Emergency Economic Measures Order

Proposed Response:

• On February 14, 2022, the Federal Government invoked the Emergencies Act as a strategic, targeted, and time sensitive response to address the current crisis.
• In relation to the Act, the Government issued the Emergency Economic Measures Order, which allowed law enforcement agencies to work more closely with Canadian financial service providers, and provided additional measures to monitor and disrupt financial activity associated with the illegal blockades.
• These measures included a requirement for financial service providers to determine whether they have in their possession or control property that belongs to a designated person participating in the blockade, and to disclose this information to the RCMP or CSIS.
• It authorized federal, provincial, and territorial government institutions to disclose information to any Canadian financial service provider when it was satisfied that the disclosure will contribute to the application of the Order.
• This allowed law enforcement agencies to share the identity of designated persons with financial service providers, enabling them to cease their dealings with those designated persons at their discretion.
• The RCMP has provided financial institutions with the identities of individuals involved in the Ottawa protest, and of owners and/or drivers of vehicles who did not want to leave the area impacted by the protest. At no time did the RCMP disclose information on donors or on those who purchased merchandise linked to the illegal protests.
• The Order also required insurance companies to cancel or suspend the insurance policy for any vehicle taking part in a prohibited assembly. This sent a strong message to the owners and operators of the vehicles implicated that their vehicle should go home.
• The measures contained in the Order assisted law enforcement by disrupting the funding behind the illegal blockades and weakening the ability to re-form them, increasing the scope of financial transaction information that may be received by FINTRAC, and making more information available to support investigations by law enforcement.

If pressed on actions taken as a result of the order:

• As of February 23, 2022, enforcement action under the Emergency Economic Measures Order has culminated in the freezing of 246 financial products; the disclosure of 57 entities, which includes individuals and owners or drivers of vehicles involved in the blockades; 253 Bitcoin wallet addresses shared with virtual currency exchangers; and, the proactive freezing of the account of a payment processor by a financial institution.
• Only financial institutions have discretionary authority to freeze and subsequently unfreeze financial accounts. To assist financial institutions with their obligations under the Order, the RCMP remained in communication with the financial institutions on persons, vehicles and companies suspected of involvement in the illegal protest.
• While the Order was still in place, the RCMP went back to financial institutions with some updated information about certain entities whose status may have changed pertaining to the illegal protest activity. This new information could then be assessed alongside all other information to help inform decisions to unfreeze certain accounts.
• Financial service providers began unfreezing accounts and credit cards/lines of credit on February 21 due to updated information provided by the RCMP. The vast majority of these have either been unfrozen or have been approved to be.
• On February 23, 2022, the Federal Government announced that it would be revoking the Emergencies Act since the situation is no longer an emergency and existing laws and bylaws are now sufficient to keep people safe.   
• The economic measures under the Order were important in disrupting the funding of the groups behind these illegal blockades, and in weakening their ability to re-form them.
• Now that the Emergency Act has been revoked, the Emergency Measures Regulations and Emergency Economic Measures Order, and their measures are also automatically revoked.
  

If pressed on Charter concerns of the order:

• As we have stated previously, any steps taken by the Government under the Emergencies Act must be consistent with the Canadian Charter of Rights and Freedoms, and must be reasonable and proportional to the risks to the public health and safety of Canadians.
• The illegal blockades we witnessed were well-funded and constituted a serious threat to national security. As such, the measures contained in the Emergency Economic Measures Order were reasonable and proportional to the threat posed.
• Importantly, they applied to persons engaging in prohibited activity as outlined in the Emergency Measures Regulations. As such, the Order ceased to apply in respect of a person’s property, transactions and account when such persons stop participating in those activities.
• Financial service providers also had an obligation to determine on a continuing basis whether they are in possession or control of property that is owned by a designated person, which ensured information was up to date.

If pressed on what issues are being addressed by the economic measures in the order:

• Prior to the Order, crowdfunding platforms and some payment service providers were not subject to registration and reporting requirements to FINTRAC under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).
• By including crowdfunding platforms and payment service providers, the Government was able to mitigate the risks that these platforms received funds for illicit purposes.
• In addition, existing federal financial institutions statutes do not require financial service providers to review their business relationships and cease dealing with persons conducting illegal activities, such as the illegal blockades.
• As such, the economic measures in the Order provided crucial authorities to further bolster the Government’s ability to disrupt the financing of these illegal actions.

