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MacDonald Laurier Institute

The Governor General deserves better, but we deserve impartiality

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From the Macdonald Laurier Institute

By Philippe Lagassé

Mary Simon’s impartiality was undermined by hosting a symposium tied to controversial government legislation.

Mary Simon has been a guarded Governor General. She’s adopted a low profile since her appointment, performing her vice-regal responsibilities without much notice. When she has been in the news, it’s usually because of her efforts to learn French and costly diplomatic trips, not on account of an initiative she’s launched or a stance she’s taken. Aside from routine public statements and some championing of Indigenous reconciliation, Simon hasn’t tried to make a mark. Until last week, that is.

On April 11, Her Excellency hosted a symposium on online abuse and creating safe digital spaces. Simon has been the target of vitriol on social media, a reality she shares with many public figures, particularly women. She wants to address this problem, stressing that “we deserve better.” As far as causes go, this is a laudable one. Online abuse is a serious issue, one that can excuse and encourage physical violence and attacks. To highlight the severity of the challenge, the Governor General’s symposium featured well-known Canadians who’ve also suffered from online abuse and are determined to fight it.

Unfortunately, the Governor General’s symposium took place while a government bill on online harms is making its way through Parliament. Bill C-63, the Online Harms Act, has been the source of significant controversy, notably around its impact on free expression and the potential life sentences it imposes on certain types of hateful speech. C-63 has been criticized by law professors, civil liberties advocates, and the Conservative Party. While there may be a general consensus that online abuse is a scourge, the solution is contentious, and Bill C-63 has been the subject of serious debate.

As well-intentioned as the Governor General’s symposium was, she should never have hosted it in this context, a conclusion that’s reinforced by the Minister of Justice publicly tying the event to bill C-63. As soon as the government tabled the bill, Her Excellency should have understood that the symposium was no longer appropriate and would present a risk to her office’s impartiality.

The Governor General is the second highest office of the Canadian state, right under the King. As the King’s vice-regal representative, the Governor General performs core constitutional functions. These demand that the Governor General not only act impartially but be perceived to be impartial. This isn’t just good form, it’s a fundamental part of the job.

As part of their constitutional role, Governors General exercise the Crown’s reserve powers. These include the granting of royal assent to legislation on the advice of the houses of Parliament, proroguing and dissolving Parliament on the advice of the Prime Minister, and inviting a party leader to form a new government when the serving Prime Minister resigns. Impartiality helps shield the Governor General from partisan attacks when exercising these powers and maintains public trust in the office.

Now, to be clear, the Governor General has very limited discretion in exercising these reserve powers. As long as the Prime Minister’s party holds the confidence of the House of Commons, the Governor General must almost always accept their advice. Yet, there have been and will be cases where vice-regal representatives exercise their discretion to decide the fates of governments or guard against unconstitutional abuses of power. When these occur, we need the Governor General to be respected as a non-partisan, politically neutral office. Doubts about a Governor General’s impartiality undermine her or his constitutional functions and can weaken trust in the office when it’s most needed.

Turning back to the symposium, it’s important to clarify why it undermined her impartiality, or at least perceptions of it. Defenders of the symposium have argued that the event didn’t feature any members of the government as speakers, hence it wasn’t partisan or meant to endorse the Online Harms Act. Suffice to say, had ministers spoken at the event, we would be dealing with an outright constitutional debacle, not just concerns about vice-regal impartiality. A full-on violation of constitutional norms isn’t the standard here. Instead, we should be asking why the Minister of Justice was even there, and why the Governor General decided to host the symposium, considering how contentious Bill C-63 has been already. Hosting the event allowed Her Excellency to get pulled into the partisan fray, a predictable outcome that she shouldn’t have risked.

Those who participated in the symposium will counter that it was the Minister of Justice who made the connection with Bill C-63, not the Governor General. Her Excellency’s motives, and the importance of the cause addressed by the symposium, shouldn’t be impugned by a careless, partisan tweet. Alas, partisans are going to partisan and politicians are going to politick. This is precisely why vice-regal representatives should avoid wading into politically charged topics. Expecting politicians to show restraint and respect the neutrality of the office of the Governor General is more than a tad naive. Vice-regal representatives should have the wherewithal to avoid situations where their office can be leveraged for partisan purposes.

