American Banker – Why banks should be concerned about hackers taking on counter terrorist financing

By Christine Duhaime | February 13th, 2015

In case you missed it, our article in American Banker‘s Bank Think entitled “We Shouldn’t Be Relying on Hackers to Stop Terrorism Financing” can be read here.

The article discusses the recent phenomena of hackers in #OpISIS taking down the websites of the Islamic State and their stated promise to go after banks engaged in terrorist financing. It also discusses ways in which ISIS is funded and why counter-terrorist financing efforts are failing thus far and why it is of concern that hackers may be targeting global banks and their executives over terrorist financing, raising cyber-security issues.

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Counter-Terrorist Financing Presentation in Toronto

By Christine Duhaime | February 13th, 2015

With the Association of Certified Anti-Money Laundering Specialists, we’re organizing a special presentation on “Terrorist Financing Concerns & Risks in Ontario for the Financial Services Sector” on February 24, 2015, in Toronto. The presentation will be given by the OPP’s Deputy Commissioner, Scott Tod, and Deputy Director of FINTRAC, Barry MacKillop, and is sponsored by Thomson Reuters.

It is a great step in making Canada a leader in counter-terrorist financing initiatives. You can contact Christine Duhaime to register for the event. Space is limited.

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Quebec moves to regulate digital currency businesses

By Christine Duhaime | February 13th, 2015

The Québec Government’s Authorité des Marchés Financiers (the “AMF“) today issued a News Release that businesses that operate digital currency (referred to as virtual currency) ATMs and “platforms for trading virtual currencies” must be licensed by the AMF as money services businesses (“MSB“) pursuant to the Money Services Business Act (the “Act“). It also issued a Policy Statement to the Act to reflect how “platforms for trading virtual currencies” and virtual currency ATMs will be governed. Generally, in law policies are non-binding.

The Policy Statement is not clear with respect to virtual currencies. Nowhere does it define what a “platform for trading virtual currencies” is and it is not obvious whether that means virtual currency exchanges, or a website, or neither, or both, or something else entirely.

The Policy defines “currency exchange” as the exchanging of currency or legal tender money for another, based on an exchange rate. Virtual currencies are not currency or legal tender so “platforms for trading virtual currencies” are not currency exchanges but there are no other definitions that could possibly be relevant

With respect to ATMs, the Policy Statement says that virtual currency ATMs are considered ATMs for the purposes of the Act only where they sell virtual currencies for cash and provided there is no human intervention in the transaction. If an ATM transaction has human intervention, it is not a MSB.

Under the Policy Statement, customers of virtual currency ATMs do not have to be identified before the MSB provides serves to them.

The Act requires that MSBs be investigated by the provincial police and found suitable to operate the business. In addition to a criminal background check, the police will determine the moral character of the person. Security clearances must be obtained for the business associates and all of its lenders.

MSBs must disclose all of their lenders and employees, as well as its directors and officers and their personal information, a business plan and financial statements.

A business that has any connections to a person in organized crime, will not be regulated to operate a MSB.

The AMF also clarified that its move to regulate businesses that operate such ATM or operate the platforms in question, does not mean that it regulates digital currencies per se, or that digital currency purchases or transactions are insured or protected by the government. It warned consumers that digital currencies are susceptible to Ponzi schemes.

The legal obligations imposed pursuant to the Act are here.

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Digital Currencies like Bitcoin May be Heavily Regulated in EU as Part of a New 3rd E-Money Directive

By Christine Duhaime | February 13th, 2015

Digital currencies may be heavily regulated in 3rd EMD, resulting in sweeping international regulation if nationally adopted at EU State Level

According to some people in the banking industry, digital currencies (also called virtual currencies), such as Bitcoin, are being included in a new E-Money Directive being drafted by the European Parliament and the Council of the European Union. This would be the 3rd E-Money Directive. The inclusion of digital currencies in a 3rd E-Money Directive, according to people knowledgable with the matter, is going to result in the heavy regulation of digital currencies.

The existing 2nd E-Money Directive (2nd EMD) is a harmonization Directive that created a common EU framework for the regulation of financial institutions that issue e-money. In a proposed 3rd EMD, digital currencies will need to be defined in order to be captured by the 3rd AMLD.

