Trucker blockades expose the weaknesses of Canada’s anti-money-laundering regime

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It seems those ragtag truckers accomplished something after all.

Sure, their behaviour has been odious. They’ve tormented residents of Ottawa, disrupted border crossings and inflicted damage on the Canadian economy with their illegal blockades.

But the true triumph of the so-called Freedom Convoy has absolutely nothing to do with its ostensible purpose of protesting COVID-19 vaccine mandates. Nope.

As it turns out, those horn-blaring, hockey-stick-wielding, flag-waving rabble-rousers have pulled off a feat that has long eluded even the most erudite financial-crime experts. Not only have they exposed shortcomings in Canada’s anti-money-laundering and anti-terrorist-financing regime, they’ve spurred the Trudeau government to fix them, at least temporarily. And in relatively short order, to boot.

Police make arrests in Ottawa as convoy protesters ignore orders to leave

Financial institutions have started freezing protesters’ bank accounts based on RCMP information, Chrystia Freeland says

Thanks for that, fellas – oh, and for forcing the government to finally confront the threat posed by far-right extremist organizations, too. You good ol’ boys gave our parliamentarians one heck of a reality check.

But here’s the thing for us law-abiding folks. There’s a very real risk that Ottawa’s decision to temporarily expand the power of banks, insurers and other financial-services companies to freeze protest-related accounts and halt financial support for the blockades could backfire in a big way.

Don’t misunderstand: crowdfunding platforms and other payment service providers, including those dealing with cryptocurrencies, should be required to submit suspicious transaction reports (STRs) to the Financial Transactions and Reports Analysis Centre of Canada, the federal anti-money-laundering agency. Their exclusion from the federal regime has long hindered Canada’s ability to combat financial crime.

Trouble is, owing to years of underinvestment by Ottawa, FinTRAC simply lacks the manpower to deal with a flood of new STRs. Given the broad scope of the federal order – it requires a wide range of companies to cease providing financial services to accounts linked to the blockades – it’s easy to see how the financial intelligence watchdog could become overwhelmed.

Consider this: FinTRAC has roughly 127 full-time staff working on its compliance team and about 116 employees dedicated to production and dissemination of financial intelligence, according to its latest departmental plan.

That’s not a lot of people, considering that FinTRAC received 386,102 STRs from businesses across Canada during its 2019–20 financial year alone. Keep in mind that FinTRAC also receives millions of other financial transaction reports each year, including those for large cash transactions, electronic funds transfers and cross-border currency movements, among others.

In fact, the Basel Institute on Governance, an independent non-profit that combats corruption and financial crime, recently urged Canada to dedicate “a lot more human and technological resources” to countering money-laundering and terrorist-financing risks, because an increase in the number of STRs was already “putting competent authorities under additional pressure.”

The RCMP, meanwhile, also lacks sufficient resources to investigate money laundering, according to a separate review conducted in British Columbia back in 2019.

Recall, the RCMP shuttered their national proceeds-of-crime and commercial-crime sections in 2012 (which specialized in money-laundering investigations), stopped investigating white-collar crimes for five years and have been trying to restore that lost expertise ever since.

Now, of course, our federal police are playing a critical role in the government’s current crackdown on the illegal truck blockades. What could possibly go wrong?

Financial institutions have already started freezing an undisclosed number of bank accounts belonging to the protesters. But considering that Canada has a poor track record of investigating and prosecuting financial crime, the chances are low that these moves will actually result in successful convictions.

Worse still, what if this simply amounts to a make-work assignment that distracts FINTRAC and the RCMP from sussing out even more dangerous threats to Canada’s national security?

Finance Minister Chrystia Freeland has said that, once these emergency measures expire, the government will introduce legislation that expands FinTRAC’s powers on a permanent basis.

Fantastic.

But let’s hope Ms. Freeland also uses this spring’s federal budget to provide significant funding boosts to both FinTRAC and the RCMP.

While she’s at it, she should also ensure that FinTRAC has the ability to share information with banks and other financial services providers on a continuing basis. Her remarks earlier this week indicated federal institutions were given this authority as part of the new emergency measures, but those powers should be made permanent.

There have long been complaints that FinTRAC functions like a black hole because it has no ability to ask banks and other businesses follow-up questions about the STRs that those entities flag for review. That one-way flow of information has prevented FinTRAC from requesting additional information about suspicious customers.

Ottawa should also ensure that banks are given a permanent “safe harbour” – a provision that shields them from legal liability if they participate in data-sharing partnerships to catch criminals.

U.S. banks have benefitted from such protections for more than 20 years. Sadly, it has taken a national emergency for Ottawa to provide such legal indemnity to banks, but only on a temporary basis.

These illegal blockades have highlighted why Canada can’t afford to take a ham-fisted approach to combatting financial crime.

Countless experts have urged Ottawa to close these gaps over the years. But perhaps these loutish truckers will inspire the government to finally get ‘er done.

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