Canada is broadening its power to clamp down on cartels after the Trump administration used tariff threats to push for stronger curbs of the cross-border illegal drug trade.
Prime Minister Justin Trudeau’s government announced it is listing seven organized crime cartels as terrorist entities under the country’s Criminal Code, essentially strengthening the ability of police to investigate financial transactions of those groups as well as detect and disrupt illicit activities.
“Today, we’re going after the money,” Public Safety Minister David McGuinty said at a news conference on Thursday. “We are moving aggressively, using every tool in our toolbox, to take the profit out of drug trafficking.”
The move was part of Trudeau’s suite of proposals to US President Donald Trump after they spoke earlier this month and agreed the US would delay 25% tariffs on most Canadian products until at least March 4. Trudeau also agreed to stand down on retaliatory tariffs until that date.
Similarly, the US State Department on Wednesday also designated eight cartels and gangs operating in Latin America as terrorist organizations. The move prompted Mexico President Claudia Sheinbaum to promise legislation to ban foreign governments from intervening in her nation’s territory.
Transnational criminal organizations, including cartels, play a key role in the production and distribution of fentanyl in Canada. Listing cartels as terrorist organizations means financing and other actions with the groups are illegal, and any person in Canada and Canadians abroad would also be prohibited from knowingly dealing with any property of the groups.
Last week, Trudeau appointed a former senior police officer as the country’s so-called “fentanyl czar” to lead Canadian efforts to stop the flow of the drug across the border. While less than 1% of the fentanyl seized at the US border comes from Canada, Trudeau has pledged more than C$1 billion ($705 million) to increase border security and placate Trump’s concerns.
“The measures we are taking will help keep fentanyl off Canadian streets, and from entering the US,” McGuinty said.
McGuinty’s office did not immediately provide a list of the seven groups it had designated as terrorist entities.
Listing drug cartels as terrorist organizations is largely a “performative” move for the benefit of the Trump administration, according to Jeffrey Simser, a Toronto lawyer and expert on anti-money laundering law. Still, it could have implications for Canada’s financial institutions, he said.
Banks could theoretically be prosecuted for doing business with the newly designated terrorist groups, Simser said, noting that while it would be “very difficult to ever prosecute a bank,” the change “might make the compliance role a little more complicated.”
With assistance from Christine Dobby and Thomas Seal.
Randy Thanthong-Knight, Bloomberg News
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