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MacDonald Laurier Institute

Bureaucrats should not be arbiters of our online world

Published

8 months ago

18 minute read

From the Macdonald Laurier Institute

By Leonid Sirota and Mark Mancini

When it comes to regulating the internet, Ottawa tells Canadians to simply “trust the experts.”

The federal government has pursued a far-reaching internet regulation agenda. This includes the Online Streaming Act (previously known as Bill C-11) and the Online News Act (previously known as Bill C-18). Both are ostensibly designed to force foreign online platforms – streaming ones such as Netflix, Disney+, and YouTube in the former case, Google and Facebook in the latter – to provide support, mainly but not exclusively financial, to Canadian cultural and journalistic producers. The most recent addition to this regulatory programme, Bill C-63, partly targets online platforms too, but its reach is broader. It seeks to prevent a range of “online harms” – from the distribution of child pornography to hate speech.

These legislative endeavours have attracted commentary from all corners, not least from Macdonald-Laurier Institute experts. Much of the discussion has been critical of the government’s policies on the ground of their unwisdom, immorality, and possible unconstitutionality.

But we would like to take a different tack here and focus not on the ends pursued but the means employed by C-11, C-18, and C-63: the empowerment of administrative agencies as rule-makers and arbiters of Canadians’ online world. While they purport to regulate new technologies, business models, and cultural forms, these policies are a throwback to an old philosophy of government that subverts fundamental constitutional principles: democracy, the separation of powers, and the rule of law.

It is worth beginning with a brief restatement of what these principles mean. Democracy means the exercise of political power – law-making, in particular – by either the people themselves or, more commonly, through elected representatives. The separation of powers means that the making and execution of laws are different functions, not to be confused or conflated, and that adjudication of disputes in accordance with the law is a separate function still. The rule of law is a complex idea, but perhaps the pithiest formulation of its core meaning belongs to economist and political philosopher F.A. Hayek: it “means that government in all its actions is bound by rules … which make it possible to foresee how the authority will use its coercive powers in given circumstances.”

Contrast this with the philosophy underpinning the government’s approach to internet regulation. This philosophy permeated the report of a panel commissioned by the federal government at the end of the last decade to propose reforms to Canada’s regulation of the internet. Published in January 2020, “Canada’s Communications Future: Time to Act” called for legislation that would “provide sufficient guidance to assist the [Canadian Radio-Telecommunications Commission (CRTC)] in the discharge of its duties, but sufficient flexibility for it to operate independently in deciding how to implement sector policy. To achieve this, legislative statements of policy should set out broadly framed objectives and should not be overly prescriptive.” Translation: the democratically elected Parliament should not bother with making actual rules; that would be the job of the bureaucrats at the CRTC. They know better – both what the rules should be and how to apply them. Parliament is their enabler, not their master, and the courts should defer to their judgments.

In fairness, the legislation ultimately enacted or considered by Parliament does not go quite as far in empowering the CRTC or a new Digital Safety Commission (DSC) at the expense of Parliament as that report had urged. But it does go far. Probably the most important example of this concerns the amenability of user content – the average TikTok video, rather than Netflix – to CRTC regulation. This was one of the major points of contention when Bill C-11 was before Parliament. The Bill itself – despite claims by the government to the contrary – quite clearly permitted the CRTC to regulate user content, though it did not require it to do so. Amendments to remove this discretionary power were roundly rejected at the government’s insistence, in favour of leaving the user content question open for decision by the CRTC – only for the government to issue a Policy Direction to the CRTC “not to impose regulatory requirements” on user content.

