Break The Needle
New drug cartel terrorist designations raise legal risks for Canadian banks

By Alexandra Keeler
In October 2024, the U.S. Department of Justice slapped TD Bank, Canada’s second-largest bank, with a $3 billion US fine for failing to stop cartel-linked money laundering.
Canada’s financial institutions could face criminal liability for facilitating transactions tied to cartel-linked drug sales, according to a new report by journalist David Clement.
Clement argues Canada’s recent designation of seven transnational criminal organizations as terrorist entities may implicate banks, credit card companies and Interac under the Criminal Code, due to their role in processing payments for illegal drug sales.
“In Canada, collaborating with a listed terrorist organization is a serious offence under the Criminal Code,” writes Clement in the report.
“It should cause them — the banks and Interac — to take action,” Clement told Canadian Affairs in an interview.
Legal experts say the Criminal Code permits the prosecution of institutions that facilitate terrorism. But the burden of proof is high and the likelihood of charges being laid is low.
“Theoretically, there’s no impediment to [prosecuting financial institutions],” said Anil Kapoor, a criminal and national security lawyer.
“The real question is how you acquire the evidence, and … does the evidence add up to knowingly [facilitating illegal transactions]?”
Terrorist organization
In February, Canada expanded its list of designated terrorist organizations to include seven criminal organizations, most of them powerful drug cartels.
The list includes five Mexican cartels, such as the Cártel de Sinaloa and Cartel de Jalisco Nueva Generación (CJNG), El Salvador’s La Mara Salvatrucha (MS‑13) and Venezuela’s Tren de Aragua.
This designation brings anti-terrorism laws into play for groups previously targeted mainly for drug trafficking. This allows law enforcement to pursue broader charges with harsher penalties and lower thresholds for prosecution.
Clement’s report, published by the advocacy group Consumer Choice Center, warns that banks, credit card companies and Interac could face legal risks for facilitating transactions with online drug vendors linked to these cartels.
However, Clement stops short of identifying any specific institutions as having committed wrongdoing.
Bankrolling cartels
Clement says financial institutions should be required to act on publicly available information about how to purchase illicit substances.
“If I buy from Moon Haus and I buy cocaine, what bank is that deposit going to?” said Clement. Moon Haus is an online Canadian vendor that openly sells illicit psychedelic drugs and accepts payment via e‑Transfer.
A vendor like Moon Haus is not a designated terrorist organization, but its connections to cartel-supplied products could leave financial institutions legally exposed, says Clement.
“A compliance officer at a bank could likely just search for [a Moon Haus] email and see if it’s linked to any of their deposit accounts,” he said.
Legal experts agree that the Criminal Code permits financial institutions to be charged with facilitating terrorism. But the challenge would be proving intent.
There needs to be a deliberate understanding or intention to facilitate terrorist-related transactions for it to be considered “knowingly” aiding terrorism, says Kapoor, who sits on the board of the Canadian Civil Liberties Association and previously served on the Prime Minister’s Advisory Council on National Security.
Jessica Davis, president of Canadian security consultancy Insight Threat Intelligence, says the bar is very high for prosecuting financial institutions for terrorist financing in Canada.
“You’re much more likely to get things like really large fines for [financial institutions] just not doing enough due diligence and not reporting enough,” said Davis, who was formerly a senior analyst with the Canadian Security Intelligence Service.
“Then [law enforcement would] have to meet a very high bar to convince a prosecutor that this was a good use of their time. And in my experience, it’s hard enough to get prosecutors to pursue terrorist financing charges.”
Davis says Canada has seen only three terrorist financing convictions — and none of them targeted financial institutions that facilitated the transactions.
By contrast, the U.S. has aggressively pursued financial institutions linked to cartel crimes. In October 2024, the U.S. Department of Justice slapped TD Bank, Canada’s second-largest bank, with a $3 billion US fine for failing to stop cartel-linked money laundering.