Defenders of the symposium offer another argument: as the sovereign’s representative, the Governor General should address important social problems that affect Canadians. The vice-regal role shouldn’t be confined to constitutional functions, ceremonies, and commemorations. Not allowing vice-regal representatives to advocate for the public good would be a lost opportunity. This is a fair point, though Governors General need to be careful about what causes they take up. When it comes to vice-regal advocacy, banal benevolence is the way to go. Anything that’s the subject of notable partisan and parliamentary debate, is ideologically fraught, or might be fought over during an election should raise red flags.

Thankfully for the Governor General, the controversy surrounding her symposium hasn’t extended beyond the Ottawa bubble yet. She should keep it that way by abandoning her “We Deserve Better” campaign while partisans battle it out over Bill C-63 and the courts review the Online Harms Act if it becomes law.

This isn’t because the Governor General doesn’t deserve better; she does, as do all those who suffer online abuse. It’s because Canadians deserve impartiality from the Governor General, both real and perceived.

Philippe Lagassé is an associate professor at Carleton University. He’s the co-editor of Canada and the Crown: Essays on Constitutional Monarchy (2014) and The Crown and Parliament(2015).

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Canada needs to get serious about securing its border

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From the Macdonald Laurier Institute

By Todd Hataley for Inside Policy

US President-elect Donald Trump has made clear his intention to call out Canada on weak enforcement on migration, money laundering, and the cross-border trafficking of narcotics, especially fentanyl.

Until just very recently, Canada has remained largely silent on these issues. Security agencies, such as the Royal Canadian Mounted Police (RCMP), Ontario Provincial Police (OPP), Sûreté du Québec (SQ) and the Canada Border Services Agency (CBSA), have tried to secure the border via memorandums of understanding, framework agreements, and legislated agreements that allow them to share information and even work together.

However, resources are limited for cross-border law enforcement co-operation. CBSA remains  understaffed and RCMP Integrated Border Enforcement Teams (which work with US security agencies) have limited geographic reach, leaving much of the enforcement between ports of entry left to police of jurisdiction, who already are hard pressed to provide services to the communities they serve.

The Canadian government’s apparent strategy of largely ignoring the problem is becoming more difficult to maintain. With the United States Border Patrol intercepting increasing numbers of illegal migrants crossing into that country from Canada, it’s clear the porous border is a concern. Exacerbating the situation is the recent discovery of illegal narcotic super labs in Canada – where production far outstrips the market – and Canada’s unfortunate, albeit well-deserved reputation as a haven for global money launderers.

Thanks to Trump’s 25 per cent tariff threat, the crisis is now endangering Canada’s relationship with its largest and most-important trading partner. This announcement sent all sectors of government and the private sector into a frenzy, prompting Prime Minister Justin Trudeau to fly to Florida to seek out an early audience with Trump at his Mar-a-lago resort home. Trudeau’s team spun the trip as proof that the federal government is serious about working with the US to address its border security and public safety concerns.

But with political crises piling up, it will be difficult for Trudeau to also manage the political optics of kowtowing to Trump, who is widely unpopular among Canadians. Spending extra money to appease Trump during the ongoing housing, immigration, and health care crises could make the Trudeau’s popularity nosedive even further. Adding insult to injury, Trump is essentially demanding that Canada do America’s work by stopping illicit goods and people from entering the United States: customs and border security officials generally work on the principle of stopping goods from entering their country.

Trudeau faces many practical challenges, including the need to ramp up the number of border and law enforcement agents who have the skill sets and training required to police offences such as drug production, money laundering, and the cross-border smuggling of goods and humans. Purchasing helicopters and drones to conduct surveillance will do little to aid enforcement, since most goods smuggled across the border pass through legitimate border crossings. RCMP Commissioner Mike Duheme even suggested putting RCMP cadets along the border – a challenging proposition since vast swathes of the border are either wilderness or water. Surveillance is one thing, but the act of enforcement takes skilled people with the capacity to investigate, gather evidence, and articulate that evidence into something that can be used by the courts for convictions. These concerns are not being addressed in this current frenzy to spend money on border security.

There is also good evidence that fortifying the border, or what has become known as forward deployment along the border, does nothing to stop the cross-border transit of contraband goods and people. One need only look as far as the United States-Mexico border to see the failure of forward deployment.

As authorities increase border enforcement activities, the costs of smuggling goods and people mounts for criminals. Eventually, it drives out amateurs, leaving only the professional, skilled, and well-equipped criminal groups. This, in turn, often leads to increasing levels of violence along the border, making interdiction and disruption far more difficult for law enforcement agencies.

