By Sean Parker, Dawn Jutla, and Peter Copeland for Inside Policy

To promote better results, we lay out a collaborative approach

Despite exaggerated claims about how much fentanyl is trafficked across the border from Canada to the United States, the reality is that our detection, search, and seizure capacity is extremely limited.

We’re dealing with a “known unknown”: a risk we’re aware of, but don’t yet have the capacity to understand its extent.

What’s more, it may be that the flow of precursor chemicals—ingredients used in the production of fentanyl—is where much of the concern lies. Until we enhance our tracking, search, and seizure capacity, much will remain speculative.

As border security is further scrutinized, and the extent of fentanyl production and trafficking gets brought into sharper focus, the role of the federal government’s Precursor Chemical Risk Management Unit (PCRMU)—announced recently by Health Canada—will become apparent.

Ottawa recently took action to enhance the capabilities of the PCRMU. It says the new unit will “provide better insights into precursor chemicals, distribution channels, and enhanced monitoring and surveillance to enable timely law enforcement action.” The big question is, how will the PCRMU track the precursor drugs entering into Canada that are used to produce fentanyl?

Key players in the import-export ecosystem do not have the right regulatory framework and responsibilities to track and share information, detect suspect activities, and be incentivized to act on it. That’s one of the reasons why we know so little about how much fentanyl is produced and trafficked.

Without proper collaboration with industry, law enforcement, and financial institutions, these tracking efforts are doomed to fail. To promote better results, we lay out a collaborative approach that distributes responsibilities and retools incentives. These measures would enhance information collection capabilities, incentivize system actors to compliance, and better equip law enforcement and border security services for the safety of Canadians.

Trade-off bottleneck: addressing the costs of enhanced screening

To date, it’s been challenging to increase our ability to detect, search, and seize illegal goods trafficked through ports and border crossings. This is due to trade-offs between heightened manual search and seizure efforts at ports of entry, and the economic impacts of these efforts.

In 2024, the Canada Border Services Agency (CBSA) admitted over 93 million travelers. Meanwhile, 5.3 million trucks transported commercial goods into Canada, around 3.6 million shipments arrived via air cargo, nearly 2 million containers were processed at Canadian ports, roughly 1.9 million rail cars carried goods into the country, and about 145.7 million courier shipments crossed the border. The CBSA employs a risk-based approach to border security, utilizing intelligence, behavioral analysis, and random selection to identify individuals or shipments that may warrant additional scrutiny. This triaging process aims to balance effective enforcement with the facilitation of legitimate travel and trade.

Exact percentages of travelers subjected to secondary inspections are not publicly disclosed, but it’s understood that only a small fraction undergo such scrutiny. We don’t learn about the prevalence of these issues through our border screening measures, but in crime reporting data—after it’s too late to avert.

It’s key to have an approach that minimizes time and personnel resources deployed at points of entry. To be effective without being economically disruptive, policymakers, law enforcement, and border security need to strengthen requirements for information gathering, live tracking, and sharing. Legislative and regulatory change to require additional information of buyers and sellers—along with stringent penalties to enforce non-compliance—is a low-cost, logistically efficient way of distributing responsibility for this complex and multifaceted issue. A key concept explored in this paper is strengthening governance controls (“controls”) over fentanyl supply chains through new processes and data digitization, which could aid the PCRMU in their strategic objectives.

Enhanced supply chain controls are needed

When it comes to detailed supply chain knowledge of fentanyl precursor chemicals moving in and out of Canada, regulator knowledge is limited.

That’s why regulatory reform is the backbone of change. It’s necessary to ensure that strategic objectives are met by all accountable stakeholders to protect the supply chain and identify issues. To rectify the issues, solutions can be taken by the PCRMU to obtain and govern a modern fentanyl traceability system/platform (“platform”) that would provide live transparency to regulators.   

A fresh set of supply chain controls, integrated into a platform as shown in Fig. 1, could significantly aid the PCRMU in identifying suspicious activities and prioritizing investigations.

Our described system has two distinctive streams: one which leverages a combination of physical controls such as package tampering and altered documentation against a second stream that looks at payment counterparties. Customs agencies, transporters, receivers, and financial institutions would have a hand in ensuring that controls in the platform are working. The platform includes several embedded controls to enhance supply chain oversight. It uses commercially available Vision AI to assess packaging and blockchain cryptography to verify shipment documentation integrity. Shipment weight and quantity are tracked from source to destination to detect diversion, while a four-eyes verification process ensures independent reconciliation by the seller, customs, and receiver. Additionally, payment details are linked to shipments to uncover suspicious financial activity and support investigations by financial institutions and regulators like FINTRAC and FINCEN.

