Thank you, Mr. Chair.

Members of the committee, in light of the research that I have done and that I continue to carry out in Europe and Canada on countering terrorist financing, I would like to take the few minutes I have to address a point of tension that defines the fight against terrorist financing.

As you know, the fight against terrorist financing—the financial aspect of counterterrorism—was promoted as being built around two officially complementary strategies.

The first strategy is to publicly identify individuals or entities suspected of terrorist financing activities or of supporting those activities and to freeze their financial assets and bank accounts, in the hope of reducing the resources of groups considered to be terrorist and thereby reducing their ability to act.

This strategic assumption deserves to be discussed and may be highly nuanced. I am at your disposal during questions to point out the controversies and challenges related to the specific and practical implementation of this strategy.

The second strategy looks at, or seeks to see, the money and the financial trail as a source of information. The final objective of this second strategy is not so much to freeze financial flows, but rather to track them in order to produce financial intelligence on individuals or on financial relationships between individuals.

I would really like to stress this second strategy that brings together funding and security. In other words, financial intelligence and surveillance practices are, to some extent, the meeting point between very different players who, even a few years ago, were not at all accustomed to working together or even speaking to each other. This means that, on the one hand, there are people from the economic and financial world—starting of course with banks—and on the other hand, there are people from the security and intelligence world, starting with the financial intelligence unit, FINTRAC, in Canada, and law enforcement and intelligence agencies.

Such cooperation exists. It produces effects, but I think it indicates a point of tension, or balanced tension, even a misunderstanding crystallizing completely around the concept of risk. In fact, the fight against terrorist financing and money laundering is based on risk and a risk management approach. All the players I mentioned share this terminology and speak the language of risk. However, this does not necessarily reflect a common view of the risk being managed.

In other words, if I may say so, the players agree on the use of the same word, which is the concept of risk, but they are not necessarily talking about the same thing. Depending on the mission entrusted to them, police and intelligence officers, when they talk about the concept of risk in relation to terrorist financing, refer primarily to the risk of violence or attack on society and the public.

In contrast, when bank compliance officers talk about the concept of risk in relation to terrorist financing, they refer primarily to the risk to their financial and legal reputation for themselves, their employers and their institutions. So some refer to societal risks while others are more focused on institutional risks.

To some extent, there is a convergence between the two. There is some cooperation, but it comes at the cost of a misunderstanding, or at least a difference of interpretation of this idea of risk in relation to terrorist financing.

We might think and assume that these two concepts of risk can go in the same direction, converge and overlap. However, our empirical studies on these issues rather show the opposite: compliance officers, in banks in particular, take action in a context of organizational defence, with a view to defending their institutions. As a result, a lot of compliance officers tend to make what are called complacent or defensive statements. This means that they will tend to turn any small doubt into sufficient suspicion to declare and report any unusual transaction.

In the name of institutional risk aversion, they prefer to report the transaction, at the risk of doing harm and reporting it in an abusive manner to the competent authorities, including the financial intelligence unit. Ultimately, this may well produce more information noise than useful financial information. Of course, this institutional risk management can be useful to protect financial institutions. Whether this is productive or not in terms of managing the risk terrorist financing poses to society remains an open-ended question.

The debate is therefore about that misunderstanding, the concept of risk and the cooperation based on this misunderstanding in terms of what the fight against terrorist financing needs to be.

To conclude, we could say that this cooperation to counter terrorist financing is effective in the sense that it produces effects; there is some daily cooperation. However, determining whether this cooperation is efficient in addition to being effective is a question that triggers debate and is still open today.

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