Canadian security officials have boarded a cargo ship carrying 490 Tamil asylum seekers from Sri Lanka, including some people Canada said may be terrorists.
Public Safety Minister Vic Toews said the vessel MV Sun Sea declared them to be refugees but the government has concerns that there may be members of the rebel Liberation Tigers of Tamil Eelam, or Tamil Tigers, on board.
Canada has regarded the Tamil Tigers as a terrorist group since 2006.
The ship is off the coast of Vancouver Island and is travelling at a slow rate of speed. The government is preparing tents at seaside military facilities to house the people from the ship, and jails have been warned they could receive new inmates.
"A vessel carrying 490 individuals claiming refugee status - including suspected human smugglers and terrorists - entered our waters and the Canadian Government is taking action," Mr Toews said.
"Human smugglers and human traffickers are now watching Canada's response to judge whether or not they can continue to take advantage of us."
Mr Toews' office originally issued a statement saying the navy boarded the ship, but a government official corrected that later to say the ship was not boarded until shortly after 1am on Friday