Archived - Departmental Performance Report 2015–2016 - Supplementary Information Tables

The Federal Sustainable Development Strategy (FSDS) 2013–16 presents the Government of Canada's sustainable development activities, as required by the Federal Sustainable Development Act. In keeping with the objectives of the Act to make environmental decision making more transparent and accountable to Parliament, the Department of Finance Canada (the Department) supports the implementation of the FSDS through the activities described in this supplementary information table.

This Departmental Sustainable Development Strategy presents the results for Theme I – Addressing Climate Change and Air Quality, Theme III – Protecting Nature and Canadians, and Theme IV – Shrinking the Environmental Footprint – Beginning with Government. The Department does not undertake any activities that support Theme II – Maintaining Water Quality and Availability.

The Department is not responsible for leading any targets for Themes I to III of the FSDS 2013–16.

Although the Department does not lead the implementation of any targets for Themes I to III, it does contribute to some targets under Themes I and III. The following implementation strategies related to goals and targets under Themes I and III are all elements of Sub-Program 1.1.1: Taxation (part of Program 1.1: Economic and Fiscal Policy Framework) of the Department's Program Alignment Architecture.

Theme I – Addressing Climate Change and Air Quality

The Department’s implementation strategies for Target 1.1: Climate Change Mitigation (relative to 2005 emission levels, reduce Canada's total greenhouse gas emissions by 17% by 2020) and Target 2.1: Outdoor Air Pollutants (improve outdoor air quality by ensuring compliance with new or amended regulated emission limits by 2020 and thus reducing emissions of air pollutants in support of Air Quality Management System objectives) are as follows:

Accelerated Capital Cost Allowance for Clean Energy Generation Equipment

Encourage businesses, through the accelerated capital cost allowance for clean energy generation equipment, to invest in specified equipment that can contribute to a reduction in harmful emissions and to diversification of the energy supply (Implementation Strategies 1.1.38 and 2.1.2).

An accelerated capital cost allowance (CCA) for income tax purposes is provided under CCA Class 43.2 (50% per year on a declining balance basis) for businesses that invest in clean energy generation and energy conservation equipment. Class 43.2 includes specified equipment that generates energy by using a renewable energy source (e.g., wind, solar and small hydro), using fuels from waste (e.g., landfill gas, wood waste and manure) or conserves energy by making efficient use of fossil fuels (e.g., high-efficiency cogeneration systems).

The provision of an accelerated CCA is an explicit exception to the general practice of setting CCA rates based on the useful life of assets. An accelerated CCA provides a financial benefit by deferring taxation. This incentive for investment is premised on the environmental benefits of low-emission or no-emission energy generation equipment and its ability to displace consumption of fossil fuels.

1. Relationship between the implementation strategies and the FSDS targets: To the extent that Class 43.2 encourages incremental investment in clean energy generation and energy conservation equipment, it has an indirect positive impact on the environment. It could contribute to a reduction in greenhouse gas emissions, pursuant to Target 1.1: Climate Change Mitigation, and to a reduction in air pollutants, pursuant to Target 2.1: Outdoor Air Pollutants.
2. Outline of the non-financial performance information: Providing a modest financial incentive for investment in clean energy generation and energy conservation equipment provides an incentive for businesses to invest in such equipment.

Public Transit Tax Credit

Provide tax relief to Canadians who use public transit regularly, and encourage individuals to make a sustained commitment to using public transit regularly to help reduce traffic congestion, air pollution and greenhouse gas emissions through the public transit tax credit (Implementation Strategies 1.1.20 and 2.1.5).

The public transit tax credit allows individuals to claim a non-refundable tax credit for the cost of monthly public transit passes or those passes of a longer duration, effective July 1, 2006. The credit was extended in Budget 2007 to electronic fare cards and weekly passes when used on an ongoing basis.

1. Relationship between the implementation strategies and the FSDS targets: As stated in Budget 2006, the objective of the public transit tax credit is to encourage individuals to make a sustained commitment to use public transit regularly, to help reduce traffic congestion in urban areas and to improve the environment. This measure is intended to contribute to a reduction in greenhouse gas emissions, pursuant to Target 1.1: Climate Change Mitigation, and to a reduction in air pollutants, pursuant to Target 2.1: Outdoor Air Pollutants.
2. Outline of the non-financial performance information: The public transit tax credit is intended to encourage individuals to make a sustained commitment to public transit use by providing a tax credit for the purchase cost of monthly public transit passes and passes of a longer duration, as well as electronic fare cards and weekly passes when used on an ongoing basis. The Department conducted an evaluation of the public transit tax credit in 2011. Evidence suggests that the demand for public transit is sensitive to a permanent price reduction, as well as other factors, and that the benefits of the public transit tax credit have been captured mainly by public transit users, as opposed to transit operators, through coincidental increases in public transit fares. The public transit tax credit evaluation was published in the 2011 edition of the Tax Expenditures and Evaluations report.

Green Levy

Impose a Green Levy on the most fuel-inefficient passenger vehicles available in Canada (Implementation Strategies 1.1.37 and 2.1.27).

The Green Levy applies to passenger vehicles with a weighted (55% city and 45% highway) fuel consumption rating of 13 litres or more per 100 kilometres and is imposed at rates ranging from $1,000 to $4,000. The Green Levy is payable by manufacturers or importers of new vehicles delivered after March 19, 2007, and by importers of used vehicles, if the used vehicle was originally put into service (in any jurisdiction) after March 19, 2007. The Canada Revenue Agency and the Canada Border Services Agency are responsible for the administration of the Green Levy and work with manufacturers and importers of vehicles to facilitate its application.

1. Relationship between the implementation strategies and the FSDS targets: The Green Levy aims to encourage clean, sustainable transportation choices by Canadians by discouraging the purchase of certain fuel-inefficient vehicles. This measure may be contributing to a reduction in greenhouse gas emissions, pursuant to Target 1.1: Climate Change Mitigation, and to a reduction in air pollutants, pursuant to Target 2.1: Outdoor Air Pollutants.
2. Outline of the non-financial performance information: The Green Levy aims to discourage the purchase of fuel-inefficient vehicles and to promote the development and deployment of cleaner transportation technologies.

Theme II – Maintaining Water Quality and Availability

The Department does not undertake any activities that support Theme II – Maintaining Water Quality and Availability.

Theme III – Protecting Nature and Canadians

The Department’s implementation strategies for Target 4.3: Terrestrial Ecosystems and Habitat Stewardship (contribute to the proposed national target so that by 2020, at least 17% of terrestrial areas and inland water are conserved through networks of protected areas and other effective area-based conservation measures) are as follows:

Ecological Gifts Program

Maintain the incentives for the protection of Canada's ecologically sensitive land, including habitat used by species at risk, through ongoing tax assistance for donations of ecologically sensitive land under the Ecological Gifts Program (Implementation Strategy 4.3.6).

Under the Ecological Gifts Program, Canadian landowners may donate ecologically sensitive land, or easements and covenants on such land, to conservation charities to ensure its preservation in perpetuity. Under this program, donors may benefit from the charitable donations tax credit (for individuals) or the charitable donations deduction (for corporations) on the full value of the gifts of ecologically sensitive land. Donations of ecologically sensitive land, or easements, covenants and servitudes on such land can be carried forward for tax purposes up to 10 years. In addition, capital gains that have accrued on the donated land are eligible for a complete exemption from capital gains tax.

To protect the public interest, Environment and Climate Change Canada is responsible for certifying:

• the eligibility of recipient charitable organizations;
• the ecological sensitivity of the donation; and
• the fair market value of the donation.

In addition, to ensure the perpetual protection of the donated land, the Income Tax Act imposes special tax liabilities for recipients of ecologically sensitive land if there are any changes in use without the prior authorization of Environment and Climate Change Canada.

1. Relationship between the implementation strategy and the FSDS targets: The Ecological Gifts Program is intended to help Canada's landowners and conservation groups in their habitat conservation and protection efforts. In particular, donations of ecologically sensitive land can contribute to the protection of non-park protected habitat, including habitat used by species at risk, pursuant to Target 4.3: Terrestrial Ecosystems and Habitat Stewardship.
2. Outline of the non-financial performance information: Although the decision to donate ecologically sensitive land is often motivated by non-financial factors, the significant income tax benefits provided through the Ecological Gifts Program provide an incentive to encourage further donations of ecologically sensitive land.

Target 7.2: Green Procurement

As of April 1, 2014, the Government of Canada will continue to take action to embed environmental considerations into public procurement, in accordance with the federal Policy on Green Procurement.

Scope and Context

Environmental considerations are embedded in the Department’s procurement activities. Goods are usually purchased through Public Services and Procurement Canada (PSPC) or Shared Services Canada (SSC) standing offers and supply arrangements that include environmental performance specifications. When contracting for services, procurement to pay processes from electronic solicitation and bidding, use of scanning technology to issue contracts, as well as electronic invoicing and payment by direct deposit are embedded in the process. Of all supplier payments, 90% are made via direct deposit.

