The Anti-Terrorism Act is a key component of the Government of Canada's overall anti-terrorism strategy. Charities and the directors and officers of charities that transfer charitable funds withink Canada or internationally need to understand the restrictions and guidelines on these activities set out in the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and of the Income Tax Act.
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 Canada Revenue Agency (CRA). A 2006 amendment broadened the type of information shared to include charities’ directors’, officers’ and employees’ names, addresses, email addresses, phone numbers and other information including citizenship.
For charities, 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 that have directors who are suspected of supporting or having ties to terrorists. If flagged for investigation, charities could have their assets frozen or seized and lose their charitable status. Their directors and officers could even be charged under the Criminal Code for facilitating terrorism.
Charities should make sure 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. Charities can refer to CRA's Checklist for Charities on Avoiding Terrorist Abuse to help identify vulnerabilities to terrorist abuse and develop good management practices.
CRA References to the Anti-Terrorism Act
Section 4.3 of CRA’s guidance Canadian Registered Charities Carrying Out Activities Outside Canada provides the following comments on what charities need to know about Canada’s antiterrorism legislation:
- Charities are responsible for making sure that they do not operate in association ith individuals or groups that are engaged in terrorist activities, or that support terrorist activities.
- Under the Charities Registration (Security Information) Act and the Income Tax Act, a charity’s status may be revoked if it operates in such a way as to make its resources available, either directly or indirectly, to an entity that is a listed entity as defined in subsection 83.01(1) of the Criminal Code; or to any other entity (person, group, trust, partnership, or fund, or an unincorporated association or organization) that engages in terrorist activities or activities in support of them.
- There are other prohibitions on funding or otherwise facilitating terrorism. For more information, see the Criminal Code, the Regulations Implementing the United Nations Resolutions on the Suppression of Terrorism, and the United Nations Al-Qaida and Taliban Regulations, as well as the Charities Directorate’s Web page Charities in the International Context.