In 2015, a significant update occurred when the Department of Finance released its first-ever National Risk Assessment (NRA) on money laundering and terrorist financing in Canada. This report concluded that 11 entities, composed of 10 terrorist groups and the broad category of “foreign fighters”, had a nexus to Canada and posed a terrorist financing threat, although without publicly presenting the evidence for such conclusions. Nine of these entities were linked to extremist/militant Islamist groups and foreign fighters in Muslim countries. Importantly, all 11 were identified as being linked to racialized communities in Canada. Little public evidence was shared to demonstrate the

basis for this determination, but it has proved to be the basis for a growing number of audits of charities. Further, the NRA has raised significant questions about the singling out of charities based in Muslim and other racialized communities for scrutiny.

Based on the NRA findings, the federal 2015 Economic Action Plan allocated increased investigative resources to the CRA to allow them to identify and mitigate issues of terrorist financing and money laundering. While RAD’s focus was already on Muslim charities even before the release of the NRA, the report’s findings triggered the CRA to further target Muslim charities. The new “risk-based approach” gave a rationale for singling out Muslim charities for, knowingly or unknowingly, supporting terrorism. While the NRA did not present any conclusive evidence to connect ISIS, Al-Qaeda, or other foreign terrorist groups to Muslim charities in Canada, the “nexus in Canada” asserted in the report helped create a bias against all Muslim charities: a presumption that Canadian Muslim charities must be monitored, and possibly audited, to verify no terrorist financing risks exist. This includes not only Muslim relief organizations operating internationally but also domestic Muslim organizations that operate mosques and provide local community services.

Over the past two decades, the CRA reports it has audited between 600 and 800 charities per year. The vast majority of these audits are selected at random, but other audits are based on the prerogative of the Charities Directorate, inspired by their own investigations and/or by complaints from the public. Based on this, between 2003 and 2015, the CRA would have audited approximately 8,400 charities. Of these, 335 charities saw their status revoked due to audit findings. Of these revocations, 8 were Muslim charities, accounting for 2.4% of all revocations. At the same time, Muslim charities made up only 0.47% of all charitable organizations in Canada in 20152. Some may argue that this small number alone demonstrates no malfeasance. However, it is misleading. Distinction must be made between those randomly selected by the Charities Directorate and those specifically selected by RAD due to terrorist financing concerns.

According to statements by RAD officials, from 2008 to 2015 RAD completed audits of 16 charities, eight of which had their charitable status revoked. Of those eight, we have ascertained that six were Muslim charities, accounting for 75% of RAD revocations during this period. Two additional Muslim charities’ statuses were revoked in that time period, but it is unconfirmed if they were audited by RAD.

Since 2016, while overall RAD revocation statistics are unknown, we have identified four Muslim charities that have seen their status revoked due to RAD audits, and that at least six other Muslim charities are under audit by RAD. This presents a significant increase in annual audits of Muslim charities by RAD, following the publication in 2015 of the NRA. Further, unlike during the first period, most of the Muslim charities undergoing audits during this period have been domestic charities, marking a significant shift in approach.

Ultimately, it can only be assumed that the vast majority of charities audited by RAD since 2015 are Muslim charities, given RAD is expected to follow the NRA’s guidance regarding risks of terrorist financing that focuses almost exclusively on Muslim-linked entities or threats.

While a lack of transparency and independent review makes it impossible to pinpoint exact numbers, this data clearly demonstrates a specific focus on and singling out of Muslim charities since at least 2003.

Adding to the problematic nature of RAD audits is that they are undeclared. While no exhaustive or formal description of a RAD audit exists, our research has revealed several defining characteristics, including: revocation letters are redacted; audits take many years to complete; RAD teams are made of auditors as well as law enforcement and national security agents; RAD uses distinct practices including confiscation of electronics and files, extensive examinations, intelligence and surveillance, and digital audit of a charity’s events/programming; and extensive budgets are allocated for travel domestically and internationally.

RAD revocations also typically receive more media attention, due to the high-profile allegations they contain. This often results in a greater impact on the organizations under audit by RAD than those charities facing a more standard audit, and has ripple effects on the Muslim charitable sector as a whole.

RAD does not work alone, and is a partner in the National Security Investigations (NSI) – Anti-Terrorist Financing Team with the Royal Canadian Mounted Police (RCMP). The Canadian Security Intelligence Service (CSIS) also works with RAD as it investigates charities as part of their anti-terrorism activities. RAD is also a part of a secondment program where employees from partner agencies are seconded to the CRA, and vice versa. While RAD exists within the CRA, it has many dotted lines to other federal agencies. This means that RAD audits may very well originate from a larger RCMP/CSIS investigation, without any disclosure to the organizations being investigated. Further concerns exist that complaints about terrorism from foreign governments may also lead to investigations and audits, again without transparency or examination of the goals and motives of filing such complaints.

Post-9/11 anti-terrorism legislation and policies, including the PCMLTFA and the 2015 NRA, have created an environment conducive to systemic racism, racial profiling, targeting and bias towards Muslim Canadians. Also, Canada’s AML/CTF efforts are carried out as part of a broad, international counter-terrorist financing regime that itself has been criticized for hindering humanitarian work, particularly in Muslim countries with complex political situations. Further, the problems with this international regime along with pressure from other traditional allies of Canada to address “Islamic terrorism” have only increased with the growth of nationalist, anti-migrant and far-right governments in the past decade. These factors have resulted in years of structural Islamophobia in Canada’s national security activities, including at the CRA, allowing bureaucrats and agents to use discretionary decision-making powers to target Muslim charities.

Along with this, the mandates of many of the charities we discuss is to address the very social issues that can lead to violence in society, by working to reduce social isolation and poverty, to build bridges between communities, to provide educational programs, and to deliver humanitarian assistance. By removing their charitable status and, in consequence, shuttering many of these organizations, the government is in fact undermining its own stated goal of increasing the safety and security of people in Canada.

Finally, like many federal agencies involved in national security, the CRA (and by extension RAD) have for many years operated without independent review or oversight of their activities. The nature of their work also means that much of what they do is kept secret. We would also argue that there have been little to no proactive efforts towards transparency with the charitable sector or with the public. The creation of the National Security and Intelligence Committee of Parliamentarians (NSICOP) in 2018 and the National Security and Intelligence Review Agency (NSIRA) in 2019 has presented new opportunities for independent review, but this has yet to occur. In NSICOP’s otherwise thorough review of the national security landscape in its first annual report, published in 2019, there was no mention of