Emergencies Act Canada: What Do Financial Institutions Need To Do Now?

Following weeks of protests by truckers opposing Canada’s vaccine mandates – labeled the ‘Freedom Convoy’ – on February 15th 2022 Canada’s Attorney General, alongside other members of the government, declared a public order emergency. To do this, the government invoked the Emergencies Act in an attempt to end the protests said by the government to be causing disruptions and border blockades. 

When did the Federal Emergencies Act come into force?

Canada’s Emergencies Act dates back to the 1980s, and covers four types of national emergencies: a public welfare emergency, a public order emergency, an international emergency and a war emergency. Some members of parliament have criticized the use of the Emergencies Act to end protests in Canada, arguing it is “only to be used when the situation is so drastic that no other Canadian law can deal with the situation.”

What does the Emergencies Act mean for FIs in Canada?

Under the Emergencies Act, the Canadian government argues it has the authority to apply a series of “temporary” measures in an attempt to end the protests. One measure empowers the government to authorize or direct Financial Institutions (FI) “to render essential services to relieve the impact of blockades, including by regulating and prohibiting the use of property to fund or support the blockades”.

FIs will now be compelled to turn their attention to citizens and businesses involved in supporting the financing of protesters.

In her remarks regarding the use of the Emergencies Act, Chrystia Freeland, Canada’s Deputy Prime Minister and Finance Minister, said “This is about following the money…We are today serving notice: if your truck is being used in these protests, your corporate accounts will be frozen. The insurance on your vehicle will be suspended.” Freeland added that she “spoke directly with the heads of Canadian banks and I would like to commend them for doing their part to uphold Canadian laws”.

What measures are included? 

The ‘Emergency Economic Measures Order’ will last for 30 days from its invocation on February 15th. The order also states that no civil proceedings will be brought against firms as a result of their actions to comply with the legislation. 

The specific measures FIs need to consider and act upon include:

• An extension to the scope of Canada’s Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) rules to include crowdfunding platforms and the payment processors they use. With this change, all types of transactions including virtual assets like cryptocurrencies would be in scope.
• Crowdfunding platforms and payment service providers in ‘possession’ or ‘control’ of any funds “owned, held or controlled by or on behalf of anyone involved in the illegal blockades” must now register with Financial Transactions and Reports Analysis Center of Canada (FINTRAC) and report suspicious or large value transactions.
• A requirement for Canadian banks, insurance firms and other financial service providers to temporarily stop providing services in situations where both personal and/or corporate accounts are being used to support the protests. This is applicable to all funds, whether held in a deposit chequing, savings or trading account. It also covers cryptocurrency wallets, lending products, investment assets and insurance policies for vehicles used in the protests.
• Canada’s financial institutions have also been directed to review their relationships with anyone believed to be involved in the protests and to report the assets and connected transactions of those involved to the Royal Canadian Mounted Police (RCMP) or Canadian Security Intelligence Service (CSIS).
• Finally, the order gives federal, provincial, and territorial government institutions the authority to share information with banks and other financial service providers – and goes further by allowing Canada’s financial institutions to immediately freeze or suspend accounts without the need for a court order of individuals and businesses affiliated to the protests.

Explore Canada’s shifting AML/CFT landscape in more detail with our in-depth guide

Originally published February 21, 2022, updated May 6, 2022