On February 15, 2022, the Federal government enacted a Proclamation Declaring a Public Order Emergency (Order) in accordance with the Emergencies Act (Act) in response to the “Freedom Convoy” protests taking place across Canada. If you didn’t know about the Order, congratulations! This means that you’re probably blissfully enjoying your days and it isn’t impacting you or your business directly.
This is the first time that the Federal Government invoked the Act since it was passed in 1988. Prior to the Act, Canada had the War Measures Act. This former legislation was used only during World Wars I, II and during the “October Crisis”. The “October Crisis” was a dark time in Canadian history when the Front de libération du Québec (FLQ), a pro-separatist organization, kidnapped a British diplomat and the Deputy Premier, who was murdered. The difference between the Order recently passed and previous uses of similar legislation is obvious.
Aside from being annoying, offending parking by-laws, and protesting a disjointed message, it is unclear right now why protesting truckers and their supporters require invoking the Act. Polls seem to suggest that most Canadians support an end to the protests (CTV News), and the Order was proclaimed after back-ups at the Ambassador Bridge were cleared.
According to section 25(1) of the Act, each province or territory impacted by the emergency will be consulted by the Federal Government about the proposed action. If, before the emergency is declared, the provinces cannot be adequately consulted, the Act allows the impacted provinces to be consulted after the declaration is issued (section 25(2)). Based on their public outcry, neither the Provinces of Alberta nor Saskatchewan were consulted.
A declaration of public order emergency is effective on the day that it is issued even though it still has to come before the House, “within seven sitting days after the proclamation is issued” (section 60) for debate and approval.
Any business that performs banking functions or banking-like functions, such as having or maintaining an account, payment operations, holding funds, initiating electronic funds transfers, authorizing electronic funds transfer, clearing or settlement services, etc. must comply with the Order effective the date it is issued. This also applies to any provincial securities businesses, “…authorized under provincial legislation to engage in the business of dealing in securities or to provide portfolio management of investment counselling services” (j).
All organizations captured by the Order must, generally:
- Determine – if they are in possession or control of any property (Order, s. 3)
- Cease – making any property (funds) to benefit a person or someone acting on their behalf or at their direction (Order, s. 2)
- Report – to FINTRAC, RCMP & CSIS (Order, ss. 4/5)
Property cannot be used directly or indirectly to benefit any person facilitating or participating in the “Freedom Convoy” activities (Order, s. 5). This is a fairly broad provision.
The Canadian Bankers Association said that banks will “diligently implement the required measures” (Global News). If you’re a financial institution or securities business captured by the current Order, there are some things to be especially cautious about: 1. Joint accounts – will the joint account holders, like the spouse and family of a “Freedom Convoy” participant be subject to account freezes?, 2. False identity – what happens when/if the wrong accounts or assets are frozen? What happens when someone is not a participant? Or, is improperly identified as a participant?
Financial organizations and securities firms are in a difficult position having to balance protecting the integrity of the Canadian financial system while facing the potential backlash of devastating financial consequences to their Clients. Regardless of the indemnity provisions protecting organizations who comply with the Order, client relationships take years to develop. Portfolio Managers, Investment Advisors, Financial Planners and Mutual Fund Dealer Reps, cultivate trust with their Clients and the Order requires that financial institutions and securities firms take actions that impact people who not only directly participate in the “Freedom Convoy” but also those who are simply sympathetic, but not directly involved.
The Order is interesting from a legal and philosophical standpoint, and it will be interesting to see how debates in the House of Commons unfold over the next few days, and what additional information and evidence the Federal Government produces to the public to support these arguably extreme measures.
*This post is not legal advice.