If pressed for more details on the frozen payment processor account:

• It was reported to the RCMP that the value of the payment processor account was $3.8M.
• We are unable to disclose any additional information at this time about this account, to avoid any unnecessary reputational damage to the payment processor involved.

If pressed on implications of revoking Emergencies Act and economic measures in the order

• All powers granted by the Emergency Regulations and Emergency Economic Measures Order disappear once the declaration and regulations are revoked.
• However, investigations into offences that took place while the measures were in force can continue. Charges may be laid and investigations and prosecutions can continue, subject to police discretion and to prosecution decisions as to whether there is a reasonable prospect of conviction and whether it is in the public interest to proceed.
• If property seized under the Emergency Regulations is required as evidence in an investigation or for a prosecution, it may be retained by police in accordance with the usual Criminal Code provisions. Property seized but not required as evidence may be returned. The normal provisions of the Criminal Code regarding the return of such property apply.

Background:

On February 14, 2022, the Government of Canada declared a public emergency, invoking the Emergencies Act, along with the Emergency Economic Measures Order (the Order) and the Emergency Measures Regulations (the Regulations). The provisions of the Order, as outlined above, came into force immediately on Tuesday, February 15, 2022.

MPs in the House of Commons voted to affirm use of the Emergencies Act on Monday February 21, 2022. The Emergencies Act was revoked by the Government of Canada the afternoon of February 23, 2022, formally ending the state of emergency.

Collectively, the Order and the Regulations were intended to limit funding of illegal blockades and restore public order. This order contained the following key authorities:

Reporting Requirements for Crowdfunding Platforms

• The Order extended the scope of the reporting requirements under the Proceeds of Crime (Money Laundering and Terrorist Financing Act (PCMLTFA) to cover crowdfunding platforms and payment providers, inclusive of all forms of transactions, including digital assets such as cryptocurrencies.
• The Order required crowdfunding platforms and payment service providers that are in possession or control of any funds that are owned, held or controlled by or on behalf of a designated person^{Footnote 1} to register with and report suspicious and large value transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).
• Prior to the Order, crowdfunding platforms and some payment service providers were not subject to obligations under the PCMLTFA.

Temporary Cessation of Financial Services

• Canadian financial service providers were required to temporarily cease providing financial services if the institution suspects that a personal or corporate account is being used to further the illegal blockades, the could immediately freeze or suspend an account without a court order. Specifically, they were required to cease:
• dealing in any property owned, held or controlled, directly or indirectly, by a designated person or by a person acting for that designated person, or facilitating any transaction related to such a dealing;
• making available any property or financial support (including virtual currency) to or for the benefit of a designated person or to a person acting for a designated person;
• providing any financial or related services to or for the benefit of any designated person; and
• acquiring any financial or related such services from or for the benefit of any such person or entity.
• This applies to all funds, including those held in a deposit, chequing, savings, or trading account, and to cryptocurrency wallets, lending products, investment assets, and insurance policies for vehicles used in the illegal blockades.

Reporting certain property and assets to RCMP and CSIS

• Financial institutions and other reporting entities under the PCMLTFA (including crowdfunding platforms and payment service providers) must determine, on a continuing basis, whether they are in possession or control of property that is owned, held or controlled by or on behalf of a an individual or entity that is engaged, directly or indirectly, in an activity which is prohibited in sections 2 to 5 of the Regulations (i.e. designated person).

Disclosure of Information:

• The order provides federal, provincial, and territorial government institutions with new authority to share relevant information with banks and other financial services providers named in the Order, if the disclosing institution is satisfied that the disclosure will contribute to the application of the Order.

