February 2007 Update

A new Senate Report, Fundamental Justice in Extraordinary Times: Main Report of the Special Senate Committee on the Anti-Terrorism Act states that there have been no denials or revocations of charitable status under the Charities Registration (Security Information) Act, which is Part VI of the Anti-terrorism Act.

The report does not recommend any amendments to the Act , however, it does recommend that in the event that a charity’s status is denied or revoked under these Anti-terrorism laws, a special advocate should be able to participate in the proceedings to help ensure that procedural fairness is observed.

Click here to see the full Fundamental Justice in Extraordinary Times report

Background Information

Charities and the directors and officers of those that transfer charitable funds (within Canada or internationally) should take note of the recent Act to amend the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and the Income Tax Act and to make a consequential amendment to another Act (“Bill C-25”).

Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) is an independent government agency that uncovers money laundering and terrorist financing. It collects and analyzes information from financial institutions and businesses that transfer money. If illegal activities are suspected, FINTRAC reports that information to law enforcement and government agencies, including the CRA. Bill C-25 broadens the type of information shared to include charities’ directors’, officers’ and employees’ names, addresses, email addresses, phone numbers and other information including citizenship.

Situations that could raise suspicions include transferring humanitarian funds to organizations in “conflict areas”, using a financial institution suspected in other terrorist-related transactions, or being a charity that funds other organizations whose directors are suspected of supporting or having ties to terrorists. If flagged for investigation, charities could have their assets frozen or seized, lose their charitable status, and their directors and officers could be charged under the Criminal Code for facilitating terrorism.

Charities should make sure that their due diligence practices include measures that evaluate the financial institutions used to transfer funds, appraise the region as well as the organization that is to receive transferred charitable funds and verify the suitability of its directors and officers.

Resources for More Information:

www.antiterrorismlaw.ca- Anti-Terrorism resources from Carters Professional Corporation

New Anti-Terrorist Financing Law has Direct Impact for Charities
by Terrance S. Carter and Sean S. Carter, Charity Law Alert No. 12, January 24, 2007.