The real scope of the law, and hence the degree of its impact on the freedom of expression of ordinary Canadians, will thus be fleshed out through the interplay of policy directions from Cabinet and CRTC consultations and orders. The same goes for various other aspects of the Online Streaming Act, such as Canadian content and discoverability requirements to be imposed on online platforms. The Online News Act, had it functioned as intended, would similarly have given the CRTC the final say over the extent of the obligations of the platforms subject to it. (In reality, one of these two platforms instead banned the publication of news content, and to avoid the other doing the same thing, the government made a deal with it that eviscerated the act.) And under Bill C-63, the decisions as to whether an online platform’s policies are “adequate to mitigate the risk that users … will be exposed to harmful content” is similarly within the remit of the DSC, with little if any guidance from Parliament as to what is in fact required.

This way of doing things undermines parliamentary democracy as anyone, except some scholars of administrative law would understand it. The people elected to make laws do not, in fact, make them in any meaningful way. On the contrary, they pawn off responsibility for contentious policy choices to administrators; they enact no more than empty shells, politely described as “framework legislation,” full of blanks to be filled out later. This transgression against constitutional principle is compounded when Cabinet makes a mockery of the parliamentary process with its policy flip-flops, which can then be reversed by further Cabinet fiat. The excuse typically given for this dereliction of duty is that the problems to be addressed are too complex for parliamentarians to deal with, which only makes one wonder at their nerve to have put themselves forward to do a job they are concededly unqualified for in the first place.

Enthusiasts for the internet agenda may say that it remedies its democratic deficiencies by consulting with those subject to new registration requirements. Yet CRTC consultations on the Online Streaming Act provided no more than a shabby ersatz of what democracy is supposed to mean – debate and discussion in Parliament. The submission period was short,  and “industry-focused.” The CRTC ended up issuing orders requiring registration on a range of internet services that meet a $10 million revenue threshold, and the government issued a policy direction to the CRTC instructing that user content not be regulated. The CRTC’s regulatory plan for the Online Streaming Act is still being developed, and will likely involve further decisions about the reach of registration requirements. Whether the DSC does any better – if and when it implements Bill C-63 – remains to be seen. But, in any case, consultations that only include industry players, or some nominal number of users, cannot replicate an engaged and informed Parliament that weighs competing interests. Nor can it replace an engaged and informed citizenry, holding politicians to account for their choices at the ballot box.

Separation of powers fares no better. Instead of Parliament making laws, independent prosecutors bringing charges, and independent courts ruling on them, the CRTC and DSC combine their broad rule-making powers with the ability to both jawbone and outright prosecute online platforms, and to rule on the charges. The Canadian Civil Liberties Association rightly laments “the vast authority bestowed upon” the DSC “to interpret the law, make up new rules, enforce them, and then serve as judge, jury, and executioner.”

Here again, proponents of administrative power think they have an answer. Instead of the old-fashioned institutions wielding divided powers, they say the modern world requires the government’s full authority to be concentrated in the hands of experts. Agencies like the CRTC and, presumably, the DSC have the skills and wisdom to deal with the complex and increasingly difficult online environment. This claim is attractive in part because the layman often cannot comprehend the size and scale of challenges that modern regulation confronts, while politicians are all too often happy to demonstrate their unseriousness and ignorance.

But, in addition to its other problems, the vision of expert administrators who know better is simply unwarranted by the facts. For example, Konrad von Finckenstein, former chair of the CRTC, has told a Senate committee studying Bill C-11 that the CRTC simply does not normally deal with matters of this nature; and that the CRTC will likely need to hire contractors to fulfil its mandate under the legislation. The CRTC is also, by its own admission, not really up to speed when it comes to the universe of online media it is required to regulate under the Online Streaming Act: it has invoked the need to gather information about podcasting to justify its far-reaching registration requirements for platforms that host them. As for the DSC, it will of course be an entirely new bureaucratic structure with no existing expertise at all. Perhaps the government will appoint experts to it. But it doesn’t have to. Bill C-63 imposes no requirements as to the qualifications of the DSC’s members other than their being Canadian citizens or permanent residents. Under the Canadian Radio-television and Telecommunications Commission Act, the same is also true of the CRTC.

