In August 2025, ICLMG made a submission in advance of the Financial Action Task Force’s (FATF) upcoming on-site review of Canada’s anti-money laundering and counter-terrorist financing (CTF) regime.

In 2021, the ICLMG published, “The CRA’s Prejudiced Audits: Counter-Terrorism and the Targeting of Muslim Charities in Canada,” one of the first reports to analyze the government’s implementation of counter-terrorist financing measures and identifying serious concerns about the profiling and targeting for sanctions charities based in the Muslim community in Canada. It detailed how the Canadian government’s approach to countering terrorist financing was targeting Muslim-led charities was biased, disproportionate, unduly secretive and unequal and selective in its application. This included an analysis of Canada’s 2015 National Inherent Risk Assessment and Canada’s approach to monitoring and auditing charities for CTF purposes.

In that report, we found that Canadian national security agencies and the charities regulator, since at least 2003, had been targeting Muslim-led charities for surveillance and investigation based on approaches to countering terrorism that viewed Muslim and other racialized communities as inherently at-risk for abuse by, or engaging in, terrorist activities.

Our research demonstrated that this approach, as in other counter-terrorism measures, was not supported by facts, but rather opinion, conjecture and accusations based in bias and prejudice (both conscious and unconscious), including possible Islamophobia.

The findings were bolstered by a report from the Senate of Canada issued in November 2023, finding that the Canadian Revenue Agency’s counter-terrorist financing “work to date – regardless of the intentions of its employees – has demonstrated structural bias against Muslim charities” and recommended a full review of the counter-terrorist financing division of the CRA.

Moreover, testimony from CRA staff during Senate hearings confirmed that of 12 of the 14 charities that have had their status revoked following investigations by the CRA’s counter-terrorist financing division were Muslim-led, which supports our previous finding that at least 75% of charities targeted by the CRA were in the Muslim community. Importantly, none of these charities or their directors have been formally charged with terrorist financing or related infractions.

We also identified significant concerns in Canada’s National Inherent Risk Assessment (NIRA) from 2015, which unduly labeled the NPO sector as medium to high risk, again with a particular focus (without evidence) on Muslim and racialized NPOs operating both domestically and internationally. Overall risk appeared exaggerated, there were no efforts to address risk mitigation, and the NPO sector was not consulted in the sectoral evaluation.

However, this version of the NIRA persisted until 2023, well after new guidance was issued by the FATF. Unfortunately, similar concerns continue to persist with the 2023 NIRA, and the forthcoming 2025 NIRA.

There have also been significant concerns with the impact of Canada’s CTF regime on the work of humanitarian and international assistance NPOs. In particular, following the take-over of the Afghanistan government by the Taliban in 2021, the Canadian government issued an interpretation of its CTF laws that prohibited any activity in Afghanistan that could provide material support to the Taliban government. This included any taxes, tariffs or other fees that aid organizations would be required to pay to the government in order to carry out humanitarian activities. This was a clearly disproportionate application of Canada’s counter-terrorism laws and violated international humanitarian law. With sustained pressure from NPOs, the Canadian government passed legislation to create a humanitarian exemption to CTF measures and an authorization regime for international assistance activities deemed to be non-humanitarian; however, the program is significantly flawed and continues to result in limitations on international aid.

These issues are explored in more detail in the rest of the submission. Read it in full here.