The heavy regulation of digital currencies in a new 3rd EMD, will likely mean that the recommendations from the opinion of the European Banking Association (“EBA“) will be implemented. The EBA recommended in June 2014 that:

  • The financial system be “shielded” from digital currency transactions. 
  • That digital currency exchanges be deemed to be obliged entities under AML/CTF law pursuant to the 3rd AMLD.

The decision from the EU to draft a 3rd EMD at this time, and to include digital currencies in the 3rd EDM, is likely in response to the fact that regulators now have zero tolerance for terrorist financing as a result of the rise of the Islamic State and its phenomenal wealth, and the recent attacks against democracies by ISIS and al Qaeda.

Three very recent news stories are relevant in respect of terrorist financing and digital payments – two involved digital currencies and the third involved an online payment processor:

(a) A cyber-security analyst leaked the news that that an ISIS sympathizer had opened and used a Bitcoin wallet and solicited funds via Bitcoin (here);

(B) The Council of the EU’s President issued declarations and proposals for the regulation of “anonymous financial transactions” including digital currencies.  As a result of the Charlie Hebdo incident, France issued a declaration calling for a strict position on digital currencies and sought an end to anonymous “e-money” (here); and

(C) The USDOJ unsealed an Indictment against six people that it said had abused the financial system by routinely using PayPal for terrorist financing for ISIS and al Qaeda (here).

Reading between the lines, it is highly likely that the Government of France and intelligence agencies in the EU have evidence of the use of digital currencies and online payment processing services systematically being used to fund terrorist groups, otherwise there would not be an impetus for such regulation so rapidly.

Digital currencies are of concern to law enforcement in respect of terrorist financing because they can be anonymous. It is possible to have both an anonymous wallet and to send and receive digital value anonymously. For example, one can buy Bitcoin in person with cash from a stranger without even having a wallet, and to send it or have it sent, to anyone anywhere in the world in seconds without ascertaining who the recipient is, or where they are located, circumventing counter-terrorist financing and sanctions laws. There continue to be digital currency exchanges that advertise on the Internet that they accept the purchase and sale of Bitcoin to Syria, a sanctioned country and will accept payments wired from Western banks to send Bitcoin to places like Syria.

There is enormous pressure to stop terrorist financing to ISIS, al Qaeda and other emerging groups and a growing realization that the  FATF Recommendations, which were supposed to prevent a terrorist organization from acquiring such wealth and rising to power, are not  effective. Partly, that’s because the FATF Recommendations treat terrorist financing as a sub-set of money laundering, whereas the methods and risk factors could not be more different. The FATF Recommendations are premised on the concept of thresholds for reporting. However, terrorist financing tends to involve low-value but high-risk payment instruments, sometimes using pre-paid access, that are distributed and used without verification of the customer’s identity.  Transaction monitoring designed for money laundering detection does not work for terrorist financing because the latter slips under the radar.

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ISIS confirmed it is sending defectors back home to Canada and other countries with instructions to commit terrorist acts

By Christine Duhaime | February 7th, 2015

ISIS  sending defectors back home

According to the popular website “Raqqa is Being Slaughtered Silently” written by people who oppose the Islamic State (“ISIS“) living in al Raqqa, Syria, a town occupied by ISIS and the capital of the so-called caliphate, ISIS is starting a campaign to send defectors back home to places like Canada, the UK, France and the US to carry out terrorist attacks and suicide attacks.

The Syrian website operators translated the song that is heard in the video depicting the burning death of the Jordanian pilot Moaz al-Kasabeh, and spoke with members of ISIS in al Raqqa about the song’s message. The website authors say that members of ISIS informed them that ISIS is starting a campaign to falsely allege that foreign fighters who defected from their home countries (such as from countries like the US and Canada) and fought with them, have now defected from ISIS and are trying to return home. In reality, ISIS is funding them to return home to commit terrorist acts in the West.

The song says that ISIS’ battles will be “in their own home” referring to countries that are participating in attacks against ISIS. In the hi-tech video of the burning death of al-Kasabeh produced by ISIS, flags of the coalition countries are featured as the former Jordanian pilot describes their air strikes against ISIS, and the first country featured is –> Canada.

