How authorities are targeting the ‘freedom convoy’ money via the Emergencies Act

Posted on February 23, 2022 in Governance Policy Context

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February 22, 2022.   Patrick Leblonde, Costanza Musu

The Canadian government gave itself extraordinary powers for a 30-day period to end the “freedom convoy” occupation of Ottawa by invoking the Emergencies Act.

The situation was especially difficult in Ottawa, where trucks occupied the downtown core and Parliament Hill for weeks. Tensions with residents came to a breaking point after three weeks of incessant noise, shuttered businesses, harassment and disruption of normal life.

Two types of emergency measures were adopted.

First, the Emergency Measures Regulations prohibit public gatherings that could “lead to a breach of the peace.” The regulations also ban travelling to such gatherings, as well as providing any type of property in support of them.

Second, the Emergency Economic Measures Order is aimed at starving the convoy of money and deterring people from supporting its activities. It deprived convoy participants of the ability to pay for gasoline to keep vehicles and generators running, food, hotel rooms, bouncy castles, fireworks, etc. The goal was to end the convoy’s activities so that the city of Ottawa could get back to normal without any need for a violent crackdown.

How did the federal government take away the convoy’s financial resources to force them to end their activities? It did so in two ways: by stopping new money from being sent to convoy organizers and participants, and by blocking access to funds already in their hands.

Crowdfunding played a big role

Stopping the flow of new funds means preventing donations from reaching the convoy’s organizers or anyone associated with them. Crowdfunding platforms have been the main vehicle for channelling donations to the convoy.

Until the Emergencies Act was invoked, the only way to stop donations from reaching the convoy was by appealing to the goodwill of crowdfunding platforms, as occurred with GoFundMe, or by seeking legal injunctions against them, as with GiveSendGo.

In GiveSendGo’s case, the crowdfunding platform refused to abide by the judge’s ruling. It claimed that the Ontario court did not have jurisdiction over its operations since it’s based in the United States.

Furthermore, even if GiveSendGo had respected the injunction, donations to the convoy would have just moved to another platform. That’s what happened after GoFundMe froze the funds destined to the convoy; donors moved to GiveSendGo and other platforms, including ones collecting donations in cryptocurrencies like Tallycoin.

The emergency economic measures now require domestic and foreign crowdfunding platforms to register temporarily with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

This means they must provide FINTRAC with information about donations sent to the convoy (or similar activities being organized), no matter the amount. That’s because the convoy is now considered akin to a terrorist organization.

According to Barry MacKillop, FINTRAC’s deputy director for intelligence, crowdfunding platforms were not under FINTRAC’s regulatory purview until the Emergencies Act was invoked.

Why such platforms were not already covered by existing rules is unclear, since they are in the business of remitting or transmitting funds. In any case, Finance Minister Chrystia Freeland plans to introduce legislation so that crowdfunding platforms continue to register with and report to FINTRAC after the emergency ends.

Once FINTRAC receives information on convoy donations from crowdfunding platforms, it analyzes the information and passes it on to law enforcement agencies like the RCMP. Law enforcement authorities are responsible for freezing the funds associated with these donations, not FINTRAC.

What happens to the seized funds depends on the legal proceedings that follow, but convoy donors could lose their donations forever. This possibility is aimed at deterring new donations.

Will foreign platforms comply?

What isn’t clear yet is whether foreign crowdfunding platforms are complying with the new requirement to register with and report to FINTRAC (if they collect donations for the convoy), and, if they don’t, how they’ll be sanctioned.

For this reason, blocking access to financial services used by the convoy’s organizers and associates has probably been more effective at starving the protests of funds. The emergency economic measures require financial institutions, payments platforms, funding platforms, digital currency exchanges, etc., to stop doing business with anyone directly or indirectly associated with the convoy.

This includes freezing their accounts for the emergency’s duration. The measures also cover those who provide in-kind contributions to the convoy, like food or gas.

Fear of losing access to their money, even if only for a few weeks, should keep people and businesses away from the convoy and its activities. But law enforcement authorities must play their part.

First, they must collect the names of people and companies associated with the convoy and pass them on to entities providing financial services in Canada (so accounts can be frozen). Second, they need to ensure that sanctions are imposed on anyone in the financial system who does not abide by the Emergency Economic Measures Order.

After that, the only way for the convoy movement to survive would be to conduct its entire business in cash. But with accounts in Canada frozen, where would the cash come from? It isn’t likely to come from converting Bitcoins collected for the convoy into cash because it’s too difficult to do without going through traditional financial institutions.

Cash would have to come from abroad, especially the United States, where accounts cannot be frozen. Already, anyone bringing more than $10,000 in any form into Canada must declare it. And border officials have likely been extra-vigilant about cash entering the country in the past few days.

The backbone of the convoy’s activities was its access to a steady flow of financing from donors both domestic and foreign. By deterring convoy supporters and participants, the federal government made it easier for law enforcement to bring a relatively peaceful end to an unprecedented crisis in Canada.

Patrick Leblond   CN-Paul M. Tellier Chair on Business and Public Policy, L’Université d’Ottawa/University of Ottawa
Costanza Musu   Associate Professor, Graduate School of Public and International Affairs, L’Université d’Ottawa/University of Ottawa

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