Canada has several clear options to address Trump’s border concerns. It can increase the staffing of frontline CBSA officers, including border agents, inland enforcement units that actively investigate and remove individuals from Canada, international liaison officers, and customs processing staff. It can also create a plan for CBSA to take over enforcement between ports of entry. Currently, CBSA enforces entry into Canada at the ports of entry and the RCMP are responsible for the areas in between. Having a single agency manage the border builds capacity and expertise, avoiding inter-bureaucracy competition and confusion.

Canada can also work to better integrate law enforcement, intelligence units, and border services at all levels of government and across international boundaries. Cross-border crime operations are often planned and execute far from the border.

Some of this already takes place, as noted above, but it needs to go much deeper and be more supportive at both institutional and individual levels. This process must also include private sector stakeholders: companies such as FedEx, UPS, and Amazon, as well as freight forwarders, trucking companies, and customs brokers, are all involved in cross-border trade. Their participation as partners in reducing cross-border criminal activity is essential.

Finally, the government needs to designate laws specific to cross-border crime and include meaningful penalties as a means of deterrence.

Hyper-focusing on the border while ignoring other aspects of cross-border crime may be good political optics, but it is a bad strategy. What we really need is functional enforcement – including an integrated process extended vertically and horizontally across all sectors of border stakeholders, at and away from the border, supported by strong policy and legislation. This is the path forward to better cross-border crime enforcement.


Dr. Todd Hataley is a professor in the School of Justice and Community Development at Fleming College. A retired member of the Royal Canadian Mounted Police, he worked as an investigator in organized crime, national security, cross-border crime, and extra-territorial torture. He is a contributor to the Macdonald-Laurier Institute.

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Canada can – and should – crack down on trade-based money laundering

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From the Macdonald Laurier Institute

By Jamie Ferrill for Inside Policy

Neglecting to take decisive action enables organized criminal networks whose activities cause significant harm on our streets and those of our international partners.

Financial crime bears considerable political and economic risk. For the incoming Trump administration, the threat that transnational organized crime and the illicit financial flows pose to global financial stability is a top priority. The threat of tariffs by the Trump administration makes the costs to Canada in enabling global financial crime all too apparent. In addition to the cost of tariffs themselves, the associated reputational risk and loss of confidence in Canada’s financial system has implications for investments, credit, supply chains, and bilateral co-operation and agreements.

Canada’s proximity to major international markets, stable economy, high standard of living, and strong institutions and frameworks make it an attractive place to do business: for both legitimate and criminal enterprises.

Trade is a key contributing sector for Canada’s economic security. It represents two-thirds of Canada’s GDP, and exports alone support nearly 3.3 million Canadian jobs. Trade is also highly vulnerable to criminal exploitation. Ineffective oversight, regulatory complexity, and lagging technology adoption, coupled with a lack of export controls, make it possible to move vast proceeds of crimes, such as those from drug trafficking, human trafficking, corruption, and tax evasion through the global trade system.

These vulnerabilities are well-known by transnational organized crime groups. They are able to effectively move billions of dollars of dirty money through the global trade system every year, a method commonly referred to as Trade-Based Money Laundering (TBML).

While any statistics must be interpreted with caution, evidence shows that TBML is a prevalent method of money laundering.

What is it?

There are several types of Trade-Based Financial Crimes such as terrorism financing through trade, sanctions evasion, and simply trade fraud. However, the TBML definition is necessarily specific. Essentially here, TBML is a money laundering method: the processing of criminal proceeds to disguise their illegal origin. TBML involves the movement of value through the global trade system to obfuscate the illicit origin. This is usually done through document fraud: undervaluing, overvaluing, phantom shipping, or multiple invoicing. Different techniques employ different aspects of the supply chain. And TBML may be just one method used within larger money laundering operations.

By way of example, US authorities allege that two Chinese nationals living in Chicago laundered tens of millions of dollars for the Sinaloa and Jalisco Cartels. Drugs were smuggled into the United States and sold throughout the country. The proceeds from these sales were collected by the Chinese nationals. Those proceeds were used to purchase bulk electronics in the United States, which were then shipped – with a falsified value – to co-conspirators in China, who sold them locally. The legitimacy provided by the electronics sales and the trade transaction provide cover to “clean” proceeds from precursor crime.