ISIS planning propaganda campaign to allege foreign fighters left them to “facilitate” their re-entry into the West to harm us

In order to ensure that the defectors are re-admissible in their home countries for immigration purposes, ISIS appears to have devised a plan to claim on social media that certain foreign men and women who joined them are now defectors. The ISIS members who talked to the Syrian website authors said that ISIS will “facilitate their entry into Western countries” by publishing rumors of defection [on social media].

The plan must be premised on ISIS’ leaders believing that the media, politicians, administrators, law enforcement, security intelligence agents and the judiciary in the West will believe ISIS’ terrorist propaganda in respect of alleged foreign fighters defecting. That seems unlikely – it would require that security intelligence agencies and government agencies believe that ISIS foreign fighters: (a) became disenchanted with ISIS or the jihadist cause; (b) did not commit, support or participate in crimes against humanity committed by ISIS, or  that defectors were forced to commit such crimes and are “victims” of ISIS; (c) managed to steal the passports they surrendered to ISIS administrators when they joined ISIS (not possible); (d) managed to leave the heavily guarded areas under ISIS control undetected and enter Turkey or Jordan, the two main countries in which ISIS controls part of the border; and (e) managed to miraculously obtain sufficient US funds to travel and book flights to the West.

It also presumes, on the part of ISIS, that the ostensible defectors will be re-admitted in their home countries by law enforcement agencies and deemed fit to be re-integrated into Western society after committing crimes against humanity. Membership in ISIS is, in and of itself, a crime. They may in fact be re-admitted in due course, but likely only to preserve international security and for prosecution.

One of the reasons Canada is enacting its Bill C51, Anti-Terrorism Act (summarized here), is to ensure that Canada’s intelligence agencies can undertake investigations on foreign fighters (and their spouses) overseas attempting to return to Canada before they land for national security purposes, and to prohibit air carriers from letting such persons return to Canada by air until those investigations are complete. The UK is also implementing anti-terrorist legislation to require that foreign fighters and their families are inadmissible to the UK, unless their re-entry is judicially managed.

When ISIS sees that its foreign fighters are unable to be re-admitted easily back into the West, they will likely try to send women back alone who will be tutored to claim they were victims of ISIS violence in order to be more easily re-admitted. Female terrorists are treated with more leniency than their male counterparts, a fact not lost on ISIS and other terrorist organizations. We have already seen some examples of ISIS defectors trying to return home from Turkey unscathed, claiming to have been victims of ISIS. One cannot be both a member of a transnational criminal organization like ISIS and a victim of that gang.

It is not an understatement to say that, as a matter of law, philosophy and religion, the ISIS reign of terror will be intellectually taxing for years to come and the first such issue to manifest itself is the problem of what to do with ISIS members seeking to return to the democracies they attempted to eradicate.

Extra due diligence for terrorist financing

Money services businesses that operate in known terrorist financing conduit states for ISIS which are mainly Turkey, Lebanon and Saudi Arabia, or that operate in areas that share a border controlled by ISIS (Turkey, Jordan, Lebanon, Iraq), should exercise heightened due diligence with respect to financial transactions that will be generated to fund the travel of ISIS foreign fighters back home. Foreign fighters will need at least $4,000 to fly home. Foreigners receiving wired funds in those areas, especially Turkey, in the $4,000 – $6,000 range should be considered suspicious. A money services business should be cautious and not complete prohibited terrorist financing transactions, such as funds sent to ISIS members to allow them to travel to the West.

With respect to air carriers, there will be attempted one-way bookings likely from Istanbul to Canada or New York last minute that will be suspicious. Air carriers should also be concerned about accepting prohibited terrorist funds from ISIS or that will benefit ISIS.

There will also be claims made at Canadian, US and UK consulate offices by ISIS members claiming to have lost their passports in order to be papered for re-admission. Many foreign fighters burned their passports when they swore allegiance to ISIS.

What is clear, is that ISIS’ calls to sympathizers in the past 12 months to undertake lone wolf attacks in the West is not as effective as ISIS counted on, otherwise it would not be reducing its troops by sending defectors back home to perform terrorist attacks.

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Six Indicted in US for Funding ISIS Using Money Services Businesses that Routed Funds to Conduit Countries

By Christine Duhaime | February 7th, 2015

Terrorist Financing for ISIS using online Payment Processors and MSBs from US Routed to Turkey and Saudi Arabia

The USDOJ indicted six people this week for terrorist financing who are alleged to have used money services businesses to finance the Islamic State (“ISIS“) and to supply war-related goods to members of ISIS.

