Understanding Financial intelligence and its role in monitoring the "Freedom Convoy"
A guest column from an expert
Wesley Wark’s preface:
I have encouraged experts in diverse aspects of national security and intelligence to contribute guest columns for this newsletter. I am delighted that first up to bat is John Pyrik.
His brief bio is here:
John Pyrik formerly worked at FINTRAC as an analyst and is the author of a chapter on the organization in Top Secret Canada, University of Toronto Press, 2021. He currently teaches for the Justice Institute of British Columbia.
As some readers may know, we now possess a detailed forensic analysis of the efforts made by Freedom Convoy organizers to raise funds for their protest over various platforms. Ultimately they were able to raise a staggering total of c. $24 million, but only about $1 million of this ever reached them. The analysis is available on the Public Order Emergency Commission website:
https://publicorderemergencycommission.ca/files/overview-reports/COM.OR.00000005.pdf?t=1667755171
One of the key crowd-sourcing platforms used by the Freedom Convoy was “GoFundMe.” The “GoFundMe” account was shut down because of concerns by the account that the Freedom Convoy was encouraging unlawful activities, contrary to the Fund’s terms of reference.
The Public Order Emergency Commission analysis of convoy fund-raising was retrospective. We may learn more through future testimony about what was known at the time.
It is in this context that I asked John Pyrik to explain the functioning of Canada’s principal financial intelligence unit, FINTRAC (Financial Transactions and Reports Analysis Centre of Canada—whew). Here is his account, which draws attention to some important potential blindspots. My thanks to John!
John Pyrik writes :
Before GoFundMe shut down the account on 2022 02 04, over $10 million had been donated to the Freedom Convoy.
Fundraising platforms like GoFundMe are not “reporting entities” under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA). See: Who Must Report.
But this doesn't mean that FINTRAC can't receive reports about crowdfunding sites. It is just that crowdfunding sites themselves aren’t obligated to file reports.
Crowdfunding sites are covered indirectly under the legislation. Back in February, Barry MacKillop, the deputy director of FINTRAC responsible for tactical intelligence and targeted strategic intelligence, explained how this works to the House Committee on Public Safety and National Security (SECU).
Anybody who donates to a GoFundMe page would need a credit card or use an intermediary like Stripe or PayPal.
The bank that issued the credit card is covered by the PCMLTF Act as are Stripe and PayPal who are money service businesses (MSB).
When GoFundMe disburses funds, if they go to Canadian bank account, that bank could report anything they deemed to be suspicious or relevant to money laundering, terrorist financing or IMVE (ideologically motivated violent extremism) activity to FINTRAC.
That qualifier "could" is very important and points to a potential blind spot.
"What's happening in Ottawa has not been, to my knowledge, identified as ideologically motivated violent extremism," MacKillop told the Committee. He added that "We have not seen a spike in suspicious transaction reporting, for example, related to this."
Implication: FINTRAC gave no special instructions to reporting entities about the Freedom Convoy. These entities had to decide for themselves whether to report transactions or not pursuant to existing guidelines.
Another potential blindspot was revealed when MacKillop explained that, "We do not consider crowdfunding platforms to be tools that could be used to launder money or finance terrorist activities."
Implication: FINTRAC likely has poor surveillance and knowledge of fundraising platforms.
In short, FINTRAC was counting on the banks and money service businesses that transferred money to GoFundMe to send in a Suspicious Transaction Report (STR) or Voluntary Information Report (VIR) on the Freedom Convoy, if in their judgement it related to terrorism financing.
Although the bar is set very low for STRS (reasonable grounds to suspect), it is extremely unlikely that any bank or MSB took the initiative to send in any reports on the Freedom Convoy. MacKillop confirmed as much when he said that FINTRAC saw no spike in reporting.