I think that would be important, because if there are no more declarations than that on a voluntary basis, when calculations show that 17 billion dollars in dirty money is laundered annually in Canada, there is a problem. I don't know your figures. You talked about an average of 140 transactions by Desjardins each year, and there were probably some by the other credit unions and banks.

Mr. Brian Topp: Something like that.

Mr. Yvan Loubier: That's it. It would be interesting to know how many there were in total each year and what amounts were involved. If there were a couple of hundred, that totalled one or two billion dollars, and 17 billion dollars in dirty money is laundered each year, we need measures that are much more...

Mr. Brian Topp: With that question, you are assuming that the billions of dollars are being laundered by the banking system. It is not at all clear that that is the case. There is already a voluntary reporting system for all banks, caisses populaires and credit unions. There are already two acts that govern these transactions and it is not at all clear that the billions of dollars are being laundered by the banking system.

Mr. Yvan Loubier: I am not just talking about the banking system; I am also talking about insurance institutions, financial intermediaries, etc. These declarations must be centralized somewhere. I would be curious to know how many there were and how much they represented. It would be interesting to be able to compare that to the estimates with respect to dirty money that is laundered each year.

I do not think that Mr. Pillitteri's reference to the $10,000 limit is a problem. If the same person makes four or forty $9,900 deposits each week, as you pointed out earlier, they become suspicious transactions that must be identified under clause 7 of the bill. The $10,000 amount is a limit. I imagine that there has to be one somewhere. If I remember correctly, $10,000 is the average amount for drug dealers in the markets in Montreal and Toronto. It is the average weekly amount. Maybe that is why $10,000 was chosen, but I have no idea.

Mr. Brian Topp: What is interesting in his remarks is that he reminds us how easy it could be to play with the rules. The very rules of the game that are in clause 9...

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Mr. Yvan Loubier: It's a question of judgment. As I said earlier, if the same person deposits $9,900 every day in the same account, it is suspicious. I will give you the example of a criminal biker gang leader who has a huge 20-room mansion, no known employment and a huge bank account. In that case, it's a question of logic, of judgment.

Mr. Brian Topp: It's a question of judgment.

Mr. Yvan Loubier: Yes.

Mr. Brian Topp: You should not be putting in place new rules that are too strict if you cannot come up with a way to manage them, because in the end it always boils down to a question of judgment. In the end, claws 7 and 9 contain the true meaning of the Act. We cannot make a huge investment in clause 9, which would provide us with a huge amount of data that is not useful. In the end, what is at the heart of the bill is always having well-trained staff who understand their obligations under the Act and who use their judgment.

Mr. Yvan Loubier: That would mean that for you clause 7, using judgment and reasonable grounds to suspect would be enough, without the $10,000 limit.

Mr. Brian Topp: Look, it is...

Mr. Yvan Loubier: It holds accountable any person who chooses to let a transaction go through even if he had reasonable doubts as to the origin of the funds.

Mr. Brian Topp: I think we understand the serious nature of the legislation and know that the adoption of this bill will require considerable training for staff in the banking system and in the credit unions throughout Canada to ensure compliance with the Act. We understand why the government is introducing this legislation. The consequences are serious, but at the very least we want to avoid wasting our time. That is more or less our position.

Mr. Yvan Loubier: Thank you.

[English]

The Chair: Mr. Gallaway.

Mr. Roger Gallaway (Sarnia—Lambton, Lib.): I just have one question. I know our witnesses here have already studied this.

To Mr. Topp—and maybe someone else would like to respond—this bill creates a new agency that purports to do a lot of things. In your opinion, will it work?

Mr. Brian Topp: I don't consider myself qualified to judge.

Mr. Roger Gallaway: You should be in politics.

Would anyone else care to comment?

The Chair: He means run in Sarnia.

Mr. Roger Gallaway: We welcome all newcomers.

The Chair: Are there any further comments?

Mr. McKee.

Mr. David McKee: I'd likely give the same comment as Mr. Topp. I think that's an issue for both the officials and the international forces that are at play around this legislation. They're driving some of the obligations that are being imposed on Canadians under this legislation.

Ms. Philippa Lawson: If I might just add, that's the point of the five-year review—to see if it's working.

The Chair: I have a very general question. There's no question there are challenges. Any bill of this nature will create some challenges for government or for individual Canadians, but on the whole, do you think it strikes the right balance between privacy, the administration of business, and individual liberty and freedom on the one side, and combatting the laundering of the proceeds of crime? Do you think it strikes a right balance, in general terms?

Mr. Topp.

Mr. Brian Topp: My first comment, Mr. Chair, is that in a way it's a little hard to judge. As one of my colleagues at the table here has said, it's an unusually vague bill that leaves an awful lot of its substance to regulation.

In a previous life I was involved in doing some of the legislative drafting in a provincial legislature. Our law clerk at that time would have had a hard time with this bill because it delegates so much of its substance to regulation. But maybe this is the new fashion in legislative drafting. I won't comment on that.

If the regulations are carefully crafted and, as my colleague, Ms. Lawson, says, crafted in a transparent manner, and if that is the way they're always going to be done, then potentially it could work fine, bearing in mind the smallest detail, like the one I flagged about ATMs, to the biggest picture of exactly what it is we're collecting here, how it's dealt with, and who uses it. If that's all appropriately tuned as the thing comes into force, potentially it could be fine.

