Financial Post(Canada) 15-01-1999 By Alan Toulin.

The Internet and other technological advances are creating new opportunities for criminal and terrorist organizations to disguise, protect and expand their activities, according to a Senate report released yesterday.

It recommends that security forces and police be given new tools such as access to computer encryption codes in the battle against terrorism and organized crime.

Technology such as computer encryption, satellite imaging and communications, and debit cards are increasing the threat to an open society like Canada, said the Special Committee on Security and Intelligence in its report.

These new threats, dubbed cyber-terrorism, are a growing concern but Canada is falling short in its preparations to address these issues, the Senate report said.

Canada and other nations are more reliant than ever on large computer control systems in areas such as defence, telecommunications, energy generation, air traffic control and banking.

There have been no major incidents yet but the Senate warns of a number of events that highlight a growing threat, including the shutdown of a communications satellite operated by the People's Republic of China. The group that claimed responsibility for this act is based in Canada, the Senate report said.

It quotes Louis Freeh, Federal Bureau of Investigation director, as characterizing Canada as a "hacker haven," a site from which those intent on cyber-terrorism operate.

The report warns that major system failures would be comparable to the power outage caused by last winter's ice storm which devastated eastern Ontario and Quebec.

The Senate report catalogues a range of security concerns Ottawa needs to address. David Harris, former CSIS (Canadian Security and Intelligence Service) chief of strategic planning, praised the Senate report for highlighting the issues.

Among the technological tools that can be put to criminal use: - Detailed pictures of sensitive sites taken by satellites are now commercially available.

- Encryption technology can mask communications and data of terrorist organizations.

- Satellites can offer telephone communications incapable of being traced or intercepted by security.

- Cash debit cards can facilitate money laundering.

The Internet is the most significant development. It can aid terrorist groups in carrying out their activities. Yet security forces are falling behind because of the growing technology gap between them and criminal organizations.

Just keeping pace with terrorist organizations will require the investment of very considerable amounts of money by the federal government, the report states.

In addition to expanding the definition of terrorism to include cyber-terrorism and economic espionage, the Senate committee recommends changes to the Criminal Code and legislative and regulatory changes to give authorities more power.

It calls for the Criminal Code to be amended to provide a list of penalties associated with assaults on computer systems and the use of encryption technology in the commission of a crime.

Canada should give immediate attention to creating the capability of assessing and reducing the vulnerabilities of critical infrastructure and to respond to cyber attacks, the report said.