Ottawa Permanently Adds Crowdfunding Platforms to Anti-Money Laundering Regime

Hundreds of people gather by TransCanada Highway 20 to show their support to truckers heading to Ottawa to protest against COVID-19 restrictions in Levis, Quebec, on Jan. 28, 2022. (Jacques Boissinot/The Canadian Press)

The Liberal government has followed up on its plan to permanently subject crowdfunding platforms to its anti-money laundering and terrorist financing regime, a measure that had been initially put in place in response to the Freedom Convoy in February.

Blacklock’s Reporter first reported the issue on April 28.

Canada’s financial intelligence agency FINTRAC says the platforms are now required to register with FINTRAC, as well as develop and maintain a compliance program, carry out a “know your client” requirement, and keep certain records such as related to transactions or client identification.

The entities also have to make reports to FINTRAC on certain transactions, such as those over $10,000 or those deemed suspicious. The new regulation will also cover payment service providers which were not already subjected to the regime.

Approximately 1,000 entities will be impacted by the new regulations, according to the Canada Gazette as of April 27.

In its regulatory impact analysis statement on the new regulations, the government says that the lack of previous oversight over the sector presented a “serious and immediate risk to the security of Canadians and to the Canadian economy.”

“This risk was highlighted in early 2022, when illegal blockades took place across Canada that were financed, in part, through crowdfunding platforms and payment service providers. Allowing these gaps to continue represents a risk to the integrity and stability of the financial sector and the broader economy, as well as a reputational risk for Canada,” said the Regulatory Impact Analysis Statement.

The fundraising factor was a key element of scrutiny by authorities during the Freedom Convoy, which demanded the lifting of all COVID-19 restrictions. Within a matter of days, the fundraiser on the GoFundMe platform had amassed several million dollars.

Screenshot of a fundraiser page for the Freedom Convoy on GoFundMe in January 2022. (The Epoch Times via GoFundMe)

“The campaign caught our attention because of the donation velocity” and not because of the nature of the fundraiser, GoFundMe general counsel Kim Wilford told the House of Commons Public Safety Committee on March 3.

It was later cancelled after Ottawa city officials provided the company with unspecified derogatory information on the protesters, which GoFundMe said violated its terms of services.

After the GoFundMe fundraiser was shut down, the organizers established another one on the Christian conservative platform GiveSendGo, and it also racked up several million dollars in a short time.

After Prime Minister Trudeau invoked the Emergencies Act on Feb. 14 in response to the convoy protests, one of the most controversial measures brought about by the declaration of emergency was the freezing of bank accounts of protesters and supporters without a court order.

Minister of Justice David Lametti defended the measure on April 26 before the Special Joint Committee on the Declaration of Emergency.

“We wanted to prevent there being support for illegal activity, directly or indirectly, either through a truck or through financial means. These are things that we do elsewhere to combat terrorism, to fight tax evasion, these are known tools under our legislation and we applied them in these circumstances, and it worked,” said Lametti.

“Yeah, sure it worked. Look, you can kill a fly with a flyswatter or with a tank, but there might be a question of proportionality here,” replied Conservative Senator Claude Carignan.

“I think it was quite proportional. The funds were frozen. We didn’t seize anything,” said Lametti.

Public Safety Minister Marco Mendicino, Deputy Prime Minister and Finance Minister Chrystia Freeland, Justice Minister and Attorney General of Canada David Lametti and President of the Queen's Privy Council for Canada and Emergency Preparedness Minister Bill Blair stand behind Canada's Prime Minister Justin Trudeau announces the Emergencies Act will be invoked to deal with protests, Monday, February 14, 2022 in Ottawa. (Hailey Sani/Public Domain)

Minister of Emergency Preparedness Bill Blair had also raised the funding angle in justifying invoking the Emergencies Act, calling the protests a “largely foreign-funded, targeted and coordinated attack.”

State broadcaster CBC had said there was significant foreign funding supporting the protest, and the government used that reporting in its document explaining why it needed to invoke the Emergencies Act for the first time since its inception in 1988.

That claim was later debunked by GoFundMe president Juan Benitez, who said that 88 percent of donations originated within Canada. There were more foreign donations (40 percent) made to the GiveSendGo fundraiser, but none of that money made it to the organizers due to an Ontario court injunction.

The idea that the funding for the convoy was nefarious in nature was also challenged by a FINTRAC official.

“I think that there were people around the world who were fed up with COVID, who were upset, and saw the demonstrations against COVID [mandates] and I believe that they just wanted to support the cause,” Barry MacKillop, deputy director of intelligence at FINTRAC, told the House of Commons Standing Committee on Finance on Feb. 24.

“It was their money, their own money. So it wasn’t money that funded terrorism or that was in any way money laundering.”