A modern platform securely distributes responsibility in a way that’s cost effective and efficient so as not to overburden any one actor. It also ensures that companies of all sizes can participate, and protects them from exploitation by criminals and reputational damage.

In addition to these technological enhancements and more robust system controls, better collaboration between the key players in the fentanyl supply chain is needed, along with policy changes to incentivize each key fentanyl supply chain stakeholder to adopt the new controls.

Canadian financial institutions: a chance for further scrutiny

Financial institutions (FIs) are usually the first point of contact when a payment is being made by a purchaser to a supplier for precursor chemicals that could be used in the production of fentanyl. It is crucial that they enhance their screening and security processes.

Chemicals may be purchased by wires or via import letters of credit. The latter is the more likely of the two instruments to be used because this ensures that the terms and conditions in the letter of credit are met with proof of shipment prior to payment being released.  Payments via wire require less transparency.

Where a buyer pays for precursor chemicals with a wire, it should result in further scrutiny by the financial institution. Requests for supporting documentation including terms and conditions, along with proof of shipment and receipt, should be provided. Under new regulatory policy, buyers would be required to place such supporting documentation on the shared platform.

The less transparent a payment channel is in relation to the supply chain, the more concerning it should be from a risk point of view. Certain payment channels may be leveraged to further mask illicit activity throughout the supply chain. At the onset of the relationship the seller and buyers would link payment information on the platform (payment channel, recipient name, recipient’s bank, date, and payment amount) to each precursor or fentanyl shipment. The supplier, in turn, should record match payment information (payment channel, supplier name, supplier’s bank, date, and payment amount).

Linking payment to physical shipment would enable data analytics to detect irregularities. An irregularity is flagged when the amounts and/or volume of payments far exceed the value of the received goods or vice versa. The system would be able to understand which fentanyl supply chains tend to use a particular set of FIs. This makes it possible to conduct real-time mapping of companies, their fentanyl and precursor shipments and receipts, and the payment institutions they use. With this bigger picture, FIs and law enforcement could connect the dots faster.

Live traceability reporting

Today, suppliers of fentanyl precursors are subject to the Pre-Export Notification Online (PEN Online) database. This database enables governments to monitor international trade in precursor chemicals by sending and receiving pre-export notifications. The system helps prevent the diversion of chemicals used in the illicit manufacture of drugs by allowing authorities to verify the legitimacy of shipments before they occur.

​To further strengthen oversight, the platform utilizes immutability technologies—such as blockchain or secure immutable databases—which can be employed to encrypt all shipping documents and securely share them. This presents an auditable form of chain-of-custody and makes any alterations apparent. Customs and buyers would have the capability to verify the authenticity of the originating documents in a way that doesn’t compromise business confidentiality. With the use of these technologies, law enforcement can narrow down their investigations.

An information gap currently exists as the receivers of the shipments don’t share their receipts information with PEN. To strengthen governance on fentanyl supply chains, regulatory policy and legislative changes are needed. The private sector should be mandated to report received quantities of fentanyl or its precursors, as well as suspicious receiving destinations. This could be accomplished on the platform which would embed the receiving process, a reconciliation process of the transaction, the secure upload and sharing of documents, and would be minimally disruptive to business processes.

Additionally, geo-location technology embedded in mobile devices and/or shipments would provide real-time location-based tracking of custody transactions. These geo-controls would ensure accountability across the fentanyl supply chain, in particular where shipments veer off or stop too long on regular shipping routes. Canadian transporters of fentanyl and its precursor chemicals should play an important role in detecting illicit diversion/activities.

Digital labelling

Licensed fentanyl manufacturers could add new unique digital labels to their shipments to get expedited clearance. For example, immutable digital labelling platforms enable tamper-proof digital labels for legitimate fentanyl shipments. This would give pharmacies, doctors, and regulators transparency into the fentanyl’s:

• Chemical composition and concentrations (determining legitimate vs. adulterated versions of the drug)
• Manufacturing facility ID, batch ID, and regulatory compliance status
• Intended buyer authentication (such as licensed pharmaceutical firms or distributors)

Immutable digital labelling platforms offer secure role-based access control. They can display customized data views according to time of day, language, and location. Digital labels could enable international border agencies and law enforcement to receive usable data, allowing legal shipments through faster while triggering closer shipment examinations for those without of a digital label.