Performance Measurement

Expected result

Environmentally responsible acquisition, use and disposal of goods and services.

Performance indicator

Performance level achieved

Departmental approach to further the implementation of the Policy on Green Procurement in place as of April 1, 2014.

Achieved as of April 1, 2014

Number and percentage of procurement and/or materiel management specialists who completed the Canada School of Public Service Green Procurement course (C215) or equivalent, in fiscal year 2015–16.

7

Maintained current level of 100%

Note: All departmental functional specialists in procurement and materiel management have completed the Green Procurement course.

Number and percentage of managers and functional heads of procurement and materiel whose performance evaluation includes support and contribution toward green procurement, in fiscal year 2015–16.

2

Maintained current level of 100%

Note: The Director and Team Leader of the Contracting and Procurement Division have performance objectives relating to green procurement activities.

Departmental green procurement target

By March 31, 2017, 90% of purchases of audiovisual equipment will include criteria to reduce the environmental impact associated with the production, acquisition, use and/or disposal of the equipment.

Scope: Audiovisual equipment (for example, projectors, headsets, digital signage and televisions) purchased by the Department through PSPC standing offers and supply arrangements that include environmental performance specifications is reported.

Context: Purchases totalled $18,896 in fiscal year 2015–16. Of this amount, $18,426 (98%) was audiovisual equipment purchased through standing offers or supply arrangements.

Performance indicator

Performance level achieved

Dollar value of audiovisual equipment purchased that meets the target objective relative to the total dollar value of all audiovisual equipment purchased.

98%

Achieved

Departmental green procurement target

By March 31, 2017, 90% of imaging hardware will include criteria to reduce the environmental impact associated with the production, acquisition, use and/or disposal of the equipment.

Scope: Imaging hardware (devices that provide scanning, copying and printing capability) purchased through PSPC standing offers that include environmental performance specifications is reported.

Context: The Department’s contract for a four-year lease of multi-functional devices (MFDs) was executed using the PSPC standing offer framework that includes environmental considerations. Additional MFDs were leased during fiscal year 2015–16. Total incremental cost incurred was $65,547. Of this amount, $58,829 (90%) was imaging hardware purchased or leased through standing offers or supply arrangements.

Performance indicator

Performance level achieved

Dollar value of imaging hardware acquisitions that meet the target objective relative to the total dollar value of all imaging hardware acquired.

90%

Achieved

Departmental green procurement target

By March 31, 2017, 90% of information technology (IT) hardware purchases will include criteria to reduce the environmental impact associated with the production, acquisition, use and/or disposal of the equipment.

Scope: IT hardware (desktop computers, laptops, tablets and peripherals) purchased through PSPC or SSC standing offers and supply arrangements that include environmental performance specifications is reported.

Context: Purchases totalled $302,498 in fiscal year 2015–16. Of this amount, $285,066 (94%) was for IT hardware purchased through standing offers or supply arrangements.

Performance indicator

Performance level achieved

Dollar value of IT hardware purchases that meet the target objective relative to the total dollar value of all purchases for IT hardware.

94%

Achieved

Departmental green procurement target

By March 31, 2017, 70% of office furniture purchases will include criteria to reduce the environmental impact associated with the production, acquisition, use and/or disposal of the furniture.

Scope: Furniture (chairs, cabinets, desks, workstations, soft seating and accessories such as monitor arms and keyboard trays) purchased by the Department through PSPC standing offers or supply arrangements that include environmental performance specifications is reported.

Context: Purchases totalled $635,189 in fiscal year 2015–16. Of this amount, $531,793 (84%) was for furniture purchased through standing offers or supply arrangements.

Performance indicator

Performance level achieved

Dollar value of office furniture purchases that meet the target objective relative to the total dollar value of all office furniture purchases.

84%

Achieved

Departmental green procurement target

By March 31, 2017, 95% of copy paper, commercial printing, and/or envelope purchases will have a minimum of 30% recycled content and be certified to a recognized environmental standard to reduce the environmental impact of production.

Scope: Copy paper and commercial printing.

Context: Copy paper and commercial printing purchases totalled $831,471 in fiscal year 2015–16. All copy paper and commercial printing was purchased through PSPC standing offers or supply arrangements and had 30% post-consumer recycled paper content.

The Department awarded commercial printing contracts for the production of both the 2015 and 2016 federal budgets. All other documents and reports produced during 2015–16 were available in electronic format only.

Performance indicator

Performance level achieved

Dollar value of copy paper, commercial printing and/or envelope purchases that meet the target objective relative to the total value of all copy paper, commercial printing and/or envelope purchases.

100%

Achieved

Implementation strategy element or best practice

Performance level achieved

7.2.1.5. Leverage common-use procurement instruments where available and feasible.

Achieved

Best Practice

7.2.3. Train acquisition cardholders on green procurement.

Context: The Department provides training to cardholders through information sessions and encourages them to incorporate green procurement considerations when making purchasing decisions.

Achieved

Target 7.3: Sustainable Workplace Operations

As of April 1, 2015, the Government of Canada will update and adopt policies and practices to improve the sustainability of its workplace operations.

Performance Measurement

Expected result

Departmental workplace operations have a reduced environmental impact.

Performance indicator

Performance level achieved

Approach to maintain or improve the sustainability of the departmental workplace in place as of March 31, 2015.

Achieved as of March 31, 2015

Context: The “Go E” Committee and the Enviro Committee supported the development and promotion of sustainable workplace operations. The use of recycling centres and composting programs is promoted, and a waste audit conducted during the 2015–16 fiscal year found that 59% (121 tons) of waste is diverted from landfill.

The Department maintained an 8:1 employee to printer ratio. The implementation of secure “swipe to print” technology and employee awareness activities have contributed to a 30% reduction in paper usage during fiscal year 2015–16. MFD defaults are set to duplex and black and white printing.

Digital display panels communicate tips and facts to employees to promote sustainable workplace operations. The Department’s Green Meeting Guide is posted on the Department’s intranet site, and electronic distribution of documents and use of laptops at meetings are actively promoted.

E-waste is reused, whenever possible, through the Computers for Schools program, or if necessary, disposed of in an environmentally conscious manner. A new e-waste disposal program has been implemented for the recycling of batteries and personal electronic devices.

Implementation strategy element or best practice

Performance level achieved

7.3.1.1. Engage employees in greening government operations practices.

Achieved

7.3.1.3. Maintain or improve existing approaches to sustainable workplace practices (printer ratios, paper usage, and green meetings).

Achieved

7.3.1.5. Select and operate IT and office equipment in a manner that reduces energy consumption and material usage.

Achieved

7.3.1.6. Dispose of e-waste in an environmentally sound and secure manner.

Achieved

The Department's vision for sustainable development —"economic and fiscal policy frameworks and decisions that promote equity and enhance the economic, social and environmental wellbeing of current and future generations"— is consistent with its mandate to foster a strong economy. The Department's most important contribution to sustainable development lies in the development of advice and policies that ensure fiscal sustainability, that contribute to a high standard of living for future generations, and that help build strong social foundations. Through its work relating to tax policy and financial sector policy and in its central agency role, the Department contributes to efforts to integrate sustainable development considerations into policy making. In addition, the Department sets an example for other organizations through a commitment to sustainable development in its operations.

The Department has established several goals supplementary to those included in the FSDS that focus on key areas where it can contribute to sustainable development. The Department has focused on making specific commitments in areas relating to its core mandate where it is the lead federal department or has a distinct role in areas where other departments have the policy lead. Each goal is accompanied by a set of objectives and commitments the Department has made toward meeting those objectives.

Objective 1a: Promote fiscal sustainability

Target 1a.1: Return to balanced budgets, and ensure the federal debt-to-GDP ratio is back on a downward path.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.2: Economic and Fiscal Policy, Planning, and Forecasting

Results: The budgetary balance showed a $1.9 billion surplus in 2014–15. For 2015–16, weaker economic conditions, reflecting the impact of sharp declines in crude oil prices, are expected to have led to a small deficit of $5.4 billion. The federal debt-to-GDP ratio is expected to be 31.2% in 2015–16, which would be lower than its recent 2012–13 peak of 33.3%.

The Department will present an update of its analysis of long-term fiscal sustainability in the fall.

Objective 1b: Monitor long-run economic and fiscal issues and prospects.

Target 1b.1: Understand the long-run economic and fiscal implications of ongoing domestic and global developments.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.2: Economic and Fiscal Policy, Planning, and Forecasting

Results: The Department continued to monitor regularly and forecast economic and fiscal performance both in Canada and other countries; to conduct private sector surveys of the Canadian economic outlook; and to undertake analytical research on a range of topics related to the performance of the Canadian economy, the standard of living, productivity and the challenges associated with population aging.