Some of the new temporary measures in the Order built on Canada’s AML/ATF framework. Prior to the order, crowdfunding platforms and some payment service providers were not subject to obligations under the PCMLTFA. By extending certain PCMLTFA requirements to include crowdfunding platforms and the payment service providers, the Government was able to mitigate the risks that these platforms could be used for illicit purposes. It also allowed for FINTRAC to receive increased financial transaction information, and makes more information available to support investigations by law enforcement.

Other authorities were intended to address gaps highlighted by the illegal blockade actions. In particular, existing federal financial institutions statutes do not include an authority to require financial service providers to review their business relationships and cease dealing with persons conducting illegal activities. The laws and regulations covering other financial services providers, such as securities dealers or funding platforms, vary by province. There is no overall authority to restrict the funds that go to support illegal assemblies. As such, the Order provided crucial authorities in these areas to further bolster the Government’s ability to disrupt the financing of these illegal actions.

Any steps taken by the Government under the Emergencies Act, including the Order, must be consistent with the Canadian Charter of Rights and Freedoms, and must be reasonable and proportional to the risks to the public health and safety of Canadians. For instance, the measures cease to apply in respect of a person’s property, transactions and account when they stop participating in an illegal assembly. In other words, financial entities will be able to resume their dealings with persons that have stopped participating in the unlawful activities. RCMP's federal Financial Crime units are also working with financial institutions, to assist them, when possible, to determine when assets can be unfrozen.

Enforcement of the Order:

As key partners in Canada’s Anti-Money Laundering and Anti-Terrorist Financing (AML/ATF) Regime, FINTRAC, CSIS and the RCMP operate within well-defined mandates that give them legislative authorities to counter illicit financial activity. The authorities in the Order were intended to enhance law enforcement investigations and disruption of blockades, and make it more challenging to use crowdfund platforms to fund illegal activities.

The groups behind the blockades were well-funded, with financial support being provided through a variety of means, including through crowdfunding platforms and cryptocurrency-based platforms. The Order allowed law enforcement to work more closely with Canadian financial institutions and has enhanced the effectiveness of law enforcement investigations into the blockades.

• There have been multiple disclosures from the RCMP to various financial institutions, including banks and credit unions, the Canadian Bankers Association, the Investment Industry Regulatory Organization of Canada, the Canadian Securities Administrators, and the Mutual Fund Dealers Association of Canada.
• Through social media sources and open source analysis, the RCMP identified information on how the crowdfunding campaign organizers are planning the dissemination and management of Bitcoin funds raised.
• The RCMP shared information with currency exchangers about bitcoin addresses linked to the funding of blockades, and also reached out to non-traditional financial institutions, including different cryptocurrency ATM operators.
• As of February 23, 2022, enforcement action under the Emergency Economic Measures Order has culminated in the freezing of 246 financial products; the disclosure of 57 entities, which includes individuals and owners or drivers of vehicles involved in the blockades; 253 Bitcoin wallet addresses shared with virtual currency exchangers; and, the proactive freezing of the account of a payment processor by a financial institution.
• Financial service providers began unfreezing accounts and credit cards/lines of credit on February 21 due to updated information provided by the RCMP. The vast majority of these have either been unfrozen or have been approved to be.

Under the Order, designated entities have expanded requirements to report to CSIS certain activities linked to designated persons. CSIS is engaging with its financial partners to ensure that disclosures relate to its national security mandate. Under the PCMLTFA, FINTRAC makes intelligence disclosures to CSIS when legislated thresholds are met. If a reasonable nexus to national security is determined, CSIS may use the information as part of any investigation into threats as defined under section 2 of the Canadian Security Intelligence Service Act.

Revocation of the Emergencies Act

Since the declaration of a public order emergency was revoked, the Emergency Measures Regulations and the Emergency Economic Measures Order are also revoked. Investigations into offences which occurred while the measures were in force can continue after the Regulationswere revoked, subject to police discretion and to prosecution decisions as to whether there is a reasonable prospect of conviction and whether it is in the public interest to proceed.

Property seized under the Regulations may be retained by police in accordance with the usual Criminal Code provisions if it is required as evidence in an investigation or for a prosecution. Property seized but not required as evidence may be returned. The normal provisions of the Criminal Code regarding the return of such property apply.

Date modified:

2022-06-07