Much of the information upon which this report is based comes from a joint forces undercover operation designed to determine the extent of the illicit firearms trade in the "Golden Horseshoe" area of southern Ontario. The first stage of the operation consisted of the initial set-up and subsequent maintenance of an illicit firearms database. The second stage included the tactical operation that entailed the investigation, arrest, and prosecution of targeted individuals. The project found that the primary source of illicit firearms is the United States. The Federal Firearms Licensee System in the United States is one of the major conduits for the movement of illicit firearms. A license is required for anyone who wishes to sell firearms as a business. This permit allows an individual or a company to purchase firearms directly from the manufacturer and then resell them to the public. There are currently more Federal Firearms Licensees in the United States than there are gas stations. The Canadian project found that there were a number of such licensee's selling guns on the street in Canada after drilling out serial numbers. A second source for U.S. based guns are American gun shows and flea markets. Due to the failure to enforce gun purchase procedures at these shows, firearms cannot be properly traced and are subsequently available for illicit street distribution. Illicit U.S. firearms distributors generally sell guns to a first-level dealer. This dealer, usually an American citizen, then sells these guns to a Canadian importer, who then smuggles them into Canada for street-level distribution. There are numerous methods for smuggling illicit firearms into Canada. The most popular method is to hide them in a vehicle when crossing the border. Suggestions for countering the illicit firearm trade in Canada are offered.