Checklist: How to protect your charity against terrorist abuse

Your charity must be created for charitable purposes and must devote its resources to charitable activities that further those purposes. The controls your charity puts in place to manage this requirement may also help reduce your charity’s risk of terrorist abuse.

The Canada Revenue Agency (CRA) expects your charity to understand the nature and extent of the risks of being associated with or enabling the support of a terrorist entity. Your charity must implement measures to reduce the risks that could affect its charitable registration. 

Charities can be exploited without their knowledge by terrorist entities in many ways. For more information and examples, go to Assessing and reducing terrorist risks to charities. 

Your charity can protect itself against terrorist abuse or allegations of misconduct by establishing strong procedures for:

• governance and accountability
• financial control and management
• risk, fraud, and aid diversion mitigation
• transparent reporting and record keeping

Use this checklist to help your charity:

1. Identify and document your risks
2. Apply measures to manage your charity’s identified risks

A. Identify and document your risks 

A1. Identify your charity’s activities or practices that are susceptible to abuse, such as:

• fundraising practices that are largely cash based and susceptible to skimming
• cash-based transactions with partners or suppliers that are not easily traceable
• providing support to beneficiaries with items that can be used for non-charitable purposes, such as cash or capital property
• unrestricted or unsupervised use of assets such as computers, vehicles, meeting spaces and event facilities, or social media accounts
• the operation of divisions, branches, or projects that are not directly supervised or overseen by your charity
• conducting or funding activities in countries or regions with potential geographic, legal, or political concerns

A2. Review potential geographic, legal, and political concerns, in order to assess the country or region where your charity will operate in, send resources to, or receive funding from. Countries or regions that increase the risks to your charity include those:

• identified by credible sources, such as the Financial Action Task Force or the World Bank, as lacking appropriate anti-money laundering or counter-terrorism laws and regulations
• known to have terrorist entities operating within their borders
• identified as having significant levels of corruption, criminal activity or poor regulatory frameworks and enforcement regimes, due to armed conflict, political instability, or military action

A3. Screen individuals and organizations employed by or representing your charity to identify potential concerns, such as known support for terrorism. This includes your charity’s officials, employees, contractors, fundraisers, partners, and volunteers. Screening mechanisms are expected to be reasonable, based on the individual’s role within your charity. They can include:

• conducting online research
• conducting reference checks
• reviewing the following to ensure individuals and organizations are not associating with, or recognized as terrorists or terrorist entities:
  • Public Safety Canada’s Listed Terrorist Entities
  • Department of Justice Canada’s Order Establishing a List of Foreign State Supporters of Terrorism
  • If your charity operates multiple jurisdictions, you should also consult the following:
    • individuals or groups listed in the United Nations Act
    • United States State Department’s Foreign Terrorist Organizations
    • European Union terrorist list  
    • United Kingdom Treasury’s List of designated persons: Terrorism and terrorist financing
    • Australian National Security’s Listed Terrorist Organisations
    • New Zealand Police’s Designated Terrorist Entities

If an organization or individual you’re working with is linked to supporting terrorism, consider the risks involved to your charity and whether it is appropriate to continue working with them. 

B. Apply measures to manage your charity’s identified risks

B1. Ensure your resources are being used correctly:

• Develop clear, complete, and detailed descriptions of the activities and responsibilities of staff, volunteers, partners, and others.
• Train officials, employees and volunteers on the risk of terrorist abuse, and the types of activities that may support terrorism and would be unacceptable to your charity. For example, distributing or posting material that supports terrorism.
• Implement policies and procedures to ensure your premises, assets, and other resources are not being used for non-charitable purposes.
• Set clear guidelines and expectations for guest speakers at your charity’s events about what speech content is unacceptable to your charity, and conduct reference checks to identify potential concerns, such as known support for terrorism, the promotion of violence, or the incitement of hatred on the grounds of race, religion, or sexual orientation.
• Monitor your charity’s website, online presence and publications to make sure the content is appropriate.

B2. Manage unique risks that arise when working with partners:

• Clearly define the nature of the activities to be conducted with a detailed budget.
• Enter into a written agreement with partners, and implement its terms.
• Ensure partners have relevant experience in the country where activities will be undertaken and the capacity to undertake the desired activities.
• Have partners track separately how your charity’s resources are being used.
• Make periodic transfers of resources, based on demonstrated performance, and withhold future transfers if necessary and appropriate.
• Monitor the activities to ensure partners are using the charity’s resources as intended, including obtaining written reports and other appropriate proof of program delivery, such as photographs, expense receipts, and audit reports.

B3. Keep adequate books and records:

• Implement strong record-keeping practices to show how your charity’s resources are being used and ensure books and records are appropriate to the identified risks of terrorist abuse. Higher-risk activities call for more detailed books and records.
• Keep transaction records, including those for third-party payment processing services.
• Document decision-making about managing the risk of terrorist abuse.
• Keep all books and records at the Canadian address that the charity has on file with us. This includes all books and records related to any activity carried on outside Canada. 

B4. Implement internal financial controls:

• Use reputable banking methods and established banks for deposits and payments, when possible.
• Limit access to receipt booklets.
• Establish and follow safe cash-handling procedures, including for handling and depositing cash and issuing receipts.
• Track the flow of funds and record how they are used.
• Limit the number of people who have access to, and signing authority for, financial accounts and credit cards.
• Consider requiring signed receipts for cash transactions.
• Consider conducting internal audits.

B5. Implement administrative, operational, and financial oversight measures:

• Ensure that the board of directors is knowledgeable about the workings of the charity, its purposes, and activities, and is fully accountable for the charity’s use of property and funds.
• Consider when the charity’s decision-makers on day-to-day activities should consult with other officials or board members.
• Regularly review the charity’s governance structure, bylaws, financial controls, internal procedures and policies.
• Implement policies and procedures about when and how to report incidents or complaints of possible wrongdoing, and actions to be taken to address concerns.
• Consider site visits of activities and programs to ensure they are carried on as intended.

If your charity is looking for more information, go to Charities and giving or contact the Charities Directorate.