Over-reliance on administrative regulation and enforcement undermines the rule of law too, by making the rules applicable to the internet uncertain and their application unpredictable. The legislation relies on vague terms that will only be fleshed out as the agencies that apply it go along, which will discourage innovation, chill expression, and incentivize platforms to take quick action against their users to avoid getting into trouble with the regulators. And if the victims of unfavourable rulings want to challenge them in actual courts, the Supreme Court’s precedents prevent judges from coming to their own independent assessment of what the law requires, but instead require them to yield to the bureaucrats’ interpretations unless these are not “merely” mistaken, but outright unreasonable. Even the requirements of the Canadian Charter of Rights and Freedoms are dissolved in this bureaucratic acid; from the supreme law of Canada, they are diluted into values that must, to be sure, be taken into account, but only as a factor among others.

All this may seem like legalistic pedantry propounded by academics who do not care about the pressing needs of contemporary society. But that impression would be mistaken. It is precisely the government’s disregard for Canada’s constitutional foundations that ultimately ensures that the rules produced for it by its administrative instrumentalities are out of touch.

Instead of legislation reflecting Canada’s public opinion as represented in Parliament, we are to be governed by rules drafted by unrepresentative bureaucrats, potentially influenced by special interest groups with a privileged access to them. Instead of the exercise of coercive power being channelled through institutions with limited remits keeping one another accountable, we are told to trust experts who cheerfully admit having no real expertise to speak of. And instead of the law being predictably and impartially applied by judges who are not invested in the government’s policy and do not depend on government goodwill for reappointment, the law, and the constitution itself, only count insofar as they are consistent with administrative need.

It may be that we are stuck with the administrative state. Although some scholars have made arguments to the contrary, we believe that, as a matter of law, Parliament is entitled to delegate very considerable policy-making powers to agencies such as the CRTC and the DSC. If the government is set on pursuing its regulatory agenda through the old-fashioned means of creating and empowering bureaucratic structures, the courts will not save us, even though, as we have argued elsewhere, they have become rather more skeptical of the administrative state’s claim to be the solution to all the problems of the modern world than they used to be until fairly recently.

But the government having the authority to do something does not mean that doing it would be a good idea. It, and we the citizens, should embrace the judiciary’s skepticism of the vision of government-by-administrator that characterizes the federal government’s plans. More to the point, we should recall what our most important constitutional principles mean. If we are not to erode them, we need to reject the means the government is proposing to employ, as well as, arguably, the ends it is pursuing.

Leonid Sirota is Senior Fellow with the Macdonald-Laurier Institute, and an Associate Professor in the School of Law at the University of Reading, in the United Kingdom, where he teaches public law. His research interests include the rule of law, constitutional interpretation, administrative law, the freedoms of conscience and expression, election law, and other aspects of Canadian and comparative public law.

Mark Mancini, a Senior Fellow with the Macdonald-Laurier Institute, is a Ph.D. candidate at the University of British Columbia, Peter A. Allard School of Law. He holds a J.D. from the University of New Brunswick, Faculty of Law, and an LL.M. from the University of Chicago Law School.

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Mexican cartels are a direct threat to Canada’s public safety, and the future of North American trade

Crime

Mexican cartels are a direct threat to Canada’s public safety, and the future of North American trade

Published on November 21, 2024

By

From the Macdonald Laurier Institute

By Gary J. Hale for Inside Policy

RCMP raided a fentanyl ‘superlab’ in Falkland, BC, with ties to a transnational criminal network that spans from Mexico to China.

On October 31, residents of Falkland, BC, were readying their children for a night of Halloween fun. Little did they know that their “quaint, quiet, and low-key little village” was about to make national headlines for all the wrong reasons.