The department highlighted “long-term, pervasive, and systemic deficiencies” in TD’s transaction monitoring. It said TD had knowingly underfunded its U.S. anti-money laundering program, enabling over $670 million in cartel-linked laundering.
“By making its services convenient for criminals, it became one,” said Attorney General Merrick Garland, at a press conference at the time. Deputy Attorney General Lisa Monaco called the case a “lesson” for bank compliance officials nationwide.
‘Choked out’
Kapoor and Davis say Canada currently lacks the legal framework to hold banks accountable in the way U.S. agencies do.
“We don’t have the statutory infrastructure to hold our banks responsible in the same way,” said Kapoor.
Still, Kapoor says there are ways for Canadian institutions to disrupt cartel operations by cutting off their financial channels. “If they’re choked out of the equation and won’t assist people, then cartels really can’t operate,” he said.
Kapoor says Canadian banks, credit card companies and postal services could de-platform or report suspicious transactions to FINTRAC, Canada’s financial intelligence unit. This could then lead to investigations by law enforcement.
“Banks [are] in the business of essentially getting people to deposit money in their institutions so they can turn around and lend it out — that’s how they make their money,” said Kapoor.
“But at the same time, they don’t want to run afoul of any regulations.”
‘Tougher approach’
According to FINTRAC, businesses and financial institutions subject to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act are required to report to law enforcement about suspicious transactions, listed persons or properties.
“Following the listing of seven transnational criminal organizations as terrorist entities under the Criminal Code in February 2025, FINTRAC called on businesses to update their processes and ensure the submission of listed person or entity property reports,” a spokesperson told Canadian Affairs in an emailed statement.
Last fiscal year, FINTRAC generated more than 400 financial intelligence disclosures related to terrorist financing and threats to Canada’s security, which were shared with law enforcement and national security partners, the spokesperson said.
The Canadian Bankers Association, which represents more than 60 domestic and foreign banks operating in Canada, told Canadian Affairs its members dedicate “significant resources” to anti-money laundering and anti-terrorist financing programs.
It cited its work on Project Guardian as one example. That project uses financial intelligence and suspicious transaction reports to thwart fentanyl-related money laundering networks.
Interac told Canadian Affairs it carefully monitors its e-Transfer network for risks and threats, and alerts the financial institutions on both ends of the transaction about any issues.
Visa Canada told Canadian Affairs it enforces “robust compliance requirements” for financial institutions and merchants, but declined to provide further detail. Mastercard, BMO, RBC, TD and Scotiabank did not respond to requests for comment.
Davis says she hopes to see Canada take a tougher approach to holding financial institutions accountable.
“I would love to personally see more prosecutions for criminal non-compliance,” she said.
“Then, once there is a reasonable case law on that, I think that then we might be able to see something brought against financial institutions in the right circumstances for knowingly facilitating.”
“At a certain point in time, they cannot deny it anymore.”
This article was produced through the Breaking Needles Fellowship Program, which provided a grant to Canadian Affairs, a digital media outlet, to fund journalism exploring addiction and crime in Canada. Articles produced through the Fellowship are co-published by Break The Needle and Canadian Affairs.
Addictions
Critics question conclusions of new Ontario “safer supply” study

A new study links safer supply to health improvements, but critics say results are muddied by methadone use and extra supports
A new study that compares safer supply with a traditional approach to addiction treatment has ignited debate among addiction experts.
The study, published in The Lancet Public Health in April, examined health outcomes for people receiving safer supply and compared them to a similar group of people receiving methadone, a drug used to reduce drug cravings and withdrawal symptoms.
It concluded that safer supply programs significantly improved participants’ health outcomes. Safer supply provides people at high risk of overdose with prescription opioids as a safer alternative to toxic street drugs.
But critics question the study’s conclusions. They note that many safer supply participants had access to more support services and that the majority also received methadone. These factors make it difficult to identify which treatment drove the positive results.
“The study did not compare [safer supply] to methadone, but rather the initiation of both with several other unaccounted variables,” wrote psychiatrists Dr. Robert Tanguaya and Dr. Nickie Mathew in a formal critique also published in The Lancet.