According to the Indictment, Abdullah Pazara, a former Bosnian foreign national, who became an American citizen, defected from the United States in May 2013, to join ISIS. In order to get to Syria, he first traveled to Croatia then Syria and began fighting for al Qaeda, then ISIS on the front lines.

On March 20, 2014, he allegedly confessed to having participated in an ISIS attack in which 11 people were killed and directed sympathizers in the US to watch videos evidencing ISIS’ reign of terror. He is charged with terrorist financing for having supplied money, monetary instruments and property to terrorist organizations, and for having supplied funding for the purposes of murdering and maiming people. He is also charged with conspiracy to kill people in a foreign country. Paraza is believed to be with ISIS or to have been killed.

The indictment also alleges that other defendants, including Siki Ramiz Hodzic and his wife, Sedina Unkic Hodzic, communicated on Facebook to post terrorist propaganda for al Qaeda, then ISIS, in support of their terrorist activities, extolling the so-called virtues of the activities of US foreign fighters such as Pazara in Syria against, inter alia, what they typically describe as kufars (a derogatory term used by terrorists to refer to people in the West).

During 2013, Mediha Salkicevic, Jasminka Ramic, and Armin Harcevic are alleged to have transferred money on multiple occasions through PayPal and Western Union to Hodzic’s bank account, which was used to buy army gear that Hodzic shipped to ISIS. In order to ship goods to ISIS, the natural route is to ship to Turkey.

Gaziantep, Turkey used as Conduit

The porous border between Turkey and Islamic State controlled areas means that persons, including defectors, and goods can travel easily back and forth. One of the towns used for ISIS shipments was Gaziantep, Turkey. Why Gaziantep? Because it’s 60 miles from Aleppo, Syria, an ISIS stronghold.

The Indictment says that funds paid to Hodzic in multiple transactions through PayPal and other sources during 2013 by  the defendants were sent to al Qaeda, then ISIS through Western Union and in order for ISIS beneficiaries to be able to receive the funds, were routed to a conduit country, namely Turkey, then transferred to the terrorist organizations. A Western Union agent in Gaziantep was the destination for the receipt of the funds.

Hodriz’ spouse, Sedina Hodzic, is also alleged to have funded ISIS in 2014 by sending funds using Western Union to Riyadh, Saudi Arabia, another conduit state used by terrorist organizations for funding. The funds were transferred to Paraza for the use of ISIS.

Interestingly, the Indictment also alleges that Hodzic arranged for $600 to be sent to Bosnia using Western Union for a person to join ISIS, or for their traveling expenses to get to Syria. This seems to confirm the allegation by Yousaf al-Salafi, the alleged ISIS recruiter in Pakistan, that ISIS pays $600 per defector to recruitment agents that send foreign fighters to join them (as explained here), and that many of those transactions may have been routed through the US financial system, as al-Salafi alleged.

The Indictment suggests that Western money services businesses, financial institutions and postal services should be on high alert in respect of financial transactions, and shipments, as the case may be, destined for Gaziantep, Turkey, and other towns in Turkey that share a border with ISIS-controlled territories.

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ISIS offers payments in its new gold dinar – the blood dinars

By Christine Duhaime | February 5th, 2015

Whether or not ISIS truly does have a new dinar currency (see here for its description) in circulation yet remains to be confirmed. However, today they issued a statement at the end of the video in which they filmed the death of a Jordanian pilot, offering a bounty of 100 gold dinar for anyone who eliminates other Jordanian pilots, equal to about $13,900, which seems to suggest that perhaps the dinar exists. Obviously owning or trading in ISIS’ new currency is terrorist financing of a new variety of which we have not yet dealt with in the world, and is strictly prohibited.

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Toronto charity alleged to have funded listed terrorist group in Canada

By Christine Duhaime | February 2nd, 2015

According to an article in a Toronto newspaper here, the Muslim Association of Canada, based in the Toronto area, allegedly gave $296,514 to a listed terrorist entity named IRFAN-Canada before it was listed. During the period of time that the Association allegedly funded IRFAN, the latter entity was allegedly funding organizations associated with Hamas, also a listed entity.

