On June 18th, 2015 Canada's Standing Committee on Finance
(the "Committee") released its report entitled, Terrorist Financing in Canada and Abroad:
Needed Federal Actions. The report summarized
various presentations and submissions made to the Committee on
topics such as the various models of terrorist financing,
Canada's anti-terrorist financing regime, and Canada's
terrorist financing detection, investigation and prosecution
methods. Of particular importance were the comments and
submissions made with respect to the role of charities in financing
In addition to businesses and supportive sovereign states,
charities were cited as sources of revenue, and in particular
identified as popular conduits through which terrorist operations
transfer revenue. Some witnesses noted that because it is difficult
to determine the types of transactions that are normal for a
charity and because the amount donated to charities is variable
over time, it is difficult for regulators and financial
institutions to determine suspicious transactions. On the
other hand, some witnesses pointed the finger at the lack of
transparency in public registers and submitted that charities
registered in Canada are actually required to report less
information than those registered in other countries.
The Canada Revenue Agency ("CRA") was cited by some
witnesses as playing an integral role in combating terrorist
financing. In particular, CRA itself noted that its three
main responsibilities in relation to terrorist financing
Protecting the charity registration system from abuse by
Sharing information with other federal departments and agencies
to support the detection and suppression of domestic terrorist
financing activities and
Assisting Canada in meeting its international obligations
related to combating terrorist financing.
In considering each of the submissions made with respect to
terrorist financing in Canada, the Committee made fifteen
recommendations aimed at increasing the effectiveness of
Canada's anti-money laundering and anti-terrorist financing
regime. The following two recommendations are relevant for
The federal government, in light of the numerous global cases
of charities being used to raise and transfer funds for terrorist
financing purposes, continue its efforts to bring increased
transparency to the charitable sector in Canada. As part of these
efforts, the CRA should be encouraged to work more closely with
charities to ensure their compliance with anti–terrorist
financing laws. Increased transparency in the charities sector
should not unnecessarily burden legitimate charities.
The federal government initiate a study to clarify the role of
charitable organizations in order to protect legitimate entities in
Canada's charitable sector and to prevent charities from being
used as vehicles for terrorist financing.
CRA currently publishes several documents aimed at assisting
charities avoid terrorist abuse. These include a checklist
for charities on avoiding terrorist abuse which may be found here and a document on the role of charities
in the international context which may be found here.
Charities, and particularly those charities working in conflict
zones and regions where terrorists are known to operate, should
ensure that they review the Charities Directorate's
publications with respect to terrorist financing and adopt
anti-terrorism policies and procedures to ensure that they are not
used as conduits to finance terrorist operations. Charities
must ensure that they know the organizations and individuals with
whom they work and from which they receive donations, that they are
familiar with the terrorist watch lists published by Public
Safety Canada and other international bodies, and that they
familiarize themselves with international best practices in this
area. Charities should also ensure that they keep up to date
with the states that are listed as state sponsors of terrorism
(currently Iran and Syria are the only two countries which appear
on the list). As
previously reported, charities are not permitted to receive
funds from state sponsors of terrorism.
We will continue to monitor the implementation of the
Committee's recommendations. All that said, we do
continue to be troubled by the willingness of the government to see
terrorist funding – a very serious accusation – as
happening often in the charitable sector. Since the
accusation is so serious, it is one that should be backed by real
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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