Target 1b.2: Show leadership in discussions on the global economy and promote sustainable growth around the world.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.6: International Trade and Finance

Results: Through the Department, Canada continued to co-chair the Working Group on the G20 Framework for Strong, Sustainable, and Balanced Growth, an international leadership role it has shared with India since 2009. Under the 2015 Turkish and 2016 Chinese G20 presidencies, Canada led discussions at the G20 on how to support short- and medium-term economic growth using both macroeconomic and structural policy tools.

As part of Canada’s G20 commitments, the Department prepared an Adjusted Growth Strategy, which included the key measures from Budget 2015. This strategy was finalized in preparation for the 2015 G20 Leaders’ Summit in Antalya, Turkey.

Objective 1c: Develop and support policies and measures that promote the long-run sustainability of Canada’s economy.

Target 1c.1: Provide analysis and advice to the Minister in support of a tax system that raises revenues in an economically efficient, fair and simple manner that is conducive to economic growth and improved standards of living.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.1: Taxation

Results: The Department provided analysis and advice to support the introduction of tax measures that contributed to the government's agenda to support economic growth and an improved standard of living. This included measures that, for example:

• supported families through tax relief and increased benefits, for example, through a reduction in the second personal income tax rate and the introduction of the Canada Child Benefit;
• committed to review tax expenditures with a view to eliminating poorly targeted and inefficient tax measures; and
• improved the integrity of the tax system and protected the government’s revenue base by providing funds to the Canada Revenue Agency to crack down on tax evasion and to combat tax avoidance.

The Department contributed to the signing of tax information exchange agreements (TIEAs) with other countries to fight international tax evasion. During 2015–16, protocols to update tax treaties with New Zealand and Spain came into force; a tax arrangement between the Canadian Trade Office in Taipei and the Taipei Economic and Cultural Office in Canada was signed; and a TIEA with the Cook Islands was signed.

In addition, the Department released the 2016 edition of the Tax Expenditures and Evaluations report. The report provides estimates and projections of tax expenditures related to personal and corporate income taxes and the Goods and Services Tax (GST). The report also includes an evaluation of the working income tax benefit and an evaluation of the response of individuals to changes in the price of charitable donations.

Target 1c.2: Support financial stability and maintain the safety and soundness of the financial system.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.5: Financial Sector Policy

Results: The Department implemented a number of measures to promote a stable, efficient and competitive financial sector and to ensure that domestic financial markets function well.

The Department made significant progress in a number of priority financial sector areas, including support of progress internationally and domestically on implementing G20 commitments related to financial stability—notably, ending too-big-to-fail, improving over-the-counter derivative clearing, and building resilient financial institutions.

The Department supported the Government of Canada in the development of framework legislation for a “bail-in” regime. The bail-in regime will protect Canadian taxpayers in the unlikely event of large bank failure and will reinforce that bank shareholders and creditors, not taxpayers, are responsible for the bank’s risks. The regime will allow authorities to convert certain debt of a failing systemically important bank into common shares to recapitalize the bank and allow it to remain open and operating. The Department continued to advance the design of the regime in preparation for the introduction of regulations and guidelines necessary for the full implementation of the regime.

The Department conducted high-quality research and analysis and evaluated policy proposals related to supporting financial stability through containing housing-related risks and vulnerabilities, and rebalancing government support for housing financing to improve market discipline and reduce taxpayer exposure. The minimum down payment for insured mortgages was raised for properties above $500,000, and guarantee fees for Canada Mortgage and Housing Corporation (CMHC) securitization programs were increased. Moreover, final regulatory amendments were published to limit the extension of portfolio insurance through substitution of mortgages in insured pools, tie the use of portfolio insurance to CMHC securitization vehicles, and prohibit the use of government-backed insured mortgages as collateral in securitization vehicles not sponsored by CMHC.

The Department also advanced the development of measures to support the growth of smaller financial institutions. The Department announced its intention to implement legislative measures to provide targeted protection against transitional risks and to facilitate a smooth entry process for provincial credit unions continuing to the federal framework. These measures were informed by broad sector engagement on transitional challenges, including by issuing a targeted consultation paper.

The Government of Canada announced its intention to modernize the financial consumer protection framework by clarifying and enhancing consumer protection through a new chapter of the Bank Act. This new chapter will create a comprehensive, consolidated framework and include targeted and more flexible consumer protection rules to better respond to Canadians’ changing needs.

In April 2015, the Minister of Finance announced enhancements to the Code of Conduct for the Credit and Debit Card Industry. These amendments, which were developed by the Department in consultation with the industry, strengthened the Code by addressing unfair business practices and improving transparency for merchants and consumers. Amendments were also made to reflect the evolving nature of the payments landscape and address specific issues associated with the emergence of mobile payments. To further protect users of retail payment services and foster innovation in the payment sector, the Department launched public consultations in April 2015 on a potential oversight framework for national retail payment systems.

The governments of British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Yukon and Canada are working to establish the Cooperative Capital Markets Regulatory System. The Department supported the Government of Canada’s efforts to establish the Cooperative System. On July 24, 2015, the participating jurisdictions announced the selection of Mr. Bill Black as the first chair of the initial board of the proposed Capital Markets Regulatory Authority. On August 25, 2015, the participating jurisdictions released draft provincial-territorial capital markets legislation and draft initial regulations for public comment. In Budget 2016, the Government of Canada announced its intention to release a revised draft of the proposed federal Capital Markets Stability Act in summer 2016.

Objective 2a: Ensure stable and predictable funding for health and social programs.

Target 2a.1: Provide timely and accurate payment of Canada Health Transfer (CHT) and Canada Social Transfer (CST) amounts.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.4: Federal-Provincial Relations and Social Policy

Results: The Department continued to provide timely and accurate payments of CHT and CST amounts to provinces and territories.

Communications activities continued to focus on improving Canadians’ understanding of the programs.

Objective 2b: Reduce fiscal disparities through Equalization and Territorial Formula Financing programs.

Target 2b.1: Address fiscal disparities with timely and accurate payment of Equalization and Territorial Formula Financing (TFF) transfer amounts.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.4: Federal-Provincial Relations and Social Policy

Results: The Department continued to provide timely and accurate payments of Equalization amounts to Equalization-receiving provinces and TFF amounts to territories.

In response to demands submitted under the Stabilization program, for fiscal year 2015–16, by the governments of Alberta and Newfoundland and Labrador, the Department provided advance payments of $251.4 million to Alberta and $31.7 million to Newfoundland and Labrador in February and March 2016, respectively.

Objective 2c: Ensure the sustainability of the retirement income system.

Target 2c.1: Start work on the 2013–2015 Canada Pension Plan (CPP) Triennial Review (to be completed by 2015).

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.4: Federal-Provincial Relations and Social Policy

Results: Federal-Provincial-Territorial Ministers of Finance, the joint stewards of the CPP, are required to review the CPP every three years to ensure that it remains financially sustainable, and to determine whether any changes are required. In December 2015, Federal-Provincial-Territorial Ministers of Finance agreed to conclude the 2013–2015 CPP Triennial Review with no changes to the CPP. The 26th Actuarial Report confirmed that the CPP is sustainable at the current legislated contribution rate of 9.9% of contributory earnings.

Target 2c.2: Continue to work with provinces and territories to identify ways to help Canadians save more effectively for retirement.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.4: Federal-Provincial Relations and Social Policy
  • Sub-Program 1.1.5: Financial Sector Policy

Results: In December 2015, Federal-Provincial-Territorial Ministers of Finance agreed to participate in discussions on an enhancement of the CPP, with the intention of reaching a collective decision by the end of 2016. The Department collaborated with the provinces and territories to conduct an analysis of the implications of CPP enhancement.

Supported by the Department, the Government released the National Strategy for Financial Literacy – Count Me In, Canada on June 9, 2015. The strategy aims to lead to concrete and incremental success in improving the financial literacy of Canadians, helping consumers to be better prepared to make effective financial decisions, including for retirement planning. The Financial Consumer Agency of Canada is responsible for implementation of this strategy, including working with provinces and territories.

The Department continued to work with the governments of British Columbia, Alberta, Saskatchewan, Ontario, Quebec and Nova Scotia on an agreement to streamline the regulatory oversight of Pooled Registered Pension Plans (PRPPs) that will help make a new retirement savings option available to the roughly 60% of Canadians who do not have access to a workplace pension plan. A draft proposed multilateral agreement on PRPPs was released for public comment by the Department in July 2015.

Objective 3a: Evaluate the potential for the use of economic instruments as a policy tool for addressing environmental issues.