According to the Minister of Public Safety, IRFAN paid $14.6 million to several entities association with Hamas, which if true is terrorist financing. IRFAN-Canada is located in Montreal.

It’s not clear how IRFAN-Canada is able to engage in financial transactions in Canada given Part II.1 of the Criminal Code of Canada, including paying its legal fees. IRFAN stands for International Relief Fund for the Afflicted and Needy.

With respect to the Muslim Association of Canada, they will likely be subject to de-risking all over Canada by Canadian banks as a result of the Arab Bank case. According to the Toronto newspaper article, the Association operates numerous schools and has land holdings throughout Canada, all of which require the operation of bank accounts.

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Why counter-terrorist financing matters in Canada

By Christine Duhaime | February 1st, 2015

In Canada, suppressing terrorism is an “uphill battle” (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182), and a battle which Canada stands poised to lose ground over unless more is done to detect, deter and prosecute terrorist financing.

We have had numerous terrorist attacks planned and foiled, and to a much lesser extent, planned and carried out in Canada. Fortunately, our intelligence agencies have mostly been able to detect and prevent attacks but its just a matter of time before they miss one that will cause us substantial human and physical harm.

It is self-evident that terrorist acts require terrorist financing. Unfortunately, not a lot of financing is required because terrorist acts cost very little to carry out.

The direct costs of the bombing of Air India Flight 182 that claimed the lives of 280 Canadians has been estimated to cost $3,000; the cost of the 2004 Madrid train bombings that claimed 191 lives was estimated to cost €15,000. The Paris bombs in 1995, a few hundred dollars.

Thus, funds raised, even in relatively insignificant amounts, by the activities of those engaged in terrorist financing, can wreck incredible havoc on Canada with economic costs that range in the billions of dollars. In essence, what we know about terrorist financing is that is does not take a lot of money to accomplish a lot of damage.

We also know that charities and non-profits play an increasingly important role in terrorist financing (see: Commission of Inquiry Into the Investigation of the Bombing of Air India Flight 182).

The Commissioners who wrote the Commission of Inquiry into the Investigation of the Bombing of Air India Fight 182, after a multi-year study by learned people, found that financial institutions in Canada “have little incentive to monitor the flow of funds relating to terrorism.” It is surprising that the Commission received such testimony from financial institutions.

Be that as it may, it is true that financial institutions treat counter-terrorist financing law as if it is a branch of anti-money laundering law, and mistakenly use the same controls to detect it. They could not be more dissimilar.

Canadian financial institutions are managed and directed mostly by Canadians and there is ample incentive for them to be vigilant in respect of terrorist financing.

Terrorist acts have both direct and indirect costs on Canadians, and on our financial institutions.

Direct costs  include loss of human life and health and the loss of physical capital due to destruction of buildings and infrastructure. Indirect costs include the increased level of fear in the population, increased insurance and business costs.

There are also public costs, i.e., the expensive counterterrorist efforts by governments, such as airport security and border controls measures, monitoring the financial system and military operations, which drain resources from economically productive activities; and private costs bourn by the private sector, such as to comply with counter-terrorism laws and policies, reduced economic activity caused by greater costs to individuals and businesses through taxes, and non-monetary costs of the loss of civil liberties and other freedoms.

The purpose of detecting, preventing, acting lawfully against and prosecuting terrorist acts is to keep Canada and Canadians safe from those who would imperil our democratic freedom, core values and tolerant way of life, by harming Canadians through acts of violence.

Terrorism is not simply a crime. It is also an existential threat to our society, and Government has a legitimate interest in preventing terrorism, above and beyond that of punishing terrorists as criminals (see: Security, Freedom and the Complex Terrorism Threat: Positive Steps Ahead, Special Senate Committee on Anti-Terrorism, 2010).

Preventing terrorist financing prevents terrorists from committing terrorist acts. It’s that simple.

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Canada’s New Anti-Terrorism Act, 2015 – Bill C51

By Christine Duhaime | February 1st, 2015

1. New Anti-Terrorism Act, 2015

The Government of Canada introduced its anticipated anti-terrorism legislation in Parliament. Bill C-51, entitled “An Act to Enact the Security of Canada Information Sharing Act and the Secure Air Travel Act” … (the “Anti-Terrorism Act, 2015“) which is intended to arm the government with broader powers to address the increasing threat of terrorism in this country from homegrown terrorists and abroad, mainly as a result of the rise of the Islamic State (“ISIS“) and recent resurgence of al Qaeda. The purpose of the Anti-Terrorism Act, 2015, is to ensure Canada is not used as a conduit for international terrorism.

