The goal is to introduce intelligence in criminal trials while protecting the sensitivity of the information, John Davies, a director general with Public Safety Canada, told a Senate committee Monday.
The government is also studying improved information sharing among agencies and whether the threshold for detaining a terror suspect is too high, Davies said. Options are being developed for cabinet consideration.
"There's a lot of things in discussion right now."
Davies was among several public servants and police quizzed Monday by members of the Senate national security and defence committee.
The government has indicated it will bring in new legislation following last month's fatal daylight attacks on soldiers in Ottawa and St-Jean-sur-Richelieu, Que.
It recently introduced a long-planned bill that would ensure the ability of the Canadian Security Intelligence Service to track suspects overseas and provide blanket protection to the spy agency's informants.
Canada has sent fighter jets to combat the Islamic State of Iraq and the Levant's guerrilla-style forces. It has condemned the group's use of grisly videos touting their execution of opponents, including western civilians.
The government has said it's eyeing new measures that could clamp down on such glorification of extremism on the Internet.
Much of the content is hosted on servers outside Canada, noted Gary Robertson, an assistant deputy minister with Public Safety.
The challenge is balancing any move to censor expression with Canada's promotion of an open Internet as a tool of global democracy, Robertson indicated to the senators.
Canada can look at reining in content that is tantamount to hate speech, he said. "We don't want to go too far into the Internet governance domain, though, beyond that. We're still assessing what's the best approach that has the maximum impact."
A federal report published earlier this year said the government knew of more than 130 individuals with Canadian connections who were abroad and suspected of supporting terror-related activities. It said the government was aware of about 80 such people who had returned to Canada.
The RCMP has acknowledged that dozens of those individuals are under investigation.
Conservative Senator Daniel Lang wondered why there had been so few arrests.
Robertson said some Canadians who head overseas to join extremists "come back quite disillusioned. And so it's quite possible ... some segment out of that 80 are folks that would have no intention of pursuing anything further along the lines that we're discussing today."
The government uses the Anti-Terrorism Act to label groups as terrorist organizations — a designation that effectively criminalizes financial aid or other assistance to them.
Robertson pointed to the recent listing of one charitable organization as an example of how shining a light on an entity can cripple its ability to wage terror.
"One would expect that all the activities around that organization would stop the day that it was listed," he said.
"If we're on top of the listings and identifying the organizations and individuals that are likely to commit these types of crimes, we may not ending up having convictions because we'll have blocked them."
In its recently tabled performance report for 2013-14, the RCMP says it disrupted the ability of 14 individuals or groups to carry out terrorist or other national-security threats.
RCMP Sgt. Greg Cox, a spokesman for the force, said he could not provide details.
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