Target 3a.1: Evaluate potential changes to the tax system that could contribute to the government’s environmental objectives, including tax proposals received from stakeholders.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.1: Taxation

Results: The Department conducted research and analysis and evaluated policy proposals concerning environment-related tax measures in consultation with other government departments and stakeholders, including taxpayers, industry associations and environmental organizations.

Budget 2016 introduced the following measures:

• expansion of the accelerated capital cost allowance under Classes 43.1 and 43.2 to include certain electric vehicle charging stations and an expanded range of electrical energy storage equipment; and
• specific income tax rules to clarify the income tax treatment of emissions allowances and ensure the appropriate tax treatment of transactions under emissions trading regimes.

Objective 3b: Increased knowledge and awareness of environmental and broader sustainable development issues within the department.

Target 3b.1: Organize at least one speaker annually on an issue related to sustainable development.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.3: Economic Development Policy

Results: Departmental employees attended lectures as part of the Department's regular Speaker Series.

The Department hosted Enviro Fair, an annual event to celebrate Canadian Environment Week, which saw a number of environment-themed kiosks set up in the lobby of 90 Elgin Street. Exhibitors included EnviroCentre, Hydro Ottawa, the City of Ottawa, Tree Canada, VRTUCAR and OC Transpo. This event promoted awareness of environmental initiatives and consumer products.

Target 3b.2: Conduct research and analysis on environmental and natural resource issues.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.3: Economic Development Policy

Results: The Department continued efforts to improve its environmental and natural resource knowledge base by conducting research and analysis.

Objective 3c: Effective implementation of the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals.

Target 3c.1: Organize an information session for Department employees on Strategic Environmental Assessment (SEA).

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.3: Economic Development Policy

Results: The Department held its annual training session on SEAs. Presentations were given by officials from the Department and the Canadian Environmental Assessment Agency.

Objective 3d: Support implementation of Canada's international financing commitment under the Copenhagen Accord.

Target 3d.1: Manage a $350 million climate change-related initiative through the International Finance Corporation.

Link to the Organization’s Programs:

• Program 1.1: Economic and Fiscal Policy Framework
  • Sub-Program 1.1.6: International Trade and Finance

Results: The Department worked with the International Finance Corporation (IFC) to implement the IFC-Canada Climate Change Program. The program promotes private sector financing of clean energy projects through the use of concessional funds to catalyze investments in renewable low-carbon technologies. As of March 2016, the program had funded 16 investment projects and 21 advisory projects. The investment projects received US$200 million in program funds that have leveraged US$415 million from IFC’s core funding and US$749 million from other sources.

In addition to its concessional finance portfolio, the program committed US$76.5 million to the IFC Catalyst Fund in January 2013. The IFC Catalyst Fund is a fund of funds managed by the IFC Asset Management Company to provide growth capital to companies whose business activities contribute to addressing climate change. The Catalyst Fund closed its fundraising at $US417.75 million from 8 investors (including Canada) and, as of March 2016, had made commitments to 10 investee funds.

The Department continued to report on this initiative through existing Government of Canada reporting on Official Development Assistance, International Climate Change efforts, and the operations of the Bretton Woods and Related Agreements Act.

The Department is the Government of Canada's primary source of analysis and advice on the broad economic and financial affairs of Canada. In addition to preparing the budget, the Department plays an important role in the development and implementation of government policy. As a central agency, the Department provides analysis and advice on the economic merit and fiscal implications of policy and program proposals developed by other government departments. In its central agency capacity, departmental officials serve as members of a broader team of federal officials that review options for, and the implications of, proposals that are presented to Cabinet. Policy development also takes place within the Department on those issues and areas of responsibility that fall within the Department's own mandate, including tax and tariff legislation, major federal transfers to provinces and territories, the legislative and regulatory framework for the financial sector, and representing Canada within international financial institutions.

As a policy-oriented department, the Department has limited direct involvement in delivering programs and services to Canadians. Nevertheless, the Department has a clear role to play in contributing to the government's sustainable development efforts. Sustainable development requires the long-term sustainability of the economy, social programs, the environment and natural resources. This requirement is consistent with the basic principle of sustainability as set out in the Federal Sustainable Development Act. Although the Department's mandate is most evidently linked to the economic and social pillars of sustainable development, the Department continuously strives to recognize the implications of its analysis and advice on all aspects of sustainable development and to take into account the linkages between economic, social and environmental sustainability. In some cases, economic, social and environmental goals can be advanced together. In other cases, trade-offs are needed, but with informed decision making and choices that reflect careful deliberation.

Economic growth is an important aim of sustainable development because it contributes to a high quality of life for Canadians, provides the fiscal capacity for governments to address environmental and social issues, and ensures that the Canadian economy remains strong in the face of long-term challenges, such as an aging population, the need to improve productivity, and globalization. For example, an aging population will bring future economic and fiscal challenges and put downward pressure on growth in living standards. By taking action now to ensure long-run fiscal sustainability and by identifying effective policies that encourage investment in the drivers of economic growth, such as human capital, physical capital and innovation, the government can help to ensure a high standard of living for future generations. The Department addresses this challenge through responsible fiscal management, economic policy advice, sound framework policies, such as those related to taxation and the financial sector, and ongoing analysis of Canada's current and long-run economic and fiscal position.

The Department believes that safe, healthy and caring communities that provide all citizens with equal access to opportunities are vital to the creation of a strong, competitive, vibrant and sustainable economy and society. Sustainability in social policy is achieved by working with partners in other departments to identify policies that support investments in people and their communities; working in cooperation and collaboration with other levels of government, which often have the primary responsibility for these policy areas, to ensure policy consistency and, where appropriate, stable and predictable funding; and developing specific policies that support this goal, such as tax and financial sector policies.

The Department's sustainable development champion in the Economic Development and Corporate Finance Branch is responsible for coordinating activities and reporting on departmental contributions to the FSDS and sustainable development more broadly.

The Resources, Energy and Environment Section of the Economic Development and Corporate Finance Branch, under the general direction of the Department's sustainable development champion, coordinates departmental sustainable development management, policy and activities. The main coordination vehicle is the Sustainable Development Working Group (SDWG), which is made up of officials from all branches and is chaired by the Chief of the Resources, Energy and Environment Section. The SDWG is responsible for coordinating the implementation of commitments related to sustainable development within the various branches of the Department, and contributes to reporting on plans and progress related to these commitments.

Environment and Climate Change Canada's Sustainable Development Office is responsible for preparing government-wide FSDS Progress Reports at least once every three years. The first report was completed in April 2011 and tabled in Parliament in June 2011; a second report was tabled in February 2013; and a third report was tabled in February 2016. These reports offer an opportunity to assess progress in implementing the FSDS, to re-evaluate FSDS goals and targets, and to benefit from lessons learned. The Department contributes to government-wide progress reporting through its participation in the FSDS Assistant Deputy Ministers Committee and the Director Generals Committee, which are co-chaired by Environment and Climate Change Canada and Public Services and Procurement Canada.

The Department evaluates its own contribution to sustainable development, including activities and initiatives supplementary to those captured in the FSDS, as part of the annual Report on Plans and Priorities (RPP) and Departmental Performance Report (DPR) processes.

During the 2015–16 reporting cycle, the Department considered the environmental effects of initiatives subject to the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, as part of its decision-making processes. The Department tracks the number of preliminary scans and full Strategic Environmental Assessments (SEAs) that it completes and has committed to report this information each year in its Departmental Performance Report. In 2015–16, a total of 137 preliminary scans and 2 full SEAs were conducted. Additional information on the results of SEAs is available on the Department's public statements website.

• Payments to the International Development Association
• Fiscal Equalization (Part I—Federal-Provincial Fiscal Arrangements Act)
• Territorial Formula Financing (Part I.1—Federal-Provincial Fiscal Arrangements Act)
• Canada Health Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)
• Canada Social Transfer (Part V.1—Federal-Provincial Fiscal Arrangements Act)
• Statutory Subsidies (Constitution Act, 1867; Constitution Act, 1982; and other statutory authorities)
• Youth Allowances Recovery (Federal-Provincial Fiscal Revision Act, 1964)
• Alternative Payments for Standing Programs (Part VI—Federal-Provincial Fiscal Arrangements Act)
• Debt Payments on Behalf of Poor Countries to International Organizations Pursuant to section 18(1) of the Economic Recovery Act (stimulus)
• Additional Fiscal Equalization to Nova Scotia (Part I—Federal-Provincial Fiscal Arrangements Act)
• Additional Fiscal Equalization Offset Payment to Nova Scotia (Nova Scotia and Newfoundland and Labrador Additional Fiscal Equalization Offset Payments Act)
• Fiscal Stabilization (Part II—Federal-Provincial Fiscal Arrangements Act)
• Payments to Provinces Regarding Sales Tax Harmonization (Part III.1—Federal-Provincial Fiscal Arrangements Act)
• Incentive for Provinces to Eliminate Taxes on Capital (Part IV—Federal-Provincial Fiscal Arrangements Act)

Name of horizontal initiative: Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime

Name(s) of lead department(s): Department of Finance Canada

Federal partner organization(s): Canada’s AML/ATF Regime is a horizontal initiative comprising both funded and non-funded partners. The funded partners are the Department of Finance Canada, the Department of Justice Canada, the Public Prosecution Service of Canada (PPSC), the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), the Canada Border Services Agency (CBSA), the Canada Revenue Agency (CRA), the Canadian Security Intelligence Service, and the Royal Canadian Mounted Police (RCMP). The non-funded partners are Public Safety Canada, the Office of the Superintendent of Financial Institutions Canada, and Global Affairs Canada.

