Trudeau’s anti-protest law sweeps across Canada’s financial sector

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(Bloomberg) – Prime Minister Justin Trudeau’s emergency orders to cut off funds to protesters have cast a wide net across Canada’s financial industry, forcing portfolio managers and securities firms to take a closer look with who they are dealing with.

The new rules impose requirements on a wide list of entities – including banks, investment firms, credit unions, loan companies, stockbrokers, fundraising platforms, insurance companies and fraternal benefit societies. They must determine whether they are in “possession or control of the property” of someone who is attending an illegal protest or providing supplies to protesters, according to orders issued by the government on Tuesday evening.

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If they find such a person in their client list, they must freeze their accounts and report it to the Royal Canadian Mounted Police or the Canadian Intelligence Service, depending on the regulations. Any suspicious transactions should also be reported to the national anti-money laundering agency, known as Fintrac.

“I think it caught everyone off guard last night when it came out,” Greg Taylor, chief investment officer of fund manager Purpose Investments Inc., told BNN Bloomberg Television. “There are a lot of questions right now about who we are targeting, what should we be looking at.”

The Trudeau government invoked emergency powers on Monday, saying its government must stifle money from protesters who blocked border crossings and who have now been parked in downtown Ottawa for 20 days, refusing to leave. Protesters are demanding an end to vaccination mandates and other Covid-19 restrictions.

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The invocation of emergency powers, which also gives the government the power to ban public gatherings in certain places, has sparked heated debate among lawmakers and concerns that the government is going too far in its attempt to quell the protests that have paralyzed the nation’s capital.

MORE: What Trudeau can and can’t do with emergency powers: QuickTake

Trudeau said the measures will be temporary, targeted and “reasonable and proportionate” to the threats the country faces.

Caldwell Securities, an investment advisory firm that operates in Ontario, has not received any communication from the government or law enforcement, or a list of people whose accounts are supposed to be frozen, Chairman Thomas Caldwell said Wednesday.

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Caldwell said he was unsure how his company would go about enforcing the measures and would seek outside legal advice before making such a decision. The emergency rules are a “posture” on the part of the government, intended to scare protesters enough to wipe out ongoing protests, he said.

“If this thing is going to be implemented, it will start and end at the banking level,” Caldwell said in an interview. “I don’t see it going down to our level. I would be quite surprised.

The new regulations state that the law does not apply to insurance policies and that people who suffer injuries or damages as a result of the order can seek compensation. The order also gives the government the power to designate certain areas as “secure protected places, including critical infrastructure”.

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Financial institutions will be protected from prosecution for actions they take under the emergency order, the government said.

The order also states that governments have the power to “share relevant information with banks and other financial service providers, if such information contributes to stopping the financing of illegal blockades and illegal activities”. This applies not only to the federal government, but also to the provinces and territories, according to a press release from the Ministry of Finance.

The new regulations apply to platforms that collect funds or virtual currency through donations, as well as payment and clearing services, whether they process in regular currency or cryptocurrency.

“Censorship of money is something we see in an authoritarian country, not one like Canada,” said Philippe Jette, senior consultant at Rivemont Crypto Fund. “Regardless of my opinion of the protests, freezing accounts for political reasons is a big, big slippery slope.”

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