Findings
The peer-reviewed study is the first in Canada to compare the health outcomes for people receiving safer supply with those receiving methadone through a program known as opioid agonist therapy. Opioid agonist therapy, or OAT, is widely used to treat opioid use disorder.
The study, which was led by teams at Unity Health Toronto, ICES, the University of Toronto and the Ontario Network of People Who Use Drugs, followed about 1,700 Ontarians who started treatment between 2016 and 2021. Half were receiving prescribed hydromorphone through Ontario’s safer supply programs; the other half were receiving methadone through an OAT program.
Participants were tracked for up to one year. Both groups saw improvements, including fewer overdoses, emergency room visits, hospital stays and new infections.
“The findings suggest [safer supply] programs play an important, complementary role to traditional opioid agonist treatment in expanding the options available to support people who use drugs,” the study says.
However, when compared against each other, the safer supply group had higher rates of overdose, ER visits and hospital admissions than those on methadone.
Still, the authors conclude that safer supply can complement methadone, especially for people who do not respond well to traditional options like OAT.
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Confounders
In their May 27 critique in The Lancet Public Health, psychiatrists Tanguay and Mathew say the study fails to isolate the effects of safer supply.
“It is unclear from this study whether the benefits attributed to [safer supply] initiation came from the prescribed … hydromorphone or not,” they wrote.
One concern is that most safer supply participants were also on methadone — a highly dose-dependent medication — and the study did not account for how much of each drug they received.
Dr. Leonara Regenstreif, a primary care physician who specializes in substance use disorders, raised a similar point in an email to Canadian Affairs.
She noted that 84 per cent of safer supply participants in the study were already on methadone when they began receiving hydromorphone.
“It would take a lot of fudging to be able to say [safer supply] was responsible for an outcome, when that group was actually receiving two drugs,” she said.
The main study’s authors did not respond to requests for comment. Instead, they directed Canadian Affairs to their May 27 response to Tanguay and Mathew’s critique, also published in The Lancet.
Wraparound care
Critics also say that improved outcomes among safer supply participants may be due to the extensive additional health care they received while on safer supply.
This additional care was evidenced in study participants’ medication costs.
In the year after treatment began, median medication costs for safer supply patients rose by more than $13,000 per person. By comparison, costs for those on methadone rose by about $1,600.
Glen McGee, a statistics professor at the University of Waterloo, says this suggests safer supply participants may have received broader care, including treatment for other conditions like HIV or hepatitis C.
“This could suggest treatment [of the safer supply group] involved more thorough care in addition to [safer supply], which could also account for some of the improved outcomes,” he said.
In their response to Tanguay and Mathew’s critique, the main study’s authors said the additional care is not a flaw — it reflects how Ontario’s safer supply model is designed.
“Embedding hydromorphone prescriptions within other health and social services that address the complex needs of people at high risk of drug-related harms is a deliberate and defining feature,” they wrote.
McGee suggests the challenge of isolating the impact of broader care makes it difficult to draw broad conclusions about safer supply’s role in patients’ health outcomes.
“The analyses in the main paper seem reasonable, but the conclusions are perhaps too strong,” said McGee. “We don’t necessarily know if [safer supply] alone would be as effective.”
Overdose risk
Critics also focused on safer supply participants having a higher risk of overdose than those in opioid agonist therapy.
Although safer supply patients were more likely to stay in treatment than methadone patients, overdose rates remained higher for safer supply patients — even after adjusting for people who dropped out from the methadone group.
The study authors say this is likely because safer supply patients started at higher risk and many continued using street drugs early in treatment.
“The smaller decline among [safer supply] recipients might reflect higher baseline risk and greater ongoing exposure to the unregulated drug supply early in treatment,” they wrote.
They also noted that very few people died in either group, showing that treatment — whether safer supply or methadone — offers protection.
However, Regenstreif urges caution.