Non-federal and non-governmental partner(s): Not applicable

Start date of the horizontal initiative: June 2000

End date of the horizontal initiative: Ongoing

Total federal funding allocated (start to end date) (dollars)* ¹: 879,138,358

Funding contributed by non-federal and non-governmental partners (dollars): Not applicable

Description of the horizontal initiative: Canada’s AML/ATF Regime was formally established in 2000 as the National Initiative to Combat Money Laundering (NICML), as part of the government’s ongoing effort to combat money laundering in Canada. Legislation adopted that year, the Proceeds of Crime (Money Laundering) Act, created a mandatory reporting system for suspicious financial transactions, large cross-border currency transfers, and certain prescribed transactions. The legislation also established FINTRAC to collect and analyze these financial transaction reports and to disclose pertinent information to law enforcement and intelligence agencies. In December 2001, the Proceeds of Crime (Money Laundering) Act was amended to include measures to fight terrorist financing and was renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). The NICML was expanded and its name was formally changed to Canada’s Anti-Money Laundering and Anti-Terrorist Financing Regime.

The Regime is continually reviewed to ensure that it remains effective, addresses emerging risks, and maintains Canada’s international leadership in the fight against money laundering and terrorist financing. Reviews are informed by various evaluations, consultations with industry, assessments of money laundering and terrorist financing risks, as well as international considerations, including the activities of the Financial Action Task Force (FATF) and the actions of G7 partners.

As a result of reviews, over the years, changes were made to the PCMLTFA and Canada’s AML/ATF Regime. The most significant changes were made following the Parliamentary Reviews of 2005–06 and 2012–13.

Shared outcome(s): To detect and deter money laundering and the financing of terrorist activities and to facilitate the investigation and prosecution of money laundering and terrorist financing offences.

Governance structures: Canada’s AML/ATF Regime is a horizontal initiative comprising 11 federal partner organizations, coordinated by the Department of Finance Canada.

An interdepartmental steering committee, led by senior officials and consisting of all partners, provides input and advice on AML/ATF policy. In addition, general advice on Canada’s AML/ATF Regime is provided by an Advisory Committee on Money Laundering and Terrorist Financing, a broad-based advisory group composed of public and private sector representatives.

Department of Finance Canada: The Department pre-published a number of regulatory amendments for stakeholder consultation and feedback. The measures strengthened customer due diligence standards; closed gaps in Canada’s AML/ATF Regime; improved compliance, monitoring and enforcement; strengthened information sharing in the Regime; and reduced the reporting burden on reporting entities.

The Department, in cooperation with Regime partners, also led the preparation and on-site assessment of the FATF mutual evaluation of Canada’s AML/ATF Regime.

The Department of Finance Canada continued to actively participate in various international initiatives of the FATF, the G7 and the G20 to combat terrorist financing, and participated in the Counter-ISIL Finance Group.

FINTRAC: FINTRAC’s actionable financial intelligence plays an important role in helping to combat money laundering, terrorism financing and other threats to the security of Canada.

In 2015–16, FINTRAC’s financial intelligence was used by police, law enforcement and national security regime partners in hundreds of money laundering and terrorism financing investigations to provide new information previously unknown to partners and to confirm existing information and expand the scope of a wide variety of criminal investigations where the origins of the suspected criminal proceeds were linked to drug offences, fraud, tax evasion, customs and excise offences, corruption, human smuggling and trafficking, and other criminal offences. FINTRAC’s case disclosures were also used by law enforcement to prepare affidavits to obtain search warrants and production orders in pursuit of criminal charges.

FINTRAC dedicated significant effort to outreach activities to inform reporting entities about reporting requirements and the latest trends in money laundering and terrorism financing. A key area of focus was the reporting of suspicious transactions, given its importance in the analytical process and the production of actionable financial intelligence for law enforcement and national security agencies.

As a result of these efforts and an increased commitment from reporting entities, suspicious transaction reporting increased by 24% in 2015–16 and by 63% over the past five years. The comprehensiveness of the reports submitted has also improved year over year, as observed by FINTRAC and the recipients of its case disclosures.

RCMP: In 2016, the RCMP developed a comprehensive Anti-Money Laundering Strategy, which assesses the ability to investigate and successfully disrupt money laundering activities and highlights key areas where greater focus is needed (e.g., training, legislation and cooperation with stakeholders). Efforts to implement the strategy are underway.

CRA: Compliance Programs Branch: Because of a higher than projected number of referrals, the CRA completed 93 audits (as compared with a forecast of 70) based on information contained in FINTRAC disclosures, with total federal income taxes reassessed in the amount of $25,285,652 (as compared with a forecast of $7 million). Furthermore, the larger number of audits resulted in higher than projected expenditures for 2015–16.

CRA: Charities – Public Safety and Anti-Terrorism : With respect to its ATF responsibilities, the CRA’s Charities Directorate completed 1 audit that resulted in the revocation of registered charitable status, and worked on 12 active audits. In addition, it examined 12 applications for charitable status that resulted in the registration of two charities and the abandonment of three applications, the withdrawal of six, and the denial of one.

Furthermore, a representative of the Charities Directorate provided subject-matter expertise and acted as an assessor in support of the 2015 FATF mutual evaluation of Singapore. The Charities Directorate also provided subject-matter expertise at a regional workshop coordinated by the United Nations Counter-Terrorism Committee Executive Directorate (UNCTED), in Dakar, Senegal; at a regional workshop coordinated by the Organization for Security and Co-operation in Europe and UNCTED, in Sarajevo, Bosnia and Herzegovina; and at a regional workshop coordinated by the U.S. State Department, in Bahrain.

PPSC: The PPSC dealt with 7,206 new AML/ATF Regime-related charges: 7,145 were related to the possession of proceeds of crime; 58 were related to money laundering under the Criminal Code, and 3 were related to money laundering under the PCMLTFA.

FINTRAC: In the “Performance Information” table, the amounts under “Total allocation” and “Planned spending” differ from the amounts presented in the 2015–16 Report on Plans and Priorities. As a result of changes to FINTRAC’s funding authorities, they now reflect additional funding received through Supplementary Estimates for approved items (e.g., funding to modernize FINTRAC’s analytics system, and funding to disclose financial intelligence to provincial securities regulators).

PPSC: Time recorded against litigation files is file-specific rather than initiative- or charge-specific. Because charges relating to an accused on a file are dealt with as part of the prosecution of all the charges against the accused, or against all of the accused, it is not possible to attribute a precise level of effort (i.e., number of hours) dedicated to the AML/ATF component of any file. In general, the time entered on each file overestimates the actual level of effort focused on AML/ATF activities. In addition, the number of charges is not a direct reflection of the effort required, as cases can vary widely in complexity and effort required. For example, although high-complexity drug prosecution files accounted for 2.4% of the total number of drug files in 2015–16, they required 30.1% of the drug-related offence litigation time of PPSC prosecutors.

Results achieved by non-federal and non-governmental partners: Not applicable

Contact information:
Ian Wright
Chief, Financial Crimes – Domestic Section
Phone: 613-369-3853

The Department of Finance Canada will continue its effective oversight of Canada’s AML/ATF Regime. The Department will also focus on the following areas:

• Continuing to lead the development of regulatory amendments to strengthen Canada’s AML/ATF Regime;
• Leading and coordinating input to the FATF peer review of Canada through the interdepartmental Mutual Evaluation of Canada Working Group;
• Completing and implementing Canada’s risk assessment for money laundering and terrorist financing;
• As the head of the Canadian delegation, actively participating as a member of the FATF and other regional groups. Activities involve contributing to the country review process under the fourth round of assessment and to key international policy development initiatives, including collaborating with key allies, such as the G7; and
• Continuing to participate in interdepartmental and horizontal initiatives related to the mandates of Regime partners.

