Canada is sleepwalking into a cartel-driven security crisis

The U.S. is getting serious about drug cartels. If Canada doesn’t step up, we risk becoming their next base of operations

Interview requests

According to a recent New York Times report, U.S. President Donald Trump has given the Pentagon the green light to target Latin American drug cartels. Not “target” in the metaphorical sense—this is the real thing. Drones. Intelligence ops. Boots, if not yet on the ground, then certainly in the briefing rooms.

This isn’t just another law-and-order flex. It’s a clear signal that cartels are no longer being treated like street thugs with fast cars and gold-plated pistols. The U.S. is starting to treat them as what they’ve become: strategic actors capable of hollowing out nations through violence, economic sabotage and political manipulation.

Canada, take note. These cartels aren’t lurking just south of the Rio Grande. They’re here—moving narcotics through our ports, washing dirty money through casinos and real estate, and slipping illicit profits into the bloodstream of our legitimate businesses. The same loopholes that let hostile states meddle in our economy—opaque ownership laws, sluggish enforcement, paper-thin oversight—are a buffet for criminal networks.

The U.S. move to label cartels as foreign terrorist organizations isn’t just semantics. It unlocks serious tools: sanctions, asset freezes, intelligence collection, and expanded interagency coordination. And yes, it will inevitably reshape how American agencies engage with Canadian police, prosecutors and financial watchdogs. Whether we’re ready or not.

Our private sector, already lumbering under the alphabet soup of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, if you’re into that sort of thing, will now face higher expectations. The law technically requires banks, real estate firms, casinos and others to flag dodgy transactions. But reality hasn’t lived up to regulation. Just ask TD Bank, which somehow let billions in suspected drug money pass through its accounts like it was business as usual.

Now, with U.S. regulators treating some cartels like terror networks, those Canadian reporting obligations take on a whole new urgency. Vague links to shady partners won’t be brushed aside—they’ll be flagged, frozen and maybe prosecuted. Transactions won’t just be scrutinized for origin—they’ll be examined for intent, connection and risk exposure.

And if you think this only applies to bags of cash under the table, think again. Trade-based laundering—fudged invoices, over- or underpriced exports, corporate shell games—is very much in the crosshairs. So is service-based laundering: professional firms, logistics handlers, consultants. If it moves, it can be used. And if it moves dirty money, it’s fair game.

For businesses with Latin American partners or operations in high-risk sectors—agriculture, commodities, shipping, construction—the rules have changed. Every client, every partner, every middleman becomes a compliance risk. Insurers and investors are already sharpening their pencils. If you thought due diligence was annoying before, just wait.

But the private sector won’t be the only one feeling the heat. Canadian law enforcement can’t afford to lag behind. If the U.S. is reaching for terrorism laws to take down cartel operations, Canada can’t keep leaning on an outdated “organized crime” framework better suited to The Sopranos reruns than transnational hybrid conflict.

Integrated enforcement units will need more than pep talks—they’ll need authority, funding and legal backing to go after not just cartel foot soldiers, but the enablers hiding in plain sight: financial fixers, trade brokers and regulatory sleepers.

It’s time to revisit whether our terrorism financing laws can apply to cartels that, let’s face it, look and act an awful lot like geopolitical insurgents. If they meet the Criminal Code’s thresholds, why aren’t they being treated accordingly?

Because this isn’t just about drugs. It’s about hybrid warfare.

Cartels are no longer just violent criminal enterprises. They’ve become destabilizing forces—sometimes aligned with hostile regimes, always exploiting weak institutions. Take Venezuela’s Cartel de los Soles. It’s allegedly run by senior government officials. That’s not just a crime ring. That’s a criminal state actor.

When such networks pass through Canada, they don’t just bring drugs. They bring the risk of corruption, economic distortion and political interference. In short: they’re a national security threat.

And here’s the kicker: if Canada doesn’t match the U.S. posture, we become the soft underbelly. Cartels will exploit every gap between Washington’s crackdown and Ottawa’s inertia. Even if Canada doesn’t change a thing, the private sector won’t get a pass. U.S. regulators don’t particularly care what Parliament does—they care about risk exposure. And they will act accordingly.

The U.S. designation confirms what many in intelligence and enforcement have long known: the cartels use the same toolkit as hostile states: illicit finance, economic disruption and market infiltration. That makes them more than a policing challenge. They are a test of national resilience.

Canada’s response needs to be sharp, strategic and immediate. That means tightening ownership laws, expanding the operational muscle of FINTRAC—the federal agency that tracks suspicious financial transactions and combats money laundering—and properly resourcing joint enforcement teams. Above all, we must stop treating compliance as a box-checking exercise and start treating it as the security tool it was meant to be.

Washington’s message couldn’t be clearer. If Canada stays on cruise control, the cartels will set up shop here—and we’ll be the ones footing the bill in corrupted institutions, compromised markets and communities left to deal with the fallout.

Hybrid threats don’t wait for committee reports. They move fast, adapt quickly and embed deeply. So should we.

Scott McGregor is an intelligence consultant and co-author of The Mosaic Effect. He is a senior fellow at the Council on Countering Hybrid Warfare and writes here for the Frontier Centre for Public Policy.