Trudeau’s emergency orders aimed at freezing the funds of the ‘Freedom Convoy’ caught banks off guard
Prime Minister Justin Trudeau’s emergency orders aimed at cutting off funds to protesters have cast a wide net across the Canadian financial industry, forcing portfolio managers and securities firms to take a harder look at who they are doing business with.
The new rules make demands of a broad list of entities—including banks, investment firms, credit unions, loan companies, securities dealers, fundraising platforms, insurance companies and fraternal benefit societies. They must determine whether they’re in “possession or control of property” of a person who’s attending an illegal protest or providing supplies to demonstrators, according to orders published by the government late Tuesday night.
If they find such a person in their customer list, they must freeze their accounts and report it to the Royal Canadian Mounted Police or Canada’s intelligence service, the regulations say. Any suspicious transactions must also be reported to the country’s anti-money-laundering agency, known as Fintrac.
“I think this caught everyone off guard last night when it was released,” Greg Taylor, chief investment officer of fund manager Purpose Investments Inc., said on BNN Bloomberg Television. “There’s a lot of questions right now in figuring out who we’re targeting, what do we have to look at.”
Trudeau’s government invoked emergency powers on Monday, saying his government needed to choke off money to demonstrators who’ve blocked border crossings and have now been parked in downtown Ottawa for 20 days, refusing to leave. The protesters are demanding an end to vaccine mandates and other COVID-19 restrictions.
The invocation of the emergency powers, which also gives the government the power to ban public assembly in some locations, has prompted fiery debate among legislators and concerns that the government is overreaching in its bid to quell protests that have paralyzed the nation’s capital.
Trudeau has said the measures will be temporary, targeted and are “reasonable and proportionate” to the threats the country faces.
Caldwell Securities, an investment-advisory firm that operates in Ontario, hasn’t received any communication from the government or law enforcement, nor a list of people whose accounts it’s supposed to freeze, Chairman Thomas Caldwell said Wednesday.
Caldwell said he doesn’t know how exactly his firm would go about enforcing the measures and he would seek outside legal advice before making any such move. The emergency rules are “posturing” on the part of the government, meant to frighten protesters enough to clear the current demonstrations, he said.
“If this thing is to be implemented, it will begin and end at the banking level,” Caldwell said in an interview. “I can’t see it getting down to our level. I would be quite surprised.”
The new regulations say the act doesn’t apply to insurance policies and that people who suffer injury or damage as a result of the order may apply for compensation. The order also gives the government the power to designate certain areas as “secure protected places, including critical infrastructure.”
Financial institutions will be protected against lawsuits for actions they take under the emergency order, the government says.
The order also says governments have the authority to “share relevant information with banks and other financial services providers, if the information will help put a stop to the funding of illegal blockades and illegal activities.” That applies not just to the federal government but provinces and territories, according to a statement from the finance department.
The new regulations apply to platforms that raise funds or virtual currency through donations, as well as payment and clearing services—whether dealing in regular currency or cryptocurrency.
“The censorship of money is something we see in an authoritarian country, not one like Canada,” said Philippe Jette, senior consultant to the Rivemont Crypto Fund. “Regardless of my views on the protests, freezing accounts for political reasons is a big, big slippery slope.”
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