If the Canadian government can freeze bank accounts, should you keep your money there?

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While the war in Ukraine has erased the convoy of Canadian trucks from the public mind, we are still cleaning up the mess the protesters made around Parliament Hill. Many Ottawans have seen police load Freedom Convoy motorhomes onto trailers and transport them, even as we watch Ukrainians fight for their right to sovereignty.

It’s a funny time to live in, both here in North America and in Europe.

Western sanctions against Russia are coming – another extreme measure that will essentially freeze the Kremlin’s bank account. Freezing an aggressive leader’s financial funding might not warrant suspicion. But doing the same to Canadian citizens to stop a protest – that certainly raised a few eyebrows.

Banks have now unfrozen those frozen accounts, but some Canadians may feel conflicted with the emergency measure. If the government can freeze bank accounts, should you keep your money there? And if not, where?

TL;DR: Yes, banks are safe

Unless you’re planning on taking Ottawa by storm anytime soon, you’ll probably never see your account frozen.

The Emergencies Act was an extreme measure. Whether or not you agree with that, you can at least see it as such. This was not an Orwellian plot or a fundamental shift towards totalitarianism. A massive convoy of irate truckers and their supporters paralyzed Ottawa for three weeks. Trudeau just wanted everyone to go home.

It was the first time in Canadian history that the Emergencies Act was used, although that doesn’t mean much, as it was signed into law in 1988 by Pierre Trudeau). About 219 accounts were frozen, limiting the flow to about $8 million. Many of those affected had other bank accounts accessible. And although the law promises to freeze accounts for 30 days, almost all were being unfrozen two weeks later.

“But it’s my money”, you can protest. “Who gives a bank the right to freeze my money?

Federal courts. Well, you.

Banks are businesses. When you entrust them with your money, you enter into a business relationship that has certain terms and agreements. Most of us never read them, but it’s important to know them. The terms and conditions outline your rights and responsibilities as an account holder as well as what constitutes account termination and, yes, a freeze. Banks love loyal customers. But if you violate these terms or break the law, they have the right to terminate or freeze your account.

Again, unless you’re planning on invading the capital, it’s highly unlikely that you’ll wake up one morning with a frozen bank account. If you do, it could be a good thing: your bank may believe that someone hacked into your account and blocked it for good measure.

I’d be more worried about a fraudster hacking into your bank account than I would have the government freeze it. At least when your account is frozen, your funds are still there no matter how restricted your access is.

Ultimately, the bank is still the safest place to store your money. As long as your bank is a CDIC member, your money is protected, even if it’s frozen.