On that day, RCMP announced that it had raided a fentanyl “superlab” of scary proportions near Falkland – one that police called the “largest and most sophisticated” drug operation in Canada. Officers seized nearly half-a-billion-dollars’ worth of illicit materials, including 54 kilograms of finished fentanyl, 390 kilograms of methamphetamine, 35 kilograms of cocaine, 15 kilograms of MDMA, and six kilograms of cannabis” as well as AR-15-style guns, silencers, small explosive devices, body armour, and vast amounts of ammunition.

They also found massive quantities of “precursor chemicals” used to make the drugs. This strongly suggests that the superlab was tied into a transnational criminal network that spans from Mexico to China – one that uses North America’s transportation supply chains to spread its poisonous cargo across Canada and the United States.

The Canada-US-Mexico relationship is comprised of many interests, but the economic benefits of trade between the nations is one of the driving forces that keep these neighbours profitably engaged. The CUSMA trade agreement is the successor to NAFTA and is the strongest example globally of a successful economic co-operation treaty. It benefits all three signatories. This level of interdependence under CUSMA requires all parties to recognize their respective vulnerabilities and attempt to mitigate any threats, risks, or dangers to trade and to the overall relationship. What happens to one affects all the others.

The supply chain, and the transport infrastructure that supports it, affects the balance books of all three. While the supply chain is robust and currently experiences only occasional delays, the different types of transport that make up the supply chain – such as trucks, trains, and sea-going vessels – are extremely vulnerable to disruption or stoppages because of the unchecked violence and crime attributed to the activities of Mexican Transnational Criminal Organizations (TCOs). These cartels operate throughout Mexico, from the Pacific ports to the northern plains at the US-Mexico border.

The sophistication of the Falkland superlab strongly suggests connectivity to multi-national production, transportation, and distribution networks that likely include China (supply of raw products) and Mexico (clandestine laboratory expertise).

For most Canadians, Mexican cartels call to mind the stereotypical villains of TV and movie police dramas. But their power and influence is very real – as is the threat they pose to all three CUSMA nations.

Mexico’s cartels: a deadly and growing threat

Mexican cartels started as drug trafficking organizations (DTOs) in the 1960s. By the late 1990s they had evolved to become transnational enterprises as they expanded their business beyond locally produced drugs (originally marijuana and heroin) to include primarily Colombian cocaine that they transported through Mexico en route to the US and Canada.

Marijuana and the opium poppy are cultivated in Mexico and, in the case of weed, taken to market in raw form. While the cartels required some chemicals sourced from outside Mexico to extract opium from the poppy and convert it into heroin, the large-scale, multi-ton production of synthetic drugs like Methamphetamine and today Fentanyl expanded the demand for sources of precursor chemicals (where the chemical is slightly altered at the molecular level to become the drug) and essential chemicals (chemicals used to extract, process, or clean the drugs.)

The need to acquire cocaine and chemicals internationalized the cartels. Mexican TCO’s now operate on every continent. That presence involves all the critical stages of the criminal business cycle: production, transportation, distribution, and re-capitalization. Some of the money from drug proceeds flow south from Canada and the US back to Mexico to be retained as profits, while other funds are used to keep the enterprise well-funded and operational.

In Mexico, the scope of their activities is economy-wide; they now operate many lines of criminal business. Some directly affect Mexico’s economic security, such as petroleum theft, intellectual property theft (mainly pirated DVDs and CDs), adulterating drinking alcohol, and exploiting public utilities. Others are in “traditional” criminal markets, such as prostitution, extortion, kidnapping, weapons smuggling, migrant smuggling and human trafficking. Organized auto theft has also become another revenue stream.

Criminal Actors

The Cartel de Sinaloa (CDS or Sinaloa Cartel) and the Cartel Jalisco Nueva Generacion (CJNG) are the two principal TCO’s vying for territorial control of Mexico’s air, land, and maritime ports, as well as illegal crossing points. These points on the cartel map are known as “plazas,” and are often between formal ports of entry into the US. By controlling territories crucial for the inbound and outbound movement of drugs, precursors, people, and illegal proceeds, the cartels secretly transport illicit goods and people through commercial supply chains, thus subjecting the transportation segment of legitimate North American trade to the most risk.