International and domestic transporter controls

Transporters act as intermediaries in the supply chain. Their operations could be monitored through a regulatory policy that mandates their participation in the platform for fentanyl and precursor shipments. The platform would support a mobile app interface for participants on-the-move, as well as a web portal and application programming interfaces (APIs) for large-size supply chain participants. Secure scanning of packaging at multiple checkpoints, combined with real-time tracking, would provide an additional layer of protection against fraud, truckers taking bribes, and unauthorized alterations to shipments and documents.

Regulators and law enforcement participation

Technology-based fentanyl controls for suppliers, buyers, and transporters may be reinforced by international customs and law enforcement collaboration on the platform. Both CBSA and law enforcement could log in and view alerts about suspicious activities issued from the FIs, transporters, or receivers. The reporting would allow government personnel to view a breakdown of fentanyl importers, the number of import permit applications, and the amount of fentanyl and its precursors flowing into the country. Responsible regulatory agencies—such as the CBSA and PCRMU—could leverage the reporting to identify hot spots.

The platform would use machine learning to support CBSA personnel in processing an incoming fentanyl or precursor shipment. Machine learning refers to AI algorithms and systems that improve their knowledge with experience. For example, an AI assistant on the traceability system could use machine learning to predict and communicate which import shipments arriving at the border should be passed. It can base these suggestions on criteria like volume, price, origin of raw materials, and origin of material at import point. It can also leverage data from other sources such as buyers, sellers, and banks to make predictions. As an outcome, the shipment may be recommended to pass, flagged as suspicious, or deemed to require an investigation by CBSA.

It’s necessary to keep up to date on new precursor chemicals as the drug is reformulated. Here, Health Canada can play a role, using its new labs and tests—expected as part of the recently announced Canadian Drug Analysis Centre—to provide chemical analysis of seized fentanyl. This would inform which additional chemical supply chains should be tracked in the PCRMU’s collaborative platform, and all stakeholders would widen their scope of review.

These new tools would complement existing cross-border initiatives, including joint U.S.-Canada and U.S.-Mexico crackdowns on illicit drug labs, as well as sovereign efforts. They have the potential to play a vital role in addressing fentanyl trafficking.

A robust, multi-pronged strategy—integrating existing safeguards with a new PCRMU traceability platform—could significantly disrupt the illegal production and distribution of fentanyl. By tracking critical supply chain events and authenticating shipment data, the platform would equip law enforcement and border agencies in Canada, the U.S., and Mexico with timely, actionable intelligence. The human toll demands urgency: from 2017 to 2022, the U.S. averaged 80,000 opioid-related deaths annually, while Canada saw roughly 5,500 per year from 2016 to 2024. In just the first nine months of 2024, Canadian emergency services responded to 28,813 opioid-related overdoses.

Combating this crisis requires more than enforcement. It demands enforceable transparency. Strengthened governance—powered by advanced traceability technology and coordinated public-private collaboration—is essential. This paper outlines key digital controls that can be implemented by global suppliers, Canadian buyers, transporters, customs, and financial institutions. With federal leadership, Canada can spearhead the adoption of proven, homegrown technologies to secure fentanyl supply chains and save lives.

Sean Parker is a compliance leader with well over a decade of experience in financial crime compliance, and a contributor to the Macdonald-Laurier Institute.

Dawn Jutla is the CEO of Peer Ledger, the maker of a traceability platform that embeds new control processes on supply chains, and a professor at the Sobey School of Business.

Peter Copeland is deputy director of domestic policy at the Macdonald-Laurier Institute.

By David L. Thomas for Inside Policy

Canadians are rightly under the impression that migrants have been properly vetted before coming into our country. But it’s clear we’re not living up to expectations.

A recently de-classified 2022 report of the National Security and Intelligence Review Agency (NSIRA) suggests we’ve entirely misplaced our priorities when it comes to protecting Canadians from foreigners with dangerous backgrounds. Apparently referring prospective immigrants from places in the world beset with violent extremism for deeper background checks could constitute discrimination against those individuals that is “not justifiable on security grounds.”

Arbitrary discrimination on a prohibited ground is wrong. However, it is obviously important, for example, for the government to conduct proper security checks when we admit people into Canada as immigrants. There are times when certain discrimination might be warranted.