In a nutshell, it:

  • Authorizes CSIS to stop threats to Canada in foreign countries;
  • Permits the judicial management of a person suspected of being a terrorist including geographic restrictions on their movements;
  • Requires that persons and entities that have electronic custody of terrorist propaganda published online disclose the identity and location of persons who posted the propaganda;
  • Makes it a criminal offence to publish terrorist propaganda;
  • Requires that the private sector (air carriers) deny air passage to suspected Canadian terrorists at the direction of the government;
  • Requires the creation of a secret list of suspected terrorists for the purposes of the no-fly list that the private sector will enforce; and
  • Permits the sharing of information among federal agencies to detect activities that undermine the safety of Canada.

I have two criticisms of the Anti-Terrorism Act, 2015, described below, namely that it may erode the Royal Prerogative that CSIS already enjoys to act, and it would be stronger if it considered the appointment of a specialized body of judges who have knowledge of international law and counter-terrorism law.

2. Information Sharing Act

The Anti-Terrorism Act, 2015, enacts a new law to authorize and facilitate the sharing of information among government agencies in situations where there is “activity that undermines the security” of Canada or the lives or security of Canadians.

“Activities that Undermine Security”

The definition of activities that undermine the security of Canada is important because everything in relation to information-sharing for counter-terrorism efforts is pinned to it.

Activity that undermines Canada, and ergo, authorizes the sharing of information, arises in the following situations:

  • Interfering with the capability of Canada to undertake intelligence-gathering, defence, justice administration, economic stability or financial stability. This could apply to any terrorism activity or cyber-hacking activities that involve the foregoing. If you hack a major bank, or a Court or Court records, that may interfere with financial stability or the administration of justice.
  • Unduly influencing a government agency in Canada by force or unlawfully.
  • Covert foreign-influenced activities.
  • Terrorism.
  • Proliferating WMD.
  • Critical infrastructure interference. This is a key one that is important given that terrorists specifically target critical infrastructure such as energy, electricity, Internet, water supply, government buildings.
  • Global infrastructure interference. This means basically our electronic communications (emails, texts, telephone calls or social media communications) carried on through networks that extend beyond Canada.
  • Activities in Canada that undermine the security of another state. This applies to all the homegrown terrorists in Canada that work for, support or propagandize for organizations like ISIS or al Qaeda, including sending funds or material support to terrorist organizations. It also applies to social media publications in support of terrorist organizations, or that are terrorist propaganda. See the new terrorist propaganda offence, below, and note that there is a tie in with that new offence and the sharing of information.

Information Sharing

Certain federal government agencies are allowed to share information in respect of any person or entity to other federal agencies when there are “activities that undermine the security of Canada.”

The broadness of the circumstances permitting disclosure, above, should not be discounted. Moreover, disclosure of such information is authorized to “detect” activities that undermine the security of Canada, and to prevent, investigate or disrupt such potential threatening activities.

The authorization of disclosure for detection purposes is important because the impugned conduct has not yet occurred. In other words, no terrorist conduct must necessarily have occurred that undermines the security of Canada since disclosure is permitted to detect it.

The agencies that may share information include but are not limited to the CBSA, RCMP, FINTRAC, National Defence, Health Canada, Department of Finance, CIC, CSIS, CRA and Canadian Armed Forces.

3. Secure Air Travel Act

Secret List of Potential Terrorists For Airlines

The Anti-Terrorism Act, 2015 enacts another new law that allows the government to create a secret list of persons that it believes may, inter alia: engage in an act that threatens transportation security; participate in the activities of a terrorist group; fund a terrorist group or a terrorist; or provide material support or property to such a person or group.

No Re-Entry to Canada

The purpose of the list is to identify persons in Canada (or outside of it) that are a threat to national security and to require that air carriers prevent such a person from boarding an aircraft, or require that they be screened before entering an air carrier or an airport. The blocking of a person applies in and outside of Canada. What this means is that Canadian defectors who renounced allegiance to Canada by joining a terrorist organization in Syria or Iraq, for example, may be prevented from returning to Canada by air.

