Budget will require crowdfunding platforms to report suspicious transactions

Popular online crowdfunding platforms and their payment processors will soon be required to report suspicious transactions to Canada’s money laundering and terrorist financing watchdog.

The policy shift, outlined in Thursday’s budget, follows the anti-vaccine convoy protest that paralyzed downtown Ottawa for three weeks and blocked several border crossings.

Crowdfunding campaigns raised millions of dollars for the event from donors located in Canada, the United States and around the world.

A campaign on GoFundMe raised $10.1 million for the protest before the company – fearing it was violating GoFundMe’s terms and conditions – shut it down. A second Freedom Convoy 2022 campaign hosted by GiveSendGo raised US$9.7 million while the Adopt a Trucker campaign, which is still running on GiveSendGo, raised US$591,440.

A separate online cryptocurrency crowdfunding campaign raised more than $1 million for the protest, much of it from anonymous donors.

Most Canadian financial institutions are required by law to report certain transactions to the Financial Transactions and Reports Analysis Center (FINTRAC), which searches for financial transactions that may be related to money laundering or terrorist financing. But the emergence of online crowdfunding sites since FINTRAC’s most recent revision has meant that they are not covered.

Crowdfunding campaigns for the convoy protest have drawn attention due to the speed with which funds were raised and the size of some of the six-figure donations from businesses and individuals. He also pointed to the fact that crowdfunding platforms were generally unregulated in Canada and that the rules that did exist were largely set by the crowdfunding companies themselves.

Extend the reach of regulations

In her budget tabled Thursday, Finance Minister Chrystia Freeland said the government would introduce new regulations to expand existing rules that require businesses to report things like suspicious transactions or financial transfers of $10,000 or more. .

“The federal government is working to bring into force new regulations that extend AML/ATF requirements to payment service providers and crowdfunding platforms,” ​​the government wrote. “This will ensure that these companies are required to monitor and report any instances of suspicious activity that may involve attempted money laundering or terrorist financing.”

In separate testimony before the House of Commons Finance Committee in recent weeks, FINTRAC and RCMP officials said they saw no signs of terrorist financing during the convoy rally. trucks.

A protester argues with police on the 17th day of the convoy protest in Ottawa on February 13, 2022. (Justin Tang/The Canadian Press)

When the federal government invoked the Emergencies Act to deal with the protest, it required crowdfunding services to register with FINTRAC. This requirement ended when the Emergencies Act was repealed.

By regulation, the government can make the requirement permanent without having to seek parliamentary approval.

To allow FINTRAC to add crowdfunding platforms and payment processors to its workload, the budget plans to provide it with an additional $89.9 million over five years and $8.8 million thereafter. representing a 24% increase in funding and a 13% increase in staffing.

“This increased capacity will allow FINTRAC to implement new anti-money laundering and anti-terrorist financing requirements for crowdfunding platforms and payment service providers; to support the supervision of federally regulated financial institutions; continue to develop expertise related to virtual currency, modernize its compliance functions and update its financial management, human resources, intelligence and disaster recovery systems,” the government wrote.

Government plans crypto review

The government also plans to strengthen the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, as well as sections of the Criminal Code and other laws, and will conduct a review of the anti-money laundering regime. money and the financing of terrorism to fill the gaps identified.

In the budget, the government says it also plans to launch a legislative review of digital currencies and help manage the risks of digitalization.

“Over the past few months, for example, there have been a number of high-profile examples – both around the world and here in Canada – where digital assets and cryptocurrencies have been used to avoid global sanctions. and fund illegal activities,” the government said. wrote.

An advertisement for the Bitcoin cryptocurrency is displayed on a street in Hong Kong on February 17, 2022. (Kin Cheung/AP Photo)

The crowdfunding platforms and payment processors involved in the convoy protest fundraisers have yet to respond to CBC News requests for comment. In testimony before House of Commons committees, they indicated that they would be willing to report to FINTRAC.

Kim Wilford, GoFundMe’s general counsel, said the company is willing to work with the government.

“To the extent that it is determined that we should be regulated by FINTRAC, we will be happy to assist and cooperate,” Wilford told the public safety committee on March 3.

Katherine Carroll is global policy manager for Stripe, which processes payments for a number of crowdfunding platforms. She said he pre-registered with FINTRAC when the Emergencies Act was passed.

“We have been in active communication with FINTRAC and stand ready to cooperate and comply with any permanent regulatory changes that are enacted, whether through new legislation or as part of the implementation of the Retail Payment Business Act,” she told the public safety committee. .

Jacob Wells is co-founder of GiveSendGo, which has held fundraisers in the past for members of the Proud Boys – which has been designated a terrorist group in Canada. He told the public safety committee that his company would comply with the FINTRAC reporting requirement.

“We will do everything we are required to do by law to keep our platform viable and to continue the service we provide to Canadians and others around the world,” Wells said.

Elizabeth Thompson can be reached at [email protected]