Framework to safeguard the charitable sector

The risk of terrorist abuse within the charitable sector is an international concern. To address this, the Government of Canada has put a number of measures in place and has created a framework that enables Canada’s national security partners to protect charities from terrorism.

Protecting the integrity of the Canadian charitable sector from the threat of terrorism

The Canada Revenue Agency (CRA) has a regulatory responsibility to protect and maintain public confidence in the charitable sector, which contributes to a whole-of-government approach to combatting terrorism and terrorist financing. In deciding whether organizations should be registered as charities, the CRA seeks to ensure that only organizations operating exclusively for charitable purposes are registered as charities.

The CRA reviews all applications for charitable registration, monitors charities that are registered and conducts compliance-related activities to make sure registered charities follow the Income Tax Act and the Charities Registration (Security Information) Act.   

The Charities Registration (Security Information) Act allows the CRA to deny registration or revoke the registration of a charity involved in supporting terrorism through a certificate process, signed by the Minister of National Revenue and Minister of Public Safety. This special administrative process protects the use of very sensitive information that may reveal an organization’s ties to terrorist groups and allows the use of this information in assessing an organization's eligibility for obtaining or maintaining charitable registration.

The CRA exchanges information with Canadian intelligence and law enforcement partners to assist their investigations, in accordance with the Income Tax Act, the Charities Registration (Security Information) Act, and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. You can find more information on the CRA’s responsibilities and the related privacy considerations at Charities - Public Safety and Anti-Terrorism Privacy Impact Assessment.

For more information on Canada's approach to dealing with national security threats, see Building Resilience Against Terrorism on the Public Safety Canada website. This includes the role of the CRA in detecting and addressing risks to the charitable sector.

For more information on Canada's national security initiatives, visit the Public Safety Canada website.

International standards and best practices

The Financial Action Task Force (FATF), an inter-governmental body, introduced international standards in The FATF Recommendations to address vulnerabilities and threats related to money laundering and terrorist financing. Recommendation 8 deals with non-profit organizations (NPO), which in Canada include registered charities.

These recommendations, which are periodically updated, guide the development of Canada’s framework for addressing the risk of terrorist abuse in the charitable sector. Charities can also find governance information in various FATF publications, including Best Practices on Combating the Abuse of Non-Profit Organisations.

Additional research and resources

The 2014 FATF report, Risk of terrorist abuse in non-profit organisations, concludes that the NPO sector has several types of vulnerability, which are interconnected. In the Canadian context, the term “NPO,” as used by the FATF, can include both registered charities and non-profit organizations as recognized under the Income Tax Act. The report analyzes the risk of terrorist abuse in various operational areas, including program delivery and how resources are collected, transferred and spent.

The FATF report noted a higher risk for organizations that engage in service activities such as housing, social services, education and health care. It also noted a higher risk for organizations that operate near an active terrorist threat. For organizations that operate domestically, there is a higher risk for those working with people who are actively targeted by a terrorist movement for support and cover.

The Government of Canada has also performed the following research on how charities have been used to finance terrorism:

• Department of Finance’s Updated Assessment of Inherent Risks of Money Laundering and Terrorist Financing in Canada
• Financial Transactions and Reports Analysis Centre of Canada’s (FINTRAC) Terrorist Financing Assessment: 2018

Links to other international publications of interest

You may find it helpful to read about efforts in other countries to reduce terrorist abuse of the NPO sector:

• Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities (archived), published by the U.S. Department of the Treasury
• Protecting charities from harm: compliance toolkit, published by the Charity Commission for England and Wales
• Protecting your charity against the risk of terrorism financing, published by the Australian Charities and Not-for-Profits Commission
• Charities operating overseas: protect your charity against terrorist financing and other risks, published by New Zealand Charities Services