A person denied entry to fly out of or into Canada may apply for removal from the list within 60 days and they can appeal an unfavorable result.

De Facto Stateless Refugees

Blocking a Canadian terrorist from returning to Canada by air is problematic. The UK in its Counter-Terrorism and Security Bill addressed the issue of defectors returning to the UK from terrorist hot-spots with the concept of temporary exclusion orders that prohibit a terrorist from entering the UK by any means, unless the person successfully applies for re-entry from another country. Canada accomplishes the same result by requiring that air carriers refuse to fly them.

The Canadian approach is more efficient, however both approaches will render a citizen denied re-entry a de facto refugee and may be contrary to the United Nations Universal Declaration of Human Rights, the UN Convention Relating to the Status of Refugees and the Charter of Rights and Freedoms, The Constitution Act, 1982, being Schedule B to the Canada Act 1982 (UK), 1982, c 11 (the “Charter“).

But not necessarily so – it depends upon the terrorist group they joined and its history of war crimes and the commission of atrocities. In international human rights law, persons that commit heinous crimes that shock our moral consciousness, or belong to groups that commit such crimes, are not entitled to the same level of legal protection as would otherwise be the case. These cases will likely be resolved at the national level as matters of high treason.

Allow Re-Entry or Not? 

If this provision is struck by Canadian courts in the future as unconstitutional, it will be partly because the solution is unworkable internationally. If we do not re-admit a terrorist from organizations like ISIS and prosecute them for war crimes, treason and terrorism, we offload the problem to the country in which they are trying to board the aircraft to return to Canada. Practically speaking, the person is just as much of a threat to that country as they are to Canada. They must be prosecuted somewhere but where, if we render them stateless?  With ISIS, for example, until a war crimes tribunal is set up for its members, defectors who attempt to return to their countries of origin will need to be managed internationally when they seek re-entry. It is an international problem, not solely a national one. Most Canadians would agree that such persons should never be permitted to re-enter Canada under any circumstances, but refusing re-entry does not solve the problem.

4. Criminal Code

Terrorist Propaganda

The Anti-Terrorism Act, 2015, also amends the terrorist provisions in the Criminal Code of Canada, R.S.C., 1985, c. C-46 (the “Criminal Code“), by making it an offence to make statements, or communicate statements that advocate or promote, inter alia, terrorist acts, terrorist financing, or providing material support or property to a terrorist or terrorist group knowing that a terrorist offence will result or being reckless as to whether it results.

The amendments also authorize the seizure of terrorist propaganda in hard copies. If there is terrorist propaganda published online, a court may require that an electronic copy of the material be provided to the court, order its removal from the Internet and order that the custodian of the propaganda disclose the identity and location of the person who posted the propaganda. This would apply not just to ISPs but anyone who is publishing terrorist propaganda.

Terrorist propaganda is mostly published by foreign social media companies unwittingly, including Twitter, Ask.fm, WhatsApp, JustPasteIt, Kik and Facebook.

Monitoring & House Arrest of Suspected Terrorists

The Criminal Code will also be amended to permit special procedures for persons who are likely to commit a terrorist offence, including terrorist financing. Such a person may be ordered to enter into a recognizance to keep the peace for up to 12 months. They may also be ordered to participate in a counter-terrorism program, wear an electronic monitoring bracelet, be under house-arrest for certain hours each day, surrender his or her passport, and be geographically restricted. This amounts to a type of de facto house arrest, or incarceration-lite for such persons without criminal due process because they have not been charged with any offence, prosecuted or found guilty.

The Canadian approach is different that the UK anti-terrorism approach which requires, through the use of Terrorist Prevention & Investigation Measures, the relocation of persons at risk away from their homes, families and employment so that they are isolated from their circle of influence and radicalizing factors to prevent them from radicalizing others and continuing to be radicalized. In Canada, this amendment contemplates keeping persons at risk within the same circle of influence and able to continue to access the Internet. There is no evidence that one approach is more effective than another.

5.  CSIS Act

The Canadian Security Intelligence Service ActR.S.C., 1985, c. C-23 (“CSIS Act“) will also be amended to authorize CSIS to reduce threats inside or outside of Canada if it has reasonable grounds to believe an activity threatens the security of Canada.

