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Minister of Finance Chrystia Freeland holds a news conference on the second day of the Liberal cabinet retreat in Ottawa on Sept. 15, 2020.Sean Kilpatrick/The Canadian Press

When Deputy Prime Minister Chrystia Freeland called the chief executive officers of Canada’s Big Six banks on the Sunday in February before her government invoked the Emergencies Act, CEOs stressed that the tools they had to help choke off money pouring in to support the convoy protests were limited.

At that moment, banks needed court orders to freeze funds, the CEOs said, which are slow to be granted. To give banks the power to freeze funds faster, the government needed to sanction the protesters under the same anti-financial-crime laws it uses for terrorists, three CEOs said. They also urged the government to plug gaps in systems for monitoring transactions by bringing in a broader range of payments providers under stricter regulations.

Accounts of at least three calls Ms. Freeland held with bank CEOs over an eight-day span are contained in summaries called “readouts” and in Ms. Freeland’s handwritten notes from the meetings, which were revealed Thursday at the inquiry studying the use of the Emergencies Act. The readouts are general summaries prepared by Ms. Freeland’s staff, and not full transcripts or exact descriptions of what was said.

What the CEOs were not told on the first call on Feb. 13 was that the government was getting ready to use the Emergencies Act to expand the banks’ powers to freeze accounts. In a briefing note sent to Ms. Freeland before the call, her director of economic strategy and planning, Tyler Meredith, wrote: “We have not given them any indication about what is under consideration. ... So your comments may be the first signal of forward guidance.”

Near the end of that call, Ms. Freeland told bank CEOs the government was considering options “which in normal times would be seen as draconian,” according to a readout. Deputy finance minister Michael Sabia told them, “we will not take you by surprise,” promising to keep the CEOs updated on any actions to ensure they were “comfortable and that it is implementable.”

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But the banks received only cursory notice before the government announced it would use the Emergencies Act the next day, on Feb. 14. And for days after that, the banks were left scrambling to understand how to execute the government’s orders.

The CEO-level calls came after a flurry of close collaboration between banks and the Finance Ministry in response to the COVID-19 pandemic. But relations between the major banks and Ottawa have ranged from distant to strained in recent years.

Ms. Freeland’s initial outreach was an attempt to involve banks in bringing the convoy protests to an end, and to get bankers’ help in assessing the gravity of the damage to Canada’s economy. Subsequent calls focused on working out the complex mechanics of halting the flow of money to the protesters.

The banks were not necessarily opposed to freezing accounts. Toronto-Dominion Bank CEO Bharat Masrani said on Feb. 13 that if the government designated the protesters as terrorists under the law, “we could act swiftly,” according to a readout of the call – a sentiment echoed by Royal Bank of Canada CEO Dave McKay and Bank of Montreal’s Darryl White. In that scenario, Mr. Masrani also urged government to give banks a list of “mischief makers” to pursue, according to Ms. Freeland’s notes.

On Feb. 13, one CEO after another drove home the grave impact the protests were having on Canada’s reputation and its economy. TD’s Mr. Masrani emphasized that “Canada’s reputation is at risk,” and was echoed minutes later by Canadian Imperial Bank of Commerce CEO Victor Dodig, according to a readout and Ms. Freeland’s own notes.

BMO’s Mr. White is said to have called the blockades “a national crisis,” urging Ms. Freeland “to act immediately” and citing a U.S. investor who told him, “I won’t invest another red cent in your banana republic in Canada,” a readout said.

But at that point, the bank CEOs thought they would be acting under existing laws when they spoke about of labelling protesters as terrorists, not using extraordinary powers to freeze accounts.

Spokespeople for each of the Big Six banks declined to comment on Friday.

At the federal inquiry on Thursday, Ms. Freeland testified that the CEOs’ comments helped crystallize her understanding that the protests were “profoundly jeopardizing” Canada’s economy.

Even before the Feb. 13 call, TD TD-T, CIBC CM-T and Bank of Nova Scotia BNS-T had privately encouraged the government to bring non-bank payments providers “more clearly” under existing anti-money-laundering laws, Mr. Meredith wrote in his briefing note to Ms. Freeland.

That day, Mr. Masrani told Ms. Freeland the “big hole” in the system was those payments providers, including crowdfunding platforms, and CIBC’s Mr. Dodig also urged measures that would cover “all of the financial system,” according to a readout. Another CEO added: “Let’s be clear, they will eventually all move to crypto.”

On a Feb. 14 call after the Emergencies Act was invoked, Mr. White told Ms. Freeland the same U.S. investor who had criticized Canada texted him: “I guess you aren’t a banana republic anymore,” according to Ms. Freeland’s notes. But bankers were uneasy about the scope of the emergency order, which put a legal onus on financial institutions to find and freeze protesters’ accounts.

In a third call with Ms. Freeland on Feb. 21, two days before the government revoked the emergency powers, Mr. Masrani stressed that the RCMP should run the process to restore accounts, to keep banks from having to act as judges, Ms. Freeland’s notes show. And Mr. White urged the government to preserve indemnity that banks were granted against potential lawsuits for freezing accounts.

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