Either the importer and/or the exporter of the goods can shift value. Chances here are the electronics shipped were undervalued: on leaving the country, they are declared at a (much) lower value than they are actually worth. The importer in China pays the undervalued invoice, then sells the goods for what they are worth. The profit from those electronics now appears clean, since it was used for a “legitimate” sale. The ensuing value gap can be transferred informally or stored as illicit wealth. The value has now shifted, without fiat currency leaving the country of origin.

But the cycle does not stop there. The value and money itself continue to traverse around the world, through various intermediaries such as financial institutions or cryptocurrency exchanges. It then goes right back into the system and enables the very crimes and organized crime groups that generated it in the first place. It is, in short, the business model of organized crime.

The Canadian problem

Ultimately, the proceeds of crime that have been legitimised through TBML (and other money laundering methods) supports the criminal enterprises that generated the value in the first place. In the example, these are prolific cartels who have been behind the fentanyl crisis, migrant trafficking and abuse, corruption, and widespread violence that destabilizes communities and undermines governments across North America and beyond.

With new actors, drug routes, and ways of doing business, the cartels are very much active in Canada. The Sinaloa cartel in particular has established a significant presence in Canada where it controls the cocaine market, manufactures and distributes fentanyl, and is embedded in local criminal networks. This increases Canada’s role as a strategic location for drug trafficking and a base to export abroad, notably to Europe, the US, and Australia.

Hells Angels, Red Scorpions, ’Ndrangheta, and other organized crime groups are also exploiting Canada’s strategic location using their transnational links. These groups are active in criminal activities that generate proceeds of crime, which they launder through Canadian institutions. From drug trafficking to extortion to human and sex trafficking, the foundation of organized crime relies on generating and maximizing profits. The proceeds generally need to be laundered; otherwise, there are direct lines back to the criminal organizations. They are, without a doubt, exploiting the trade sector; the very sector that provides so much economic security for Canada.

Canada’s regulation, reporting, and prosecution record for money laundering is notoriously weak. Its record for regulation, reporting, and prosecution for trade-based financial crimes, namely here TBML, is even weaker.

As financial institutions and other regulated entities face increased scrutiny following the TD Bank scandal and the Cullen Commission’s inquiry into money laundering in BC, more criminal activity is likely to be displaced into the trade sector and the institutions it comprises.

TBML is difficult for financial institutions to detect, especially given that 80 per cent of trade is done through open accounts. It exploits established trade structures that are meant to protect the system –like documentation and invoicing processes – by manipulating transactions outside traditional payment systems, which requires more sophisticated anti-money laundering strategies to address these hidden vulnerabilities.

Addressing the problem

Trade is a gaping vulnerability. Yet, it attracts minimal attention in countering transnational financial crime. Containing the fentanyl crisis for one requires a collaborative effort to bolster supply chains and the trade sector against financial crime. This means global cooperation, technological advances (such as blockchain technology), appropriate resourcing, more scrutiny on high-risk countries and shippers, and regulatory innovation.

But political will is in short supply. The federal government’s Budget 2024 and the resulting proposed Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorism Financing Act will grant CBSA new authorities to counter TBML, but limited resources to make good on them. And CBSA cannot do it alone.

Transnational organized crime and the illicit financial flows that support it poses a threat to global financial stability. The enabling of financial crime hurts Canada’s reputation abroad. With a new political regime emerging in the US, Canada cannot afford to be seen as a weak link. Loss of confidence in a country and its financial system has implications for investments, credit, supply chains, and bilateral cooperation and agreements.

By neglecting to take decisive action, we inadvertently enable organized criminal networks whose activities cause significant harm on our streets and those of our international partners. With profits as their primary driver, it is imperative that we scrutinize financial pathways to disrupt these illicit operations effectively.

Organized crime groups are not bound by privacy laws, bureaucracy, political agendas, and government budgets. They are continually evolving and staying many steps ahead of what Canada is equipped to control: technologically, geographically, strategically, logistically, and tactically. Without appropriate regulations, technological advances, and resources in place, we will continue to be a laggard in countering financial crime.

More systematic change is needed across regulatory frameworks, law enforcement coordination and resourcing, and international partnerships to strengthen oversight, close loopholes, and enhance detection and disruption.  It would be a low-cost signal to the Trump administration that Canada is committed to upping its game.


Jamie Ferrill is senior lecturer in Financial Crime at Charles Sturt University and co-editor of Dirty Money: Financial Crime in Canada.

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