The Department of Finance Canada continued to support the Regime through coordination activities and AML/ATF policy development. The Department of Finance Canada:

• Developed policy that supports the government’s commitment to strengthen Canada’s AML/ATF Regime and that improves Canada’s compliance with international standards, while minimizing the reporting burden on reporting entities. For example, a package of regulatory amendments to the PCMLTFA was pre-published for consultation with, and feedback from, stakeholders and the public;
• Launched a new Advisory Committee on Money Laundering and Terrorist Funding. This newly formed committee replaces the Public/Private Sector Advisory Committee and brings together representatives from the private sector and government to advise the government on AML/ATF policy development;
• Led ongoing interdepartmental initiatives, including the National Risk Assessment Committee and the Assistant Deputy Minister Committee on Money Laundering and Terrorist Financing;
• Led the mutual evaluation of Canada under the fourth round of the FATF evaluation process by:
  • Coordinating regime-wide initiatives with Regime partners to complete Canada’s submissions on technical compliance and effectiveness to the FATF; and
  • Preparing for and coordinating the three-week on-site visit of the FATF assessment team in November 2015;
• Led the Canadian delegation to the FATF and the Asia/Pacific Group on Money Laundering, and participated as a cooperative and supporting nation in the Caribbean Financial Action Task Force and as an observer of the Financial Action Task Force of Latin America; and
• Provided advice and support for broader national security issues that affect the Regime, including Canada’s Counter-Terrorism Strategy and representation at international meetings of the FATF and the Counter-ISIL Finance Group.

The IAG (which is part of the Litigation Branch) and the CLPS of the Department of Justice Canada play a significant role in the AML/ATF Regime. The IAG and the CLPS will use the resources they receive to carry out work related to the FATF, including attending FATF-related international meetings, providing advice to AML/ATF Regime partners in relation to the FATF, and participating in interdepartmental work in preparation for the next evaluation of Canada under the fourth round of the FATF mutual evaluation process. These tasks may include support and attendance related to the meetings of FATF working groups (e.g., the new Policy Development Group, the International Co-operation Review Group, and the Risks, Trends and Methods Group), and FATF-Style Regional Bodies, including the Asia/Pacific Group on Money Laundering, the Caribbean Financial Action Task Force, and the Financial Action Task Force of Latin America. Resources will also be allocated to ensure that the continued involvement of CLPS in policy development relating to money laundering and terrorist financing. Finally, the Human Rights Law Section will continue to participate, as required, with respect to constitutional issues raised in relation to proposed amendments or in the course of prosecutions.

The Department of Justice Canada, including the CLPS and particularly the Criminal sector of the Litigation Branch, continued to do operational work involving requests for Mutual Legal Assistance and extradition in support of Canada’s AML/ATF Regime. Counsel continued to provide legal advice to the Department of Finance Canada and other AML/ATF Regime partners, and attended a number of FATF meetings. The AML/ATF funds earmarked for the Department of Justice Canada were used solely for Regime-related purposes.

The PPSC will continue to provide legal advice and support to the RCMP and other law enforcement agencies during the course of investigations related to the proceeds of crime, money laundering and terrorist financing provisions of the Criminal Code and the PCMLTFA, and to undertake prosecutions that arise out of those investigations. The PPSC is not, however, an investigative agency and therefore does not determine who should be investigated and for what activities.

The PPSC will continue to provide AML/ATF Regime-related training to law enforcement personnel and prosecutors, and to support policy development and coordination.

The PPSC will also continue to perform its statutorily determined activities. These activities are part of the activities of the Government of Canada relating to the work of the FATF.

The PPSC dealt with 7,206 new AML/ATF Regime-related charges: 7,145 were related to the possession of proceeds of crime; 58 were related to money laundering under the Criminal Code, and 3 were related to money laundering under the PCMLTFA. There were no new charges related to terrorism financing under the Criminal Code during 2015–16.

The PPSC provided legal advice on a number of files involving new charges. Provision of legal advice was recorded in 3% of the possession of proceeds of crime files, 16% of the money laundering files, and 33% of PCMLTFA files.

Time recorded against litigation files is file-specific rather than initiative- or charge-specific. Because charges relating to an accused on a file are dealt with as part of the prosecution of all the charges against the accused, or against all of the accused, it is not possible to attribute a precise level of effort (i.e., number of hours) dedicated to the AML/ATF component of any file. In general, the time entered on each file overestimates the actual level of effort focused on AML/ATF activities. In addition, the number of charges is not a direct reflection of the effort required, as cases can vary widely in complexity and effort required, For example, although high-complexity drug prosecution files accounted for only 2.4% of the total number of drug files in 2015–16, they required 30.1% of the drug-related offence litigation time of PPSC prosecutors.

PPSC counsel provided legal support and training to law enforcement personnel over the course of their investigations, as required. Resources were also dedicated to policy development and coordination to ensure consistency in prosecutorial activities across all regions. Finally, the PPSC contributed to Canada’s submission to the FATF’s mutual evaluation exercise by producing trend data and analysis pertaining to AML/ATF Regime-related files and charges.

FINTRAC will continue to provide its partners, policy makers and other interested parties with relevant and actionable financial intelligence that contributes to the public safety of Canadians. FINTRAC will also continue to support efforts to disrupt the ability of criminals and terrorist groups that seek to abuse Canada’s financial system, while reducing the profit incentive of crime.

FINTRAC provided 1,655 disclosures of actionable financial intelligence to its AML/ATF Regime partners: 1,172 dealt solely with money laundering, 154 dealt solely with terrorism financing and other threats to the security of Canada, and 329 dealt with all three areas.

Of these case disclosures, 59% were initiated by Voluntary Information Records (VIRs). VIRs are used by FINTRAC’s investigative and intelligence partners to identify priority investigations where financial intelligence could make an important contribution. A total of 1,618 VIRs were received by FINTRAC during 2015–16.

FINTRAC produced strategic financial intelligence to provide a wide analytic perspective on existing and emerging issues of interest to the Canadian security and intelligence community, policy and decision makers, international partners and allies, reporting entities and other stakeholders. FINTRAC also regularly engaged with domestic and international partners, providing assessments, briefs and other strategic intelligence in support of the Government of Canada’s intelligence priority-setting exercises, the development of AML/ATF policy and regulatory changes, and criminal intelligence needs. In addition, FINTRAC continued to look at Canada’s priority money laundering and terrorist financing threat actors, including analyzing the nature and extent of professional money laundering networks, and some of the methods and techniques they use to operate within the legitimate financial system, including trade-based money laundering.

As part of Canada’s AML/ATF Regime, FINTRAC seeks to counter money laundering and terrorist financing by improving the compliance behaviours of reporting entities with obligations under Part 1 of the PCMLTFA and the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, which include obligations for reporting, record keeping, identity verification and other requirements.

FINTRAC will continue to undertake compliance and enforcement activities based on internal analysis and risk, and ensure that reporting entities correct any detected non-compliance in a timely manner by employing compliance and enforcement activities commensurate with the level of non-compliance found, including the use of administrative monetary penalties or non-compliance disclosures. FINTRAC will also continue to support reporting entities by providing them with clear and consistent technical support and guidance to facilitate quality and timely reporting.

FINTRAC continued to use a variety of compliance and enforcement activities and tools to ensure that reporting entities fulfill their PCMLTFA obligations. Examples are examinations and follow-up examinations; the issuance of compliance assessment reports; the monitoring of financial transaction reports, observation letters and validation reviews; and other awareness and assistance activities. These activities were planned and undertaken on a risk basis, with a larger proportion of the FINTRAC’s higher-intensity assessments and enforcement activities allocated to medium- and higher-risk reporting entity sectors, and lower-intensity awareness and assistance activities assigned to lower-risk sectors.

When enforcement activities determine that a reporting entity has not taken appropriate measures to remedy significant non-compliance, FINTRAC may pursue additional enforcement actions, including follow-up examinations and administrative monetary penalties (AMPs). In addition, FINTRAC can publish specific details of an AMP once all proceedings relating to the penalty have concluded—that is, after all avenues of review and appeal have been exhausted.

If FINTRAC determines that an AMP should be issued, a Notice of Violation is sent to the entity, outlining any violations of the PCMLTFA and setting out the penalty amount. In 2015–16, FINTRAC issued 22 Notices of Violation to reporting entities. It also imposed its largest penalty yet, $1,154,670, on a federally regulated financial institution. This was the first time that FINTRAC had penalized a bank since it was given powers to issue AMPs in December 2008. Since the introduction of the AMP program, FINTRAC has issued 95 penalties and has publicly named 40 reporting entities.

In addition, FINTRAC responded to enquiries and requests for clarification from reporting entities and other stakeholders on a broad range of issues, including reporting obligations, access to reporting systems, and the registration of money services businesses. During 2015–16, FINTRAC responded to 5,468 enquiries from reporting entities from across the country and issued 302 policy interpretations. To enhance the reporting entities’ understanding of their obligations under the PCMLTFA, FINTRAC has published more than 1,350 policy interpretations on its website.

