CANADA

 I. Summary

Canada, like the United States, is primarily a drug-consuming country and also produces
large amounts of marijuana. Much of the Canadian-produced marijuana is shipped to the U.S.
International drug traffickers frequently attempt to route drug shipments, primarily heroin,
through Canada to the U.S., taking advantage of the long and open Canada-U.S. border, the
massive flow of legitimate commerce, and the lower risk of long prison terms or forfeiture of
assets if caught in Canada compared with the U.S. Money laundering and chemical diversion
are also problems. Legislation is being drafted to strengthen Canada's ability to control
money laundering.

 With approximately 1,000,000 drug users in Canada, including some 250,000 cocaine
addicts and 40,000 heroin addicts, The Government of Canada's (GOC) drug control strategy
emphasizes drug abuse prevention and treatment. The law enforcement component
emphasizes action against organized crime. Canadian law enforcement officials cooperate
closely with their U.S. counterparts on narcotics investigations and interdiction efforts.
Canada is a party to the 1988 UN Drug Convention and participates actively in international
drug control efforts.

 II. Status of Country

 Narcotics production, distribution, and use are illegal in Canada. Drugs are smuggled into
Canada for domestic use and for transshipment to the U.S. While the level of illicit drug
transshipment through Canada to the U.S. is not known, Canadian and U.S. law enforcement
agencies are taking the problem very seriously, particularly with respect to Asian-sourced
heroin.

 Southeast Asian heroin continues to enter North America predominantly by sea containers,
but also by air and overland. Major ports of entry include Vancouver, Montreal, and Halifax.
Given the long and open U.S.-Canada border, Canada will continue to be targeted by
smugglers for potential transit points to and from the U.S. market. U.S. and Canadian law
enforcement coordinate closely at all levels to curb trafficking, but recognize that constant
vigilance is required. Money laundering and chemical diversion are also problems in Canada.

 Canada has a relatively low crime rate compared with most countries in the Western
Hemisphere, but organized crime and drug trafficking are becoming more serious problems.
Toronto, Canada's largest city, has experienced growing problems with organized criminals
from Asia and Russia. Asian ethnic groups, particularly gangs from China, dominate the
heroin trade, alien smuggling, and credit card fraud, much of which is aimed at the United
States. Vancouver, which also has significant Asian gang activity, now suffers from epidemic
drug abuse with nearly one death per day from heroin overdoses. There have also been
reports that outlaw motorcycle gang activities are on the rise nationwide, including
methamphetamine trafficking.

 Arrests in Europe have also indicated that Romanian and other criminal groups have
smuggled Turkish-origin heroin to Vancouver as well. Canadian-based cocaine traffickers
once relied primarily on U.S.-based suppliers, but are increasingly going directly to
Colombia, according to the RCMP. Shipments arrive via mothership, marine containers, and
occasionally by clandestine flights. Colombian organizations dominate the cocaine trade in
eastern and central Canada. Italian organized crime is also involved in drug trafficking. The
RCMP estimates that between 50-100 tons of foreign marijuana, 100 tons of hashish (plus 6
tons of liquid hashish), 15 tons of cocaine and at least one ton of heroin are imported into
Canada each year, producing up to CAN$4 billion in wholesale profits and CAN$18 billion
in street-level profits.

 Canada's drug strategy, the third in a series of five-year plans, was issued in 1998. While the
strategy is comprehensive, addressing all of the foregoing problems, it focuses most of its
counternarcotics efforts, and resources (approximately 70%), on domestic demand reduction.
Building on stronger anti-drug legislation passed in 1997, the Canadian drug strategy calls for
a new targeting imperative on organized crime by the Solicitor General's Office.

 III. Country Actions Against Drugs in 1999

 Policy Initiatives. Canada's large and diverse financial sector, and lack of mandatory
reporting requirements for suspicious transactions, has become an attractive venue for
international money launderers. Recognizing this increasing threat, and responding to
recommendations made to Canada by the Financial Action Task Force (FATF), the GOC
promulgated control legislation in 1999. It has also taken steps to increase the capabilities of
Canadian law enforcement authorities to detect suspicious transactions and to conduct money
laundering investigations. Canada also added ten new integrated proceeds-of-crime law
enforcement units, based on pilot projects in three cities.

 Accomplishments. In 1999 (as of September), Canadian authorities made 12,541
drug-related arrests (compared with 7,531 in 1998). As of September 1999, GOC authorities
had seized 500 kilograms of cocaine (down from 1.22 metric tons during the same period in
1998), 51 kilograms of heroin (down from 121 kilograms for this period in 1998), 4.289
metric tons of marijuana (down from 5.955 metric tons for this period in 1998), and 3.35
metric tons of hashish (down from 819 kilograms as of September 1998).

 Canadian law enforcement operations, often in cooperation with U.S. agencies, resulted in
the interdiction of numerous large-scale narcotics shipments and disruption of trafficking
organizations. After a two-year investigation, Royal Canadian Mounted Police (RCMP)
arrested Alfonso Caruana, reputed leader of the Caruana/Contreara organized crime family.
This organization was responsible for the acquisition of cocaine in Mexico, which was
ultimately shipped to the U.S., Canada and Italy. As part of this investigation, 200 kilograms
of cocaine were seized in Houston, Texas.

 The RCMP cooperated with the Hong Kong Narcotics Bureau in January to arrest members
of a heroin ring operating between China and Canada. There were simultaneous arrests in
Hong Kong, Vancouver and Toronto, along with seizures of large amounts of heroin and drug
proceeds. Canadian customs inspectors arrested two Hong Kong traffickers who arrived in
Toronto from Vancouver in possession of 43 kilograms of heroin; they were en route to
London.

