Confronting the CRA’s Prejudiced Audits

Graphics for ICLMG’s report The CRA’s Prejudiced Audits: Counter-Terrorism and the Targeting of Muslim Charities in Canada. ICLMG/Omar Hafez

By Tim McSorley

In June 2021, the ICLMG released The CRA’s Prejudiced Audits: Counter‑Terrorism and the Targeting of Muslim Charities in Canada,1Tim McSorley, The CRA’s Prejudiced Audits: Counter-Terrorism and the Targeting of Muslim Charities in Canada, ICLMG, June 8, 2021: https://iclmg.ca/prejudiced-audits/ a report detailing how a secretive division within the Canada Revenue Agency (CRA) targets Muslim charities in Canada for investigation, audits and even revocation, based on prejudiced and unsupported allegations of a risk of terrorist financing.

The report reveals how, as Canada ramped up attempts to counter terrorist financing after the September 11, 2001 attacks in the United States, the CRA and its Charities Directorate were enlisted to monitor the work of Muslim charities in Canada under the unsupported premise that they pose a significant terror financing risk. This work has been carried out largely in secret, with little to no outside review or public substantiation of the so-called risk posed by Muslim charities, allowing for the profiling and targeting of Muslim charities to go largely unnoticed and unchallenged.

The report demonstrates how the Review and Analysis Division (RAD), a little-known division of the CRA, in conjunction with other departments and agencies, targets Muslim charities:
The Canadian government’s National Risk Assessment (NRA) for terrorism financing in the charitable sector focuses almost exclusively on Muslim charities, and entirely on charities based in racialized communities, with little to no public substantiation of the risk;

  • This risk assessment is used to justify surveillance, monitoring and audits of leading Muslim charities on questionable grounds;
  • RAD operates largely in secret, in tandem with national security agencies, with little to no accountability and no independent review;
  • Between 2008 and 2015, 75% of all charities revoked by RAD following these secretive audits were Muslim charities, harming the sector and impacting the larger Muslim community in Canada. The number of audits and revocations before and after that period are unknown because they have never been made public.

The report recommended the following:

  1. That the federal government refer this issue to review by the National Security and Intelligence Review Agency (NSIRA) in order to examine the CRA’s RAD processes overall, and specifically its selecting of Muslim charities for audit, so as to ensure organizations are not being targeted due to racial or religious prejudice;
  2. That the Minister of National Revenue declare an immediate moratorium on targeted audits of Muslim charities by RAD until the review has concluded;
  3. That the Ministry of Finance revisit the anti-terror regulatory, policy and legislative landscape, particularly the 2015 NRA and its impact, particularly on the Muslim community;2In mid-2023, the Department of Finance released an updated version of the National Risk Assessment. While it contained new language warning against the assessment’s findings being used as the “basis or justification for discriminatory behavior or action toward specific communities in Canada or abroad,” it continued to situate the highest risk of terrorist financing among charities as being in racialized, diaspora communities or in those operating internationally, and once again focused primarily on so-called “Islamist terrorism” risks, without substantiation of actual terrorist financing https://www.canada.ca/content/dam/fin/programs-programmes/fsp-psf/nira-neri/nira-neri-eng.pdf.
  4. That the federal government amend the NSIRA Act to allow for complaints from the public regarding the CRA’s national security-related activities; and
  5. That NSIRA and the National Security and Intelligence Committee of Parliamentarians (NSICOP) coordinate to carry out regular reviews of the CRA’s anti-terrorism activities – including the Charities Directorate and RAD – going forward.

The release of our report, combined with our public launch (recorded online)3Tim McSorley, “Video: The CRA’s Prejudiced Audits with author Tim McSorley,” ICLMG, June 10, 2021: https://iclmg.ca/prejudiced-audits-event/ , led to substantial public interest and advocacy work. Our letter writing campaign4Xan Dagenais, “Stop Prejudiced Audits of Muslim Charities,” ICLMG, June 9, 2021: https://iclmg.ca/stop-prejudiced-audits/ resulted in more than 2,400 emails sent to government officials calling for action, and we organized a joint letter5Tim McSorley, “Letter to PM Trudeau: Stop the CRA’s prejudiced audits of Muslim charities,” ICLMG, June 23, 2021: https://iclmg.ca/prejudiced-audits-letter/ to the Prime Minister that was signed by more than 130 groups supporting our recommendations. The report made a lot of waves in the media, leading to the publication of more than 75 news articles and op-eds. The Prime Minister was forced to respond immediately with concern, saying he “realized that systemic discrimination exists throughout every institution.”6Achau Luu, “Trudeau addresses potential CRA bias against Muslim-led charities,” OMNI, July 26, 2021: https://www.omnitv.ca/there-is-discrimination-in-all-systems-trudeau-addresses-potential-cra-bias-against-muslim-led-charities/

This issue was a key point at the July 2021 National Summit on Islamophobia, and resulted in the Trudeau administration tasking the taxpayers’ ombudsperson François Boileau with investigating concerns of charities around systemic discrimination, with a particular focus on Muslim charities and other charities led by people of colour. The ombudsperson was also to examine the revenue agency’s efforts to root out discrimination. We raised concerns in the media, and were quoted extensively about worries that the ombudsperson’s mandate may be too narrow to examine this system in its entirety.

Although this investigation was not what we had asked for, we were initially optimistic given the government had reacted quickly. We were also in frequent communication with the office of the ombudsperson to offer support, advice and keep up with the investigation. This is why an update on the review in February 2022 left us surprised and disappointed as it did not even mention Islamophobia once, promised to review ‘fairness’ overall rather than examine specific concerns and added that the office will not investigate the role of Canada’s national security agencies in this issue. We sent an open letter to the Trudeau government sharing these concerns and naming important elements that the review should include moving forward.7Tim McSorley, “Government must take bold action if it is serious about resolving systemic Islamophobia in CRA counter-terrorism audits,” ICLMG, February 10, 2022: https://iclmg.ca/government-must-take-bold-action-if-it-is-serious-about-resolving-systemic-islamophobia-in-cra-counter-terrorism-audits/

In November 2022, the Taxpayers’ Ombudsperson testified at the Standing Senate Committee on Human Rights (RIDR) that his office is working with one hand tied behind its back, and that the ensuing report will have gaps, as they cannot access critical information. We responded to this by meeting with the Ombudsperson regarding his revelation, publishing an op-ed8Tim McSorley, “Canada’s persecution of Muslim charities must stop,” The National Post, December 5, 2022: https://nationalpost.com/opinion/canadas-persecution-of-muslim-charities-must-stop on the troubling developments and following up with the ministry of Finance regarding updating risk assessment policies for the charitable sector. In response to the significant concerns raised about the Ombudsperson’s investigation, the NSIRA launched its own review of the issue in March 2023 – which was one of our original recommendations in June 2021!

The Ombudsperson’s report, published later that same month, reflected the concerns he expressed at the Senate. Despite his diligence, it did not address the central concerns we had raised. We responded by calling on the government, once again, to suspend the work of RAD and ongoing audits until the NSIRA finishes its review and legislative changes are made.9Tim McSorley, “Taxpayers’ Ombudsperson report on systemic bias at Canada Revenue Agency demonstrates need for moratorium, accountability and transparency,” ICLMG, March 27, 2023: https://iclmg.ca/taxpayers-ombudsperson-report-on-systemic-bias-at-canada-revenue-agency/

You can read more about this issue and take action at iclmg.ca/prejudiced‑audits

Tim McSorley is the National Coordinator of the International Civil Liberties Monitoring Group


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