FINTRAC’s Internal Services groups will continue to work closely with the Department of Finance Canada and other government departments on matters related to money laundering and terrorist financing activities, with a particular focus on the following areas:

• Providing support to the Department of Finance Canada for the regulatory process and regulatory amendments associated with the Economic Action Plan 2014 Act, No. 1;
• Engaging with AML/ATF Regime partners and other stakeholders (e.g., businesses, international partners and academics), to share expertise on money laundering and terrorist financing; and
• Continuing participation in the Department of Finance Canada-led Mutual Evaluation of Canada Working Group, in preparation for the mutual evaluation of Canada’s AML/ATF Regime.

FINTRAC continued to operationalize the changes flowing from Economic Action Plan 2014 Act, No. 1. This involved collaborating with the Department of Finance Canada to consult with reporting entities and to support the development of regulations that will define some of the new provisions of the Act coming into force in 2016–17.

Under the leadership of the Department of Finance Canada, FINTRAC actively participated in a number of regime-wide initiatives as part of the FATF mutual evaluation of Canada. This included meeting with FATF assessors over the course of three weeks in November 2015.

FINTRAC also continued to contribute to broader regime-wide and government-wide initiatives, including the National Anti-Drug Strategy and Canada’s Counter-Terrorism Strategy.

Finally, FINTRAC’s Internal Services supported the work of the Centre’s Financial Intelligence and Compliance Programs by providing effective Communications, Legal Services, Human Resources, Financial Management, Information Management and Technology, and Security.

In support of its strategic priority on Economic Integrity, the RCMP will continue to prevent, detect and disrupt crimes that threaten Canada’s economy and security, including money laundering and terrorist financing.

The RCMP will develop a strategy to combat money laundering. This strategy will help ensure that the RCMP uses every tool at its disposal in remaining flexible and adaptive while responding to money laundering threats, and on a wider scale, organized crime. In addition, the RCMP will leverage existing capacity through a cooperative approach with its partners across Canada.

The RCMP will continue to disrupt terrorist financing activities in Canada through active investigations in the areas of highest risk and to leverage the information and expertise of its national and international ATF partners.

In all efforts, the RCMP will engage its domestic and international law enforcement partners and regulatory entities for a holistic enforcement and crime prevention approach to AML and ATF.

In collaboration with AML/ATF partners, the RCMP will continue to contribute and be accountable to the FATF external evaluation.

Overall, the RCMP succeeded in achieving its expected results.

It developed a Money Laundering Strategy that identified targeted actions as the basis for a new approach to money laundering. This will place the RCMP in a position where it can identify and obtain the tools needed to better investigate and enforce its AML efforts. The RCMP has already started to implement parts of the strategy.

In September 2015, in Panama, the RCMP gave a one-week training course on investigating money laundering, as part of a capacity-building initiative. The course participants included various law enforcement officers, financial intelligence, prosecutors and bank security.

In 2015–16, the RCMP conducted the following successful AML investigations:

• In October 2015, the RCMP arrested 13 suspects in Nova Scotia and British Columbia as a result of an investigation into an alleged drug smuggling operation suspected of using commercial flights to transport large quantities of marijuana to major cities across Canada. The sophisticated Vancouver-based drug network extended from coast to coast, with delivery points in Toronto, Montreal, Halifax and St. John’s. Charges of conspiracy to traffic marijuana and possession of proceeds of crime and money laundering were filed. Over the course of the five-month investigation, police seized 14 vehicles, more than CAD$232,000 in cash, and in excess of 90 kg of marijuana and other drugs.
• In December 2015, members of the RCMP London Financial Crime Unit and the London Police Service charged four individuals with various fraud and money laundering charges stemming from a 10-month investigation into theft of over USD$450,000 from a multimedia corporation based in New York City. The investigation began when the Office of Manhattan District Attorney was alerted to an elaborate defrauding of Firstborn Multimedia Corporation. Armed with forged credentials, American suspects were able to wire USD$450,000 from Firstborn Multimedia Corporation’s bank accounts to conspirators in Canada, who, in turn, laundered the money back to the United States and to Nigeria.

In addition, in 2015–16, the RCMP continued to support counter-terrorism strategies for terrorist financing, financial intelligence gathering, investigations and enforcement.

The RCMP investigates the financial component of all terrorism cases in order to establish whether terrorism financing charges may be laid. To date, there has been only one successful conviction on terrorist financing charges under the Anti-Terrorism Act. Prapaharan Thambithurai pleaded guilty to raising money for the Liberation Tigers of Tamil Eelam and was sentenced to six months in prison in 2010. The RCMP has been diligent in investigating the threat posed by individuals radicalized to violence, and in particular, those seeking to travel abroad for terrorist purposes. Some of these persons engage in criminal actions as a way to finance their travel.

The following is an example of such an activity that took place 2015–16:

• In 2015, a 15-year old youth who had become radicalized to violence became determined to travel abroad to join a terrorist organization. He was connected to other radicalized individuals in the Montreal area, including Martin Couture-Rouleau who ran over two uniformed members of the Canadian Armed Forces in St-Jean-sur-Richelieu, Quebec, killing Warrant Officer Patrice Vincent in October 2014. The youth had previously tried, unsuccessfully, to purchase an airline ticket for Syria with his father’s credit card. On October 12, 2014, the father discovered funds in his son’s backpack and became suspicious that the money might have been stolen, so he reported it to Service de Police de Ville de Montréal (SPVM). An investigation revealed that the youth had committed an armed robbery in order to purchase an airline ticket for Syria. He was charged and convicted of armed robbery by the SPVM. A national security investigation by the Division C National Security Enforcement Team (C-INSET) resulted in the youth being convicted of attempting to leave Canada to participate in the activity of a terrorist group (section 83.181 of the Criminal Code) and commission of an offence for a terrorist group (section 83.2 of the Criminal Code). He was sentenced to 24 months in youth custody plus one year of probation. The sentence was consecutive to the time being served for the armed robbery.

The RCMP uses various means to identify and investigate terrorist financing activities, including conducting undercover operations, responding to referrals from international or domestic partners (e.g., the U.S. Federal Bureau of Investigation and FINTRAC), and initiating national security investigations. In 2015–16, the RCMP submitted 158 Voluntary Information Records to FINTRAC and, in turn, was the recipient of approximately 360 terrorist financing-related disclosures from FINTRAC. The RCMP also submitted 12 requests for terrorist-related information to the CRA’s Charity Directorate and, in turn, received 5 requests for information from that directorate.

In all activities, the RCMP engages its domestic and international law enforcement partners and regulatory entities in a holistic approach to law enforcement and crime prevention with respect to anti-money laundering and anti-terrorist financing.

The RCMP continues to provide training to its members and partner agencies. In 2015–16, three ATF courses were delivered to 90 candidates.

The CRA will focus on the following key areas:

• Participating in committees and initiatives that aim to manage and strengthen Canada’s AML/ATF Regime;
• Continuing to enhance operating relationships with FINTRAC and other AML/ATF Regime partners; and
• Conducting analysis related to money laundering and tax avoidance and evasion, which includes conducting compliance action focused on individuals and entities that are participating in money laundering and terrorist financing activities.

The Domestic Compliance Programs Branch (DCPB) and the International, Large Business and Investigations Branch (ILBIB) of the CRA will continue to process all disclosures from FINTRAC on a priority basis. The DCPB and ILBIB will thoroughly review all disclosures received from FINTRAC, perform analysis for intelligence and potential criminal investigations, and select for compliance actions those with identifiable tax and collection potential. The projected number of audits is at 70 cases, with a projected federal tax reassessment of $7 million. Although the CRA will be starting at least 70 audits for this workload, the nature of these files makes it difficult to predict how many will be closed by the end of 2015–16. In addition, the $7 million estimate of reassessments is based on CRA-wide averages, and the final result may vary significantly from this figure, depending on which files are audited. Information is gathered from the FINTRAC disclosures and resulting compliance actions for intelligence purposes in order to identify trends that could positively impact the quality and success of future compliance actions.

The CRA participated in AML/ATF Regime committee meetings as well as in multiple conferences and meetings with external law enforcement. The Criminal Investigations Directorate (CID) continued to enhance its operating relationship with FINTRAC through meetings that focused on operational functions, providing feedback and improving the quality of information shared between the two organizations.

CID analyzed all FINTRAC disclosures in order to identify trends related to tax avoidance and evasion, with an emphasis on international non-compliance. CID also sent Voluntary Information Records to FINTRAC for most cases that were reviewed or accepted for criminal investigation.

FINTRAC disclosures were also reviewed by CID for potential tax evasion or fraudulent activity. If the disclosure had potential for a criminal investigation, it was referred to one of the six Criminal Investigations Divisions across the country. If the file did not have potential for a criminal investigation, it was forwarded to the Small and Medium Enterprises Directorate (SMED) or the Offshore Compliance Division (OCD) for civil compliance actions.