Essentially, for fear of being accused of discrimination, our national security oversight committee has deemed that checking prospective immigrants for ties to terrorist organizations is not a matter of national security. This is plainly absurd and is a grave risk to our national security.

The decision-style report of the NSIRA tribunal related to a group of complaints before the Canadian Human Rights Tribunal (CHRT) under the Canadian Human Rights Act (CHRA). The large group of complainants were citizens of Iran seeking temporary or permanent visas to Canada and who were subjected to security background checks. They alleged discrimination on the basis of race and that the CSIS checks delayed the processing of their visa applications (reported by NSIRA as an average delay of 14 days for temporary visas and 26 days for immigration visas). Iran is a country with which we have no diplomatic relations and we have designated as a state sponsor of terrorism since 2012.

Without the resources of CSIS and a deeper security check, how could an immigration officer in the field determine if a visa applicant may have once been a member of a terrorist organization, like al-Qaeda, or a drug cartel? CSIS security checks are designed to look deeper into an individual’s background, sometimes with the co-operation of foreign spy agencies.

These complaints came across my desk in the final months of my term as the Chairperson of the CHRT. Having previously practiced immigration law for more than 20 years, I was well aware of CSIS security background checks. My expectation was that the NSIRA would recommend dismissal of the complaints because, well of course, checking whether a prospective immigrant is connected to a terrorist organization has to be related to the security of Canada, no?

Apparently not.

The CHRT complaints were suspended under a never-before-used section of the CHRA. Under Section 45, the Minister of Immigration, Refugees and Citizenship Canada gave notice “that the (alleged discriminatory) practice to which the complaint relates was based on considerations relating to the security of Canada.” Despite this notice, the Human Rights Commission declined to dismiss the complaints and instead referred the matter to the NSIRA to provide a report on the matter.

The NSIRA report was the first of its kind and acknowledged there is little legislative guidance on the nature of its role under a Section 45 referral. However, in my view, the NSIRA has usurped the role of the CHRT by determining that the criteria applied for requesting the CSIS background checks “was not justifiable on security grounds.” In my view, their determination should have been limited to only whether the alleged discriminatory practices related to national security.

Nevertheless, the complaints are now proceeding before the CHRT to determine if it was discriminatory to make referrals for security background checks.

Arbitrary discrimination is, in most cases, against the law. However, there are exceptions, and one of them is Section 45 of the CHRA which creates a “carve out” from the normal rules when a matter of national security is on the line. And yet, the NSIRA decision bizarrely set aside national security and failed to grant the exception.

Canada has drastically increased its intake of migrants in recent years. Since 2021, the annual target for permanent residents was almost doubled to 500,000. Non-immigrant foreigners, mostly students and temporary workers, accounted for 2.5 million people, or 6.2% or the population in 2023. As these are people entering Canada legally, Canadians are rightly under the impression that migrants have been properly vetted before coming into our country. But it’s clear we’re not living up to expectations.

Canada recently admitted Muhammad Shahzeb Khan from Pakistan, accused of plotting a massive attack against Jews in New York last October. When this news broke Canada was still reeling from the embarrassment of having just granted Canadian citizenship to Ahmed Fouad Mostafa Eldidi. Along with his son, Mostafa Eldidi, he was arrested in July last year as the pair was accused of being in the advanced stages of  planning a violent attack on behalf of ISIS in Toronto. Apparently, Ahmed appears in a 2015 video dismembering an ISIS prisoner with a sword.

All prospective immigrants to Canada are subject to checks for past criminal activity. However, sometimes an immigration officer might flag an applicant for a security screening by the Canadian Security Intelligence Service (CSIS) to determine if a visa applicant has ties to terrorist groups, espionage, war crimes, crimes against humanity, etc.

In order to protect Canada, immigration officers in the field should have the unfettered discretion to refer any non-Canadian for a CSIS security background check. The referral is not a denial of entry into Canada. Applicants are just being asked to wait a little longer until we’re satisfied about their background. Immigration officers should not be second-guessing themselves about this discretion for fear of a human rights complaint.

Now is the time for Canada to set its priorities right. Our national security must be paramount and should not be hamstrung by unrealistic idealism.

David Thomas, a senior fellow at the Macdonald-Laurier Institute, is a lawyer and mediator in British Columbia. From 2014 to 2021, he was the chairperson of the Canadian Human Rights Tribunal.