“If you peel away the stats language, underneath it all you have a cohort with higher risks of opioid toxicity and other hazards of ongoing drug use,” said Regenstreif.
This article was produced through the Breaking Needles Fellowship Program, which provided a grant to Canadian Affairs, a digital media outlet, to fund journalism exploring addiction and crime in Canada. Articles produced through the Fellowship are co-published by Break The Needle and Canadian Affairs.
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Addictions
Governments ease alcohol access as evidence of its harms mount

By Alexandra Keeler
From cancer to heart disease to brain damage, the evidence of alcohol’s harms is mounting. So why are governments making it easier to drink?
In May, shortly after Parliament resumed, Quebec Senator Patrick Brazeau introduced Bill S-202, a private member’s bill to require nearly all alcoholic beverages to carry health warning labels.
“As a former alcohol consumer, I was once in the 75 per cent of Canadians who are not aware that there is a causal link between alcohol consumption and seven cancers,” Brazeau told the House of Commons on June 3.
“I personally battled colon cancer several years ago, so much so that when I received treatment, I felt I was being killed inside.”
Brazeau is something of an outlier in government. Public health experts say Canadian governments are not doing enough to address alcohol’s known health risks — and that the alcohol industry is a big part of the problem.
“We’ve known about the carcinogenic effects of alcohol since the 80s,” said Peter Butt, a University of Saskatchewan researcher and co-chair of Canada’s latest drinking guidelines. “But there are no warning labels, so the consumer is given false confidence.
“Some of this falls at the doorstep of the government, because they regulate the labeling.”
Alcohol harms
Today, the World Health Organization warns that alcohol harms nearly every system in the body.
The International Agency for Research on Cancer classifies alcohol as a cause of six cancers.
Chronic alcohol use raises the risks of liver and heart disease, brain damage, mental health issues, injuries and fetal alcohol spectrum disorders.
In Canada, the federal government oversees labeling and public health messaging rules, while the provinces control liquor sales and drinking ages.
In January 2023, Health Canada released updated national alcohol guidelines in response to the growing evidence of alcohol-related harms. This new guidance marked a major departure from its 2011 recommendations, which had suggested women not exceed 10 drinks per week and men not exceed 15.
The new guidelines have a sober message: no amount of alcohol is risk-free, and risk rises significantly with more than two drinks a week.
“We didn’t say you shouldn’t drink more than two standard drinks a week. We said you should reduce the amount that you drink,” said Butt, who co-chaired the team that updated the guidelines.
“The consumer had a right to know.”
Mixed messages
Aside from tightening its guidelines, Canadian governments have done little to better protect the public.
Public health experts say one major flashpoint has been warning labels. In general, drinks with greater than 0.5 per cent alcohol content are exempt from standard food and beverage labeling requirements.
“Even bottled water or non-alcoholic beer has to have the nutrition facts because it doesn’t have enough alcohol in it to get the exemption,” said Adam Sherk, a research scientist at the Canadian Centre for Substance Use and Addiction who also advised on Canada’s updated alcohol guidelines.
The Canadian Cancer Society has been advocating for labels on alcohol products since 2017. The Canadian Institute for Substance Use Research has done the same since 2023. But Health Canada has not initiated any regulatory process to mandate warning labels for alcohol products.
Some research indicates such labels could reduce sales.
A 2020 study by the Yukon government and the Canadian Institute for Substance Use Research tested how warning labels affect consumer behaviour. It found labels did increase awareness and reduce sales.
Yukon pulled its label requirements after the alcohol industry threatened to sue the government.

Convenient
Labelling is just one of many measures governments could take to reduce alcohol-related harm.
In addition to labels, the Canadian Alcohol Policy Evaluation project recommends minimum unit pricing, marketing and advertising controls, and public education campaigns. No province or territory has fully implemented all of these measures.
“[T]he Canadian federal government has not adopted or only partially adopted many evidence based alcohol policies,” the project’s report reads.