CID received and reviewed 107 FINTRAC disclosures between April 1, 2015, and March 31, 2016, which represents a decrease of 12 disclosures from the previous fiscal year. Eighty-two of these disclosures were referred to the SMED, and 25 were referred to CID.

Because of a higher than projected number of referrals, the CRA completed 93 audits (as compared with a forecast of 70) based on information contained in FINTRAC disclosures, with total federal income taxes reassessed in the amount of $25,285,652 (as compared with a forecast of $7 million). Furthermore, the larger number of audits resulted in higher than projected expenditures for 2015–16.

The CRA has responsibility for administering the registration system for charities under the Income Tax Act. The existence of a strong regulatory deterrence against terrorist abuse of charities contributes to suppressing the financing of terrorism in Canada and to protecting and preserving the social cohesion and well-being of Canadians.

The CRA’s regulatory oversight of charities has been strengthened by the enactment of complementary measures under the Charities Registration (Security Information) Act and the PCMLTFA and by changes to the Income Tax Act authorizing broader information sharing between AML and ATF agencies. Under these authorities, intelligence provided to the CRA assists in its mandate to protect the integrity of the registration system for charities and information disclosed by the CRA to its partners can be used for investigative purposes. The CRA will continue to identify and respond to cases involving possible links to terrorism by improving systems to support decisions and by refining risk management tools. The CRA will contribute to the international fight against terrorist financing and will bring regulatory actions to the attention of Canadians. The CRA will also continue to collaborate with AML/ATF Regime partners through domestic interdepartmental working groups and internationally through the FATF and the United Nations.

With respect to its ATF responsibilities, the CRA’s Charities Directorate continued its core activities of reviewing applications for charitable registration, monitoring registered charities, carrying out regulatory activities, and exchanging information under legal authorities with Canada’s AML/ATF Regime partners.

Specifically, the Directorate:

• Reviewed 2,542 applications for registered charitable status;
• Conducted detailed examinations of 12 applications, which resulted in the registration of two charities and the abandonment of three applications, the withdrawal of six, and the denial of one;
• Completed 1 audit that resulted in the revocation of a charity’s registered status and worked on 12 active audits; and
• Received 62 disclosures from, and made 27 disclosures to, Canada’s AML/ATF Regime partners.

Internationally, the Charities Directorate contributed to the revision of the FATF’s international standard on protecting non-profit organizations from terrorist financing abuse.

A representative of the Charities Directorate provided subject-matter expertise and acted as an assessor in support of the 2015 FATF mutual evaluation of Singapore. The Charities Directorate also provided subject-matter expertise at a regional workshop coordinated by the United Nations Counter-Terrorism Committee Executive Directorate (UNCTED), in Dakar, Senegal; at a regional workshop coordinated by the Organization for Security and Co-operation in Europe and UNCTED, in Sarajevo, Bosnia and Herzegovina; and at a regional workshop coordinated by the U.S. State Department, in Bahrain.

The CBSA will continue to be involved in tactical and strategic analysis and assessments of intelligence related to money laundering and terrorist financing activities.

The CBSA will participate in joint forces operations with the RCMP and other government departments.

CBSA Intelligence officers and Investigators participated in projects focused on money laundering and terrorist financing activities. Project Mygale is an example of a Joint Forces Operation where the CBSA focused resources toward dismantling the largest cross-border criminal network in Canadian history. The network is alleged to have imported more than 2 million kg of tobacco into Ontario and Quebec, evading CAD$530 million in federal and provincial taxes and generating over CAD$20 million in illicit proceeds. A variety of money laundering techniques were used to pay for drugs and illegal tobacco and to launder criminal proceeds out of North America.

The CBSA worked with AML/ATF Regime partners to develop the Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada, to begin to position Canada’s regime as fully risk-based, in line with FATF requirements.

The CBSA continued to engage with federal partners on money laundering and terrorist financing threats and risks to Canada through the Public Safety Canada Threat Resourcing Working Group and the National Risk Assessment Committee, led by the Department of Finance Canada.

The CBSA continued research and analysis toward the production of a strategic risk assessment of trade fraud, including trade-based money laundering.

The CBSA continued to engage and raise awareness of money laundering and terrorist financing threats and risks to international trade systems with FINTRAC, Public Safety Canada, and foreign government partners.

Border Services Officers (BSOs) maintain the responsibility to enforce the physical cross-border reporting obligation, including the examination of baggage and conveyances, and to question and search individuals for unreported or falsely reported currency and monetary instruments.

BSOs continue to seize currency and monetary instruments if they are not reported and are greater than the reporting threshold. Seized non-reported currency and monetary instruments are forfeited with no terms of release when BSOs suspect that the seized currency or monetary instruments are proceeds of crime or funds for use in terrorist financing activities. In all other instances, the seized amount will be returned upon payment of a penalty. BSOs are trained to recognize various monetary instruments and potential instances of non-compliance.

Border Services Officers (BSOs) carried out 2,070 currency seizures in 2015–16, a 36.01% increase over the previous fiscal year.

• The total amount seized was CAD$35,826,835, a 20.89% increase over the previous fiscal year.
• CAD$1.9 million was forfeited to the Crown as suspected proceeds of crime (90 Level 4 seizures). Penalties for Level 1, 2 and 3 seizures totalled CAD$985,500.

Administratively, BSOs collected 62,881 Cross-Border Currency and Monetary Instruments Reports from travellers and couriers. This represents a 45.2% increase in reports sent by the CBSA to FINTRAC.

Recourse is the legislative or administrative mechanism that provides Canadians with a timely, objective, consistent and transparent internal review process intended to determine the correctness of CBSA decisions and actions taken under the PCMLTFA.

The CBSA Recourse Directorate rendered a total of 211 decisions on PCMLTFA appeals, as follows:

• 139 decisions maintaining the enforcement action as issued;
• 39 decisions upholding the enforcement action issued but amending the terms;
• 32 decisions overturning the action issued; and
• 1 administrative closure.

• Provide functional direction to the regions on the administration and enforcement of Part 2 of the PCMLTFA;
• Provide critical strategic planning, priority setting and coordination for the Cross-Border Currency Reporting Program;
• Continue to work closely with other key government departments on matters related to money laundering and terrorist financing; and
• Continue to be involved in international conferences and workshops that require the presence of cross-border law enforcement expertise.

The Cross-Border Currency Reporting program continued to provide functional guidance to the regions on the administration and enforcement of Part 2 of the PCMLTFA.

The program area:

• Provided legislative interpretation and functional guidance to CBSA Recourse in relation to ministerial reviews of currency-related enforcement actions;
• Continued to lead the CBSA’s participation in the ongoing mutual evaluation of Canada’s AML/ATF Regime by the FATF;
• Continued to participate in the Public Safety Canada Threat Resourcing Working Group, to coordinate the Department’s portfolio engagement with the Department of Finance Canada on issues related to Canada’s AML/ATF Regime and the FATF mutual evaluation of Canada; and
• Continued to provide FINTRAC with electronic and paper copies of all Cross-Border Currency and Monetary Instruments Reports and currency seizure reports processed by BSOs.

Response to parliamentary committees: Not applicable.

Response to the Auditor General (including to the Commissioner of the Environment and Sustainable Development):

• 2015 Spring Reports of the Auditor General of Canada, Report 3—Tax-Based Expenditures.

This audit examined whether the Department of Finance Canada, with the support of the Canada Revenue Agency and consistent with their respective roles and responsibilities, properly manages tax-based expenditures. The audit also examined whether the Department of Finance Canada reported clear and useful information on tax-based expenditures to support proper scrutiny by Parliament and Canadians. Three recommendations were directed to the Department of Finance Canada.

Response to external audits conducted by the Public Service Commission of Canada or the Office of the Commissioner of Official Languages: Not applicable.

¹ The horizontal initiative is ongoing, with no fixed end date. Therefore, allocation amounts include funding to date (up to and including funding for the 2015–16 fiscal year), but exclude future funding. Total funding is the sum of the total allocation amounts shown for the reporting Regime partners in the “Performance Information” table.

² This amount includes funding provided to the Department of Justice Canada before the creation of the PPSC. Since 2007–08, the Department of Justice Canada has received $0.8 million in funding.

³ The Department of Justice Canada, since it started reporting separately from the PPSC in 2007–08, has reported receiving $0.1 million in AML/ATF Regime funding. The Department no longer accounts for AML/ATF Regime funding separately from its core mandate (A-base) funding and therefore no longer reports on Regime funding. It also continues to provide, as part of its core mandate, legal services to the Regime partners.

⁴ Total funding is the sum of the total allocation amounts of all reporting federal organizations.