That is giving the cartels the power to impair – and even control – the movement of Mexico’s legitimate trade. While largely kept out of the public domain, incidents of forced payment of criminal taxation fees, called “cuotas,” and other similar threats to international business operations are already occurring. For instance, cuotas are being imposed on the transnational business of exporting used cars from the US to Mexico. They’re also being forced on Mexican avocado and lime exporters before the cartels will allow their products to cross the border to the US and international markets. This has crippled that particular trade. Unfortunately, the Mexican government has been slow to react, and the extortion persists throughout Mexico. It is worth repeating – these entirely legitimate goods reach the market only after cartel conditions are met and bribes paid.

The free trade and soft border policies of the US of recent years have allowed cartel operatives to enter that country and work the drug trade with limited consequence. In May, the U.S. Drug Enforcement Administration (DEA) published the National Drug Threat Assessment 2024, where it reported that the Jalisco and Sinaloa cartels operate in all 50 US states and are engaged in armed violence in American cities as they fight for market shares of the sales of Methamphetamine, Fentanyl, and other drugs sourced from Mexico.

The DEA’s findings should sound alarms in Canada. Canada and the US have similar trade and immigration policies, which allow the Mexican cartels to easily enter and control the wholesale component of the drug trade. The long-term effects of the drug trade are the billions of dollars gained that allow for the corruption of government officials. Canada should be on guard: Mexican drug cartels in Canada could begin to not only kill ordinary Canadians by knowingly selling them deadly drugs like Fentanyl – their operatives can also embed themselves in Canadian society, as they have in the US, leading to ordinary citizens on Canadian streets being victimized by the armed violence cartels regularly use to assert their position and power.

Organized crime and Mexican governance

Canada faces these threats directly, but the indirect ones that the cartels present to Mexican governance are no less consequential to Canada in the long term – and likely sooner. Illicit agreements between corrupt Mexican government officials and the cartels assure that the crime organizations retain control of territory and have freedom to operate.

That threat is becoming increasingly existential. Cartel fighters are well disciplined, well equipped and strong enough to challenge Mexico’s military, currently the government’s main tool to fight them. Should the TCOs come to dominate Mexican society or gain decisive influence over government policy, Mexico’s government risks being declared a narco-democracy and the US may come to see the cartels as a threat to national security. That in turn could lead to a US military intervention in Mexico – not an outcome desired by either side.

While that scenario may be considered extreme, it is not as far from reality as many may think. While in many respects the US-Mexico trading relationship remains unchanged, the overall political context has become testy – and could be a real flashpoint for the incoming Trump administration.

Political developments in Mexico have played a role. After his election in 2018, former Mexican President Andrés Manuel López Obrador (commonly referred to his initials, AMLO) demonstrated a disdain for all things North American. This included frequent complaints of US interference or violation of Mexican sovereignty – complaints that were more about keeping Mexican government domestic actions out of the public eye. To retain a shroud of secrecy over government corruption, Mexico under Amlo started in 2022 to limit the activities and numbers of US federal law enforcement agencies operating there, particularly the FBI, DEA, ATF and ICE. These agencies formerly enjoyed a close relationship with the Mexican Federal Police – a force AMLO disbanded and replaced with the National Guard. The AMLO administration reduced the number of US assets and agents in Mexico, particularly singling out the DEA for the most punitive restrictions.

During his administration, AMLO placed the army and navy in charge of all ports of entry and gave them responsibility for all domestic public safety and security by subordinating the Guardia Nacional (GN), or National Guard, to the army. The GN, the only federal law enforcement agency, has been taken over by military officials who are sometimes corrupt and in league with the cartels.

Mexican President Claudia Sheinbaum, who took office in 2024, has continued AMLO’s organizational moves. Sheinbaum comes from the same political party and has so far extended carte blanche to the military, whose administration is opaque and now operates with impunity, under the guise of “national security” and “sovereignty” concerns.