Determining the gravity of the threat to national security posed by a defector attempting to return to Canada is an example where it requires that CSIS be in terrorist hot spots. Such investigations, to be effective, require that CSIS be overseas. Without such power, it could not undertake its mandate to protect Canada, its critical infrastructure, the rule of law or its citizens from terrorist threats.

CSIS has the jurisdiction to do the foregoing now, in any event, pursuant to the Royal Prerogative.

Not Allowed to Intentionally Kill a Person

If CSIS determines that the elimination or reduction of the threat to Canada will contravene the Charter or Canadian law, CSIS must obtain court approval to undertake its measures. When reducing or eliminating threats to Canada, CSIS may not kill a person or physically harm them intentionally or negligently. The latter is a completely unnecessary addition to the legislation. It should be removed.

If CSIS’ intended course of action isn’t likely to infringe the Charter, or Canadian law, no warrant is needed. There will obviously be cases where CSIS takes the position that its mitigation steps to eliminate harm to Canada does not infringe the Charter and in hindsight it may be wrong in its pre-assessement, meaning that while in operation overseas, a suspect’s rights are unforeseeably infringed.

6. Two Criticisms

The Royal Prerogative

I have a few criticisms of the legislation.

The first is purely legally academic and it is that much of the proposed legislation in respect of CSIS is authorized by the Royal Prerogative.

The Royal Prerogative is ancient, dating back to the medieval monarchy, and in a nutshell, it preserves in the Crown, residual, discretionary and arbitrary powers that can be exercised in numerous circumstances. The Royal Prerogative powers cannot be catalogued but key areas include powers relating to the legislature, the judicial system, foreign affairs, defence of the realm, conferring state honors and appointments, state immunity, emergency powers and parens patriae role. The Royal Prerogative is not widely taught at law schools in Canada and the most recent law text book on it was written in 1820, and because powers exercised pursuant to the Royal Prerogative are largely non-judiciable, there are few cases on its scope.

Acting pursuant to the Royal Prerogative makes most of what CSIS does for national security and to defend Canada’s democratic way of life, non-judiciable. The Royal Prerogative is alive and well in Canada, and was preserved in law precisely for the circumstances we are facing in Canada with terrorism. As a matter of law, it is possible to erode the Royal Prerogative by statute, and the CSIS Act amendments risk doing that, without any rationale that I can determine. Such a move should be considered in the Senate before being adopted.

Specialized Judges

The second criticism is that the Anti-Terrorism Act, 2015, would be stronger if it established a specialized terrorism judicial body with judges that receive specialized legal training on the combination of terrorism law, international law, immigration law, criminal law and human rights, such as exists in many countries. Or at the very least, that certain judges be required to be trained regularly in respect thereof and be assigned terrorist-related cases.

By way of illustration on why that is needed in Canada, in the first terrorist financing case, Canadian judges at two levels in the province of British Columbia, upheld a six month sentence for a member of a terrorist organization convicted of terrorist financing who, the Court said, showed no remorse. The Court noted that a six month sentence was adequate because a conviction for terrorist financing has “long-lasting effects” on a terrorist and “interferes with [a terrorist's] ability to travel beyond Canada.” The Court did not consider the effects of terrorist financing on victims who are killed or maimed by weapons purchased with terrorist funds, or who are subjected to repressive regimes when their democratic way of life is eradicated by terrorists, such as has happened in Syria. The Court held that the severity of sentences for terrorist financing should be assessed on a scale that is tied, inter alia, to how much money was raised in funding. The lower the amount, the lesser the sentence, a concept which is inconsistent with how terrorist financing works. The worst terrorist attack in Canadian history, the bombing of Air India Fight 182, killed 280 Canadians and only required $3,000 in terrorist financing to carry out. It is not the amount that matters in terrorist financing, it is the conduct.

France’s top lawyer and judge on counter-terrorism, Marc Trévidic, explains at the end of this interview (en français) that it is not the breadth (or lack thereof) of counter-terrorism law that matters, but rather it is that the proper exercise of judicial power in cases of alleged terrorism. This interview with Le Monde illustrates succinctly the need for a specialized judiciary. People who are accused of terrorist-related offenses, as well as the Canadian public, deserve to have judges who are knowledgeable and have experience with terrorism decide issues of such fundamental importance.


Antiterrorisme, libertés inviduelles : le juge… by lemondefr

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