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Mr. Loubier mentioned some of the pressures folks are potentially put under by criminals. A mandatory reporting regime, if it's carefully tuned and properly crafted, can be helpful in that way, in the sense that it can remove some element of discretion from the system and thus make the folks in financial industries a little less vulnerable to blackmail and pressure from criminals. In that sense, you could argue it's a step forward.

There are many potential troubles. There are some disturbing elements to the search and seizure provisions that were underlined by a colleague at the table. I return one last time to my obsession that it's an enormously wide net, as currently drafted.

I think, especially because the regulations are apparently being drafted concurrently and will be tabled concurrently, the coming into force will be very quick. I'd urge the committee, at a minimum, to flag some of the issues you've heard about today and you'll hear about in coming days from the department, and take a careful look at those regulations, because they will answer your question.

The Chair: Is there any further comment?

Mr. Colby.

Mr. Everett Colby: I have attended seminars given by police forces around the province of Ontario dealing with this issue, and from law enforcement's point of view, they are extremely happy about this because they do not perceive there being any great difficulty in obtaining information from this centre, which is supposedly going to be accumulated there. Understanding that it is one of the intents of the bill and there have been some safeguards provided within the bill for the release of that information, those limitations do not appear to be well communicated to law enforcement in general.

Additionally, the type of individual needed to staff this centre will have to be well trained in the art and science of detecting and coming up with reasonable grounds of what constitutes a criminal offence, such as money laundering. I hazard to guess that many of these individuals will likely come from law enforcement backgrounds.

From the point of view of privacy and balancing, one would question the propriety. We've seen other issues of tax departments releasing information inappropriately, and there may not be a balance in favour of the individual consumer in terms of privacy, considering who's going to be staffing the centre.

I have just two additional comments, slightly off topic.

Mr. Cullen, you spoke about seizure, and in clause 64, where it talks about privileged documents and how they seem to be limited from the search, it stipulates that only applies to privileged documents in a legal counsel's profession. In both my fraud investigations and certain tax matters I work with, I often have files in my premises that are subject to privilege because I'm acting on behalf of legal counsel.

There doesn't appear to be anything under these search provisions to protect privileged documents that may be in my possession. It only addresses those in the possession of legal counsel themselves.

We're certified general accountants, so as well as chartered accountants, we represent much of the accounting body in Canada, and we would be a good source to consult when trying to determine effective ways for reporting the activity that goes on through business.

Thank you.

The Chair: Do you also cooperate with the RCMP and other bodies in referring what you would consider to be...

Mr. Everett Colby: Are you asking if I'm in favour of cooperation?

The Chair: Yes.

Mr. Everett Colby: I'm in favour of fighting money laundering. My concerns stem more from when we may be on opposite sides. I have worked in conjunction with law enforcement agencies, and there has been no problem in sharing of information in that respect. It just depends on whether or not I'm defending somebody who has been accused of money laundering. I've faced potentially having to report information that came to my attention, in the defence of this client, to a centre that was then free to disclose it to law enforcement that was prosecuting him on the other side. So in that respect, I don't agree with the sharing that would come as a result of this.

The Chair: Okay.

Mr. Cullen.

Mr. Roy Cullen: This has been a good discussion.

With respect to the earlier point, Mr. Colby, about search, certainly the intent—and maybe it needs to be clearer—is that before an authorized person would come to an office to examine documents, there would be dialogue. The agency would try to get the information in a most cooperative way. It would be used as a last resort. Nonetheless, I hear what you're saying.

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Coming back to the other comment about the regulated amount, let's say it's $10,000. If someone were continually coming under that amount—you know, $9,900 repeatedly—that would under normal circumstances raise a flag of suspicious transactions. So the regulated amount is not the end of it. It's a guide. It's a mandatory reporting, but the agency would be required to look at suspicious transactions of any kind.

Mr. Brian Topp: That is precisely right: you can smurf. You can chop your money laundering amount into pieces, which is the point you were making, and get under the $10,000. Therefore it's a blunt instrument for capturing criminal transactions, but it will sure suck in a lot of legitimate ones. That's the basic problem.

The Chair: Mr. Cullen?

Mr. Roy Cullen: No, I'm here to listen.

Ms. Philippa Lawson: Can I just make one comment in response to your question, Mr. Chairman?

The new centre in this bill will be subject to the Privacy Act, which is a good thing, but we have real problems with the Privacy Act in its current form. It badly needs to be updated and strengthened. For example, if a consumer, an individual, is unnecessarily investigated and suffers some kind of harm or damage, there's no recourse, no redress. There's recourse to the privacy commissioner to investigate and make a report on it, but he has no binding powers. There's no consumer redress for privacy invasions.

The Chair: Are there any further questions? Seeing none, on behalf of the committee, I'd really like to express to you our sincerest gratitude. As I said earlier, you always try to strike the right balance. You've certainly given us a lot of food for thought, and we will certainly take into consideration everything you've raised, with the view of always trying to improve the bill.

Once again, thank you very much for your contribution.

The meeting is adjourned.