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Truck drivers and others protest COVID-19 pandemic restrictions in Ottawa on Feb. 12.Ted Shaffrey/The Associated Press

Participants in the self-described “freedom convoy” protests risk becoming financial martyrs.

That’s because the Trudeau government’s invocation of the Emergencies Act to end blockades created repercussions for financial institutions and their customers that are still not well known or understood by most Canadians.

Those long-term consequences, however, ought to be front and centre for the public inquiry headed by Ontario Court of Appeal Justice Paul Rouleau and for parliamentarians who are separately probing the legislation’s use.

The terms of reference for the Rouleau inquiry, in particular, appear to be broad and should include an examination of the aftereffects for businesses and consumers. It would be a serious mistake to give these issues short shrift.

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Banks, insurers and other financial services companies were put in an awkward position when Ottawa compelled them to freeze protest-related accounts and share confidential customer information in the absence of judicial due process. After all, no private sector company wants to be regarded as an agent of the state. That’s just bad for business in a democracy.

So, now that an official inquiry has been struck and a special committee of MPs and senators is toiling away, it’s time for a proper postmortem that focuses on the implications for financial services companies and their customers.

Don’t think for a minute that I’m defending the actions of those troublemaking truckers. Their behaviour was reprehensible. But there is a broader principle at stake: the sanctity of due process.

As part of invoking the Emergencies Act, the government gave banks temporary powers to freeze personal and business accounts without a court order, and granted them legal indemnity from potential lawsuits.

But was it really necessary to circumvent due process? After all, the courts were already taking some action to halt the flow of funds to the blockades. For instance, the Ontario Superior Court of Justice granted a request from the provincial government to freeze access to GiveSendGo, under Section 490.8 of the Criminal Code, days before the government invoked the Emergencies Act.

An Ontario Superior Court judge also froze millions of dollars, including funds held in cryptocurrency, after the act’s invocation. This suggests the government’s extraordinary actions resulted in a duplication of effort, because Ottawa was trying to seize the same funds.

It doesn’t appear the Liberal government’s heavy-handed approach worked better than the regular court process to choke off the convoy’s funding.

Additionally, it is important to probe the government’s motivations for temporarily broadening the scope of Canada’s anti-money-laundering and anti-terrorist financing rules when it triggered the Emergencies Act.

Don’t misunderstand: Crowdfunding platforms and other payment service providers, including those dealing with cryptocurrencies, should be permanently required to submit suspicious transaction reports to the Financial Transactions and Reports Analysis Centre of Canada. Their exclusion from the federal regime has long hindered Canada’s ability to successfully combat financial crime.

But our anti-money-laundering and anti-terrorist financing laws are intended to thwart criminals who pose existential threats to Canada. As I’ve argued in a previous column, they were never meant to be used against clownish civilians.

“When we enact anti-money-laundering and anti-terrorism legislation, we expect that to be focused on transnational organized crime, terrorist groups and national security threats – not a bunch of truckers barbecuing, sitting in hot tubs and with their kids playing in bouncy castles,” said Kim Manchester, founder of ManchesterCF, an online financial intelligence training company based in Toronto.

“If we take that apparatus and swing those guns toward Canadians who have not been convicted of a criminal offence and who have not been designated as terrorists, we’re entering very dangerous ground. That is the hallmark of an authoritarian regime and not a democracy,” Mr. Manchester added.

Indeed, as of last week, not a single person arrested in relation to the blockades has been charged with money laundering, terrorist financing or any other financial crime, the Ontario Provincial Police confirmed in e-mail to The Globe and Mail. Sure, their investigation is continuing, but it seems highly unlikely that any such charges will ever be laid.

Thus far, people arrested have been charged with mischief or other lesser offences. So, what exactly is the government’s justification for temporarily changing our anti-money-laundering and anti-terrorist financing rules to target citizens expressing political dissent?

Equally important are the long-term ramifications for those individuals. How long will their names, which appeared on RCMP disclosures, remain on the banks’ internal lists? And will that information make its way into third-party risk and compliance databases run by private-sector companies?

It’s entirely possible those individuals could be flagged as high-risk customers even if they are never charged with financial crimes. That means they could run into difficulties obtaining personal or business financing for years, or possibly decades, to come. Is that fair?

“It’s a question of proportionality, and this was way off the charts. Some of these people may end up paying a financial price for a very long time,” Mr. Manchester said.

All this, of course, only amplifies Canada’s reputation for being naive about real financial criminals.

What message does it send our allies, especially other members of the Five Eyes intelligence-sharing alliance, if Ottawa treats protesting truckers as a more serious threat than kleptocrats, money launderers and convicted terrorists?

There are lessons to be learned from this godawful experience and guard rails must be put in place to prevent this type of government overreach in the future.

For starters, a strict protocol must be established to prevent a repeat of the chaos that engulfed banks and other financial-services companies after the government ordered them to freeze accounts and hand over customer information to law enforcement.

Ottawa was slow to provide those businesses with even basic information about the federal order, including its effective date, the threshold for freezing accounts, which types of accounts and the scope of affected customers.

Bank customers, meanwhile, deserve an appeals process if these extraordinary measures are ever enacted again. The Financial Consumer Agency of Canada is responsible for protecting the rights of customers and should play a role in developing this mechanism.

The Office of the Privacy Commissioner of Canada also needs to step up and ensure that any bank customer information that was shared with law enforcement is properly safeguarded and eventually destroyed. Moreover, it should improve oversight of third-party risk and compliance databases.

The Emergencies Act is a blunt instrument. Its implementation proved problematic. If there’s a next time, banks and other businesses shouldn’t be responsible for figuring it out on the fly.

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