Budget 2023 promises plan to ‘protect’ Canadians from crypto risks

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Law enforcement could get new powers to freeze or seize crypto currency suspected to be linked to criminal activity under the Liberals’ 2023 budget plans.

It’s an issue that came to the fore in last year’s convoy protests, when the government used exceptional emergency powers to monitor and freeze assets believed to be fueling the demonstrations.

The government is also signaling their intention for new measures to “protect” Canadians from the “risks of crypto-assets,” including requiring financial institutions and pension funds to disclose their exposure to volatile crypto currency markets.

The measures are part of a suite of Budget 2023 proposals the Liberal government hopes will address money laundering, terrorist financing and other financial crimes.

“Canada requires a comprehensive, responsive and modern system to counter … sophisticated and rapidly evolving (financial) threats,” the budget document reads.

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“Canada must not be a financial haven for oligarchs or the kleptocratic apparatchiks of authoritarian, corrupt, or theocratic regimes – such as those of Russia, China, Iran, and Haiti. We will not allow our world-renowned financial system to be used to clandestinely and illegally move money to fund foreign interference inside Canada.”

The proposed measures include giving law enforcement the ability to freeze or seize “virtual assets” suspected to be linked to criminal activity, as well as creating a new offence for structuring financial transactions to avoid having to report them to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

In an effort to crack down on individuals and businesses attempting to evade sanctions, the financial sector will also have to report “sanctions-related information” to FINTRAC.

Addressing financial crime has been a recent emphasis for Liberal budgets, with the government announcing in 2022 that it would create a new Canada Financial Crimes Agency. The agency, housed within the federal public safety department, was pitched as Canada’s lead agency for investigating financial crime.

A year later, Public Safety Canada is still consulting on how best to set up the new agency. But the government maintains it will “bring together expertise necessary to increase money laundering charges, prosecutions and convictions, and asset forfeiture results in Canada.”

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“These actions will address the key operational challenges identified in both domestic and international reviews of Canada’s (anti-money laundering and anti-terrorist financing) regime,” the document read.

On crypto currency, the budget document noted the recent volatility in crypto markets – as well as the high-profile collapse of crypto trading platforms like FTX – and indicated the government will require financial institutions and pension funds to disclose their exposure to crypto assets.

The government also signaled they will “bring forward proposals to protect Canadians from the risks of crypto-asset markets” in their fall economic and fiscal update later this year.

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