It is expected that Sheinbaum will continue to shield American eyes from Mexico law enforcement and judicial affairs. The fear in the US law enforcement and national security community is that Sheinbaum may even declare DEA non grata, much as then Venezuelan President Hugo Chavez in 2005 and Bolivian President Evo Morales in 2008 did in their countries. Both were anti-American leftists of the same mindset as AMLO and Sheinbaum, who feared detection of their connections to the illegal drug trade.

Sheinbaum has publicly demonstrated disinterest in the consistent application of the rule of law against the TCOs by stating that she will continue the “hugs not bullets” (“abrazos, no balazos”) non-confrontational, non-interventional posture towards organized crime. Agreements with corrupt government officials will allow the cartels to expand their business and to operate with impunity. Through intimidation, bribery, and murder, the cartels affect decision making at the municipal, state, and federal levels of Mexican government. That leverage, while performed outside the public eye, has the potential to negatively affect supply and demand among the three countries at the very least, and at worst, to signal that cartels in Mexico are directly or indirectly involved in the formulation of government security, immigration, drug, and trade policy.

AMLO enacted constitutional changes that will provide Sheinbaum with the powers of a dictator, giving her administration unchecked control of the executive, legislative, and judicial branches of government. As a result, the judiciary in Mexico is in crisis mode with 8 of 11 Supreme Court Justices resigning in October 2024 to protest the unconstitutional disregard for due process that started with AMLO and continues with Sheinbaum thanks to a “voting for judges” law that she and AMLO have rammed into operation without debate. This development portends even more corruption.

Without the existence of an independent judicial system, these institutional changes could give pause to US and Canadian negotiators when it comes time to renew CUSMA in 2026.

Beyond 2025: Mexican organized crime as a threat to the US and Canada, and Greater North American implications

Most worrying, the cartels will be in a yet stronger position to affect and even dictate the pace and volume of legitimate trade between the US and Mexico under Sheinbaum. This makes Mexico the weakest link among the three CUSMA members.

The US and Canada should therefore be concerned about the strength and power of the cartels because the current trajectory could provide them a greater role in Mexico’s performance as a trade partner. Should this trend continue, the US would likely begin to see Mexico through the lens of a threat to critical components of its national security: 1) the public safety of US citizens being killed in epidemic proportions by the drugs produced by citizens of Mexico; 2) the negative impact or increased cost of commerce that supplies goods to the American market; and 3) the CUSMA relationship that sustains the economic strength of all three participating countries.

This worrisome evolution requires proactivity by Canada and the US to insist that Sheinbaum reverse the gains that the cartels have made to influence policy and erode the government’s monopoly on territorial control and the use of violence, and reverse Mexico’s limits on drug enforcement co-operation with what should be its partners to the north. Pressure should also be applied to demand a return to a drug policy model that includes international law enforcement co-operation and a continuation towards the transformation of the Mexican judicial system from a mixed inquisitorial or accusatorial system to an adversarial system that employs the use of juries, witness testimony, oral hearings and trials, and cross-examination of witnesses, as opposed to a system where cartel-influenced elections could dictate judicial outcomes.

The implications of the further development of a Mexico narco-democracy for US-Mexico-Canada relations would be devastating. Co-operation on public safety and security would cease completely, allowing the cartels to take full control of commercial supply lines, significantly reducing trade between the three nations – likely causing the CUSMA trade deal to fracture until governance returned to duly elected civilian officials.

Continental security and Canada’s contribution

The continued success of CUSMA lies with Mexico more than any other country. Should Mexico continue on its path to autocracy, it could upset the trade deal, crucial to the prosperity of all three countries. Canada is not immune from what on the surface may appear to be mostly bilateral, US-Mexico issues, because, regardless of the commodity – whether it’s consumables or manufactured items – the cartels are positioned and empowered to affect imports, exports, trade, and migration throughout North America.

