Appearance before the House of Commons Standing Committee on Finance (FINA) on Bill C-31: Economic Action Plan 2014 Act, No. 1

May 14, 2014
Ottawa, Ontario

Opening Statement by Chantal Bernier
Interim Privacy Commissioner of Canada

(Check against delivery)

---

Thank you, Mister Chair and members of the Committee, for inviting me to discuss the privacy implications of Bill C-31.

In my time today, I will focus on the United States Foreign Account Tax Compliance Act or FATCA, and I will conclude with some brief comments on two other parts of C-31 which have privacy implications.

FATCA is a U.S. law which requires financial institutions in countries outside of the United States, including Canada, to report certain information on accounts of a “U.S. Person” to the U.S. Internal Revenue Service (IRS).  Bill C-31 includes an Agreement to implement this through the CRA.

While there is a long-established practice of information-sharing between nations for the purposes of taxation enforcement, all information-sharing activities must be undertaken in a way which respects privacy obligations. 

These obligations include limiting the amount of personal information collected to only that which is necessary for the stated purposes and safeguarding it appropriately.

The risk to privacy here is therefore mainly related to over-collection, over-reporting, and information security. 

To avoid over-collection and over reporting, education and outreach to institutions affected by this new reporting requirement will be crucial. To address information security considerations, appropriate technological measures, as well as access controls, are called for.

Beyond this, Bill C-31 introduces other legislative amendments that affect privacy.

First, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) will be modified in a way that broadens the amount of personal information collected, and increases information-sharing capabilities and requirements by FINTRAC.

I am encouraged, however, by the provision of Bill C-31 which requires FINTRAC to destroy the personal information it receives that is not related to the suspicion of criminal or terrorist activity. This corresponds to our recommendations in our audits of FINTRAC.

Second, changes to the Income Tax Act will allow for broader disclosure of taxpayer information to law enforcement authorities. This means that if CRA officials have reasonable grounds to believe that taxpayer information provides evidence of certain crimes, they may disclose this information to law enforcement. It appears that this information would be shared between the CRA and law enforcement authorities without judicial oversight.

We would urge the Committee in its examination of this provision to seek demonstration that this provision is necessary, and if it is necessary that appropriate oversight mechanisms will apply.

In closing, thank you, Mister Chair and members for the opportunity to discuss this issue.  I welcome your questions.