Meanwhile, some provinces are moving in the opposite direction.
Nova Scotia is considering expanding retail options. In April, Quebec rejected a recommendation to lower its blood alcohol limit for drivers, despite repeated coroner warnings.
Ontario has gone the furthest.
The province plans to invest $175 million over five years to grow its alcohol sector. It has begun permitting alcohol sales in convenience stores for the first time — with up to 8,500 new retailers expected to carry alcohol by 2026. It has also scrapped previous limits on pack sizes and discount pricing.
In April 2024, the province’s chief medical officer, Dr. Kieran Moore, recommended raising the legal drinking age from 19 to 21. Premier Doug Ford rejected the idea, arguing that if 18-year-olds can enlist in the military, they should be allowed to drink.
“We believe in treating people like adults,” he told media at the time.
In late June, the province also approved alcohol consumption on so-called “pedal pubs” — large, multi-person bicycles equipped with a U-shaped bar, often used for tours or bachelor parties.
“There’s never been such a large increase in availability all at once,” said Sherk, calling Ontario’s expansion “unprecedented.”
False profits
Tim Stockwell, a University of Victoria professor and former director of the Canadian Institute for Substance Use Research, says corporate influence helps explain why governments are failing to address alcohol’s health risks.
“Evidence for harms from alcohol has been with us for decades and has only strengthened,” said Stockwell. “Commercial vested interests have always dominated the policy sphere.”
Federal lobbying records show Beer Canada has routinely targeted Health Canada and more than two dozen federal agencies to influence policy on labeling, taxation and public health messaging. This includes closed-door meetings with MPs and senior officials from the Department of Finance and Agriculture Canada.
Beer Canada did not respond to multiple requests for comment by press time. Spirits Canada and Molson Coors Beverage Company also did not respond to multiple requests for comment.
Butt, of the University of Saskatchewan, says the money governments generate from alcohol sales creates a conflict with their public health mandate.
Federal and provincial governments generate revenue from alcohol through a range of mechanisms, including excise taxes, provincial markups, sales taxes and licensing fees. In some provinces, governments also earn profits from government-run liquor stores.
“[Governments] look at it from a lost revenue perspective, rather than from a public health perspective,” said Butt.
Ian Culbert, of Public Health Canada, puts it more bluntly. “Governments have a substance sales issue, as opposed to a substance use issue,” he said. “But it’s short-term gain for long-term pain.”
“Public Health wants to reduce consumption, because all consumption contributes to harm,” said Stockwell, of the Canadian Institute for Substance Use Research. “Commerce wants to … expand the consumption.”
A familiar playbook
Every expert interviewed for this story said the alcohol industry is following the tobacco industry’s playbook.
“They’re using the same sort of rear-guard action policies: denial, heavy government lobbying, government revenue,” said Butt.
“I don’t trust either the industry nor the government to do the right thing based upon past action. I think it’s important that consumers are educated.”
Adam Sherk agrees. “If I was [the industry], I would also be scared about consumers knowing this link [to cancer] better,” he said.
“The strategy is to obfuscate the link — point to studies that might be older or found no link, or put a lot of things in the water so it seems less clear than it is.”
But alcohol, experts say, is harder to regulate than tobacco. “Nobody liked to be in an airplane with smokers eating dinner next to smokers, so it was really easy to demonize smoking,” said Culbert.
“Alcohol is so ingrained in everything: we drink when we’re happy, we drink when we’re sad, we drink when we’re bored — we drink.”
Still, the normalization does not make the risks any less real. “There’s a mortality rate attached to this,” said Butt.
“And that’s the thing that is tragic — this is a modifiable risk factor.”
This article was produced through the Breaking Needles Fellowship Program, which provided a grant to Canadian Affairs, a digital media outlet, to fund journalism exploring addiction and crime in Canada. Articles produced through the Fellowship are co-published by Break The Needle and Canadian Affairs.
Our content is always free – but if you want to help us commission more high-quality journalism, consider getting a voluntary paid subscription.
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