For the foreseeable future, Mexico is not going to voluntarily change its security posture. This enables the cartels to remain persistent threats, especially to trade. Canada and the US need to continue to jointly insist that Mexico take a stronger stance against organized crime and that it take steps to strengthen the judiciary and the rule of law in that country.

Gary J. Hale served 31 years in the Drug Enforcement Administration (DEA), retiring as an executive-level intelligence analyst. In 2010, he was appointed as Drug Policy fellow and Mexico Studies Scholar at the James A. Baker III Institute for Public Policy at Rice University in Houston, Texas.

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Business

Canada’s struggle against transnational crime & money laundering

Published on November 7, 2024

By

From the Macdonald-Laurier Institute

By Alex Dalziel and Jamie Ferrill

In this episode of the Macdonald-Laurier Institute’s Inside Policy Talks podcast, Senior Fellow and National Security Project Lead Alex Dalziel explores the underreported issue of trade-based money laundering (TBML) with Dr. Jamie Ferrill, the head of financial crime studies at Charles Sturt University in Canberra, Australia and a former Canada Border Services Agency officer.

The discussion focuses on how organized crime groups use global trade transactions to disguise illicit proceeds and the threat this presents to the Canada’s trade relationship with the US and beyond.

Definition of TBML: Trade-based money laundering disguises criminal proceeds by moving value through trade transactions instead of transferring physical cash. Criminals (usually) exploit international trade by  manipulating trade documents, engaging in phantom shipping, and altering invoices to disguise illicit funds as legitimate commerce, bypassing conventional financial scrutiny. As Dr. Ferrill explains, “we have dirty money that’s been generated through things like drug trafficking, human trafficking, arms trafficking, sex trafficking, and that money needs to be cleaned in one way or another. Trade is one of the ways that that’s done.”

A Pervasive Problem: TBML is challenging to detect due to the vast scale and complexity of global trade, making it an attractive channel for organized crime groups. Although global estimates are imprecise, the Financial Action Task Force and The United Nations Office on Drugs and Crime (UNODC) suggests 2-5% of GDP could be tied to money laundering, representing trillions of dollars annually. In Canada, this could mean over $70 billion in potentially laundered funds each year. Despite the scope of TBML, Canada has seen no successful prosecutions for criminal money laundering through trade, highlighting significant gaps in identifying, investigating and prosecuting these complex cases.

Canada’s Vulnerabilities: Along with the sheer volume and complexity of global trade, Canada’s vulnerabilities stem from gaps in anti-money laundering regulation, particularly in high-risk sectors like real estate, luxury goods, and legal services, where criminals exploit weak oversight. Global trade exemplifies the vulnerabilities in oversight, where gaps and limited controls create substantial opportunities for money laundering. A lack of comprehensive export controls also limits Canada’s ability to monitor goods leaving the country effectively. Dr. Ferrill notes that “If we’re seen as this weak link in the process, that’s going to have significant implications on trade partnerships,” underscoring the potential political risks to bilateral trade if Canada fails to address these issues.

International and Private Sector Cooperation: Combating TBML effectively requires strong international cooperation, particularly between Canada and key trade partners like the U.S. The private sector—including freight forwarders, customs brokers, and financial institutions—plays a crucial role in spotting suspicious activities along the supply chain. As Dr. Ferrill emphasizes, “Canada and the U.S. can definitely work together more efficiently and effectively to share and then come up with some better strategies,” pointing to the need for increased collaboration to strengthen oversight and disrupt these transnational crime networks.

Looking to further understand the threat of transnational organized crime to Canada’s borders?

Check out Inside Policy Talks recent podcasts with Christian Leuprecht, Todd Hataley  and Alan Bersin.

To learn more about Dr. Ferrill’s research on TBML, check out her chapter in Dirty Money: Financial Crime in Canada.

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