 In June, after a three-year investigation, the RCMP launched a full-scale operation against a
major international heroin ring that had been smuggling large amounts of Burmese-origin
heroin into Vancouver for distribution in Canada and the U.S. Over 30 suspects were arrested
and 56 kilograms (120 pounds) of heroin seized. According to the RCMP, the group moved
enough heroin that it could occasionally stockpile supplies in Canada and drive up prices in
North American markets. Parallel raids and arrests were conducted by the FBI in New York
and Puerto Rico, and by Thai and Hong Kong authorities. This exceptional investigative
work and international coordination dismantled the organization.

 Law Enforcement Efforts. During 1999, Canadian authorities continued to implement the
five-year anti-drug strategy issued in 1998. The strategy recognizes the growing threat from
transnational organized crime, particularly narcotics traffickers, and directs a concerted effort
against it. In addition to creating proceeds of crime units, the offensive focuses law
enforcement resources on criminal organizations and money laundering operations. These
efforts will be enhanced once expected suspicious transaction reporting requirements
legislation is passed next year and a new financial investigation unit is created. After five
years of consecutive budget cuts to law enforcement, the improving national budget situation
permitted an increase in funding in 1999.

 While the RCMP has mounted effective operations against narcotics and other criminal
organizations, the impact of these efforts have been undermined in numerous cases by court
decisions. Canadian courts have been reluctant to impose tough prison sentences, often
opting for fines, reflecting a widespread view that drugs are a "victimless" crime or simply a
health issue, not a criminal or public safety concern. For example, one court dismissed
charges against an individual arrested for snorting crack in a public restroom, calling it an
invasion of his privacy. The Supreme Court has questioned the legality of police involvement
in "sting"-type operations, undercover "buys" and other techniques now commonly used
around the world in drug investigations, largely on privacy grounds, as a potential violation
of the 1982 Canadian Charter of Rights and Freedoms. Canadian press reports indicate that
only about 20% of those convicted of growing marijuana in Vancouver receive jail terms, and
that British Colombia has the highest rate of acquittal rates in the nation. In January, a judge
ruled that a convicted criminal, who had already been deported by the GOC, must be returned
to Canada at GOC expense to pursue his request for refugee status, despite having aided two
Colombian drug traffickers to escape from jail.

 Corruption. Canada holds its officials and law enforcement personnel to very high standards
of conduct and has strong anti-corruption controls in place. Government personnel found to
be engaged in malfeasance of any kind are removed and subject to prosecution.

 Agreements and Treaties. Canada is a party to the 1988 UN Drug Convention. The U.S. and
Canada have long-standing agreements on law enforcement cooperation, including
extradition and mutual legal assistance treaties and an asset sharing agreement. In 1998, the
RCMP became the first foreign law enforcement organization to be afforded access to the El
Paso Intelligence Center (EPIC), the USG's tactical drug intelligence center.

 The USG has concluded a Customs Mutual Assistance Agreement (CMAA) with the
Government of Canada. Canada is also a party to the World Customs Organization's
International Convention on Mutual Administrative Assistance for the Prevention,
Investigation, and Repression of Customs Offenses (Nairobi Convention), Annex X on
Assistance in Narcotics Cases.

 Canada actively participates in international anti-drug fora including: the United Nations
International Drug Control Program (UNDCP), the Inter-American Drug Abuse Control
Commission of the Organization of American States (CICAD), the Dublin Group, the
Financial Action Task Force, and other groups. Canada is an active participant in the UN
negotiations on a global crime convention.

 During 1998-9, Deputy Solicitor General Jean Fournier chaired the inter-governmental
working group that negotiated the Multilateral Evaluation Mechanism (MEM), a hemispheric
peer review system to evaluate each OAS Member State's anti-drug strategies and efforts.
The MEM, which was mandated by the 1998 Summit of the Americas, was completed in
Ottawa, Canada in August after 18 months of negotiations. It was approved by the OAS in
October. The first MEM evaluations will be completed during 2000.

 Minister of Foreign Affairs Axworthy organized a Foreign Ministers' Dialogue Group at the
June OAS General Assembly to explore the drug issue from the perspective of "Human
Security," including the impact of law enforcement or drug control activities on individuals
and communities. Canada provided CAN$650,000 to UNDCP for 1998. It also contributed
CAN$246,900 cash and CAN$132,000 in kind directly to CICAD.

 Cultivation and Production. Cannabis is grown throughout the country and is particularly
abundant in the Provinces of Quebec and British Columbia. While the GOC does not produce
a formal production estimate, Canadian law enforcement authorities estimate it at around 800
metric tons per year, with up to 60 percent of that smuggled into the United States. According
to Canadian intelligence, marijuana cultivation in British Columbia is a sophisticated, one
billion dollar-a-year growth industry. RCMP investigations suggest that high-THC content,
hydroponically-grown marijuana is exchanged pound-for-pound with cocaine from the U.S.
U.S.-produced marijuana is also imported into Canada, although the level of this activity is
not known.

 Domestic Programs. The GOC emphasizes demand reduction in its drug control strategy
and, along with non-governmental organizations, offers extensive drug abuse prevention
programs. The focus on prevention is considered a more cost-effective intervention. There are
substantial regional differences in the patterns of drug abuse. For example, Vancouver
suffered a wave of heroin overdose deaths while native American communities in the prairie
provinces were plagued with propane and glue-sniffing and an injected combination of two
legal drugs (over-the-counter Talwin and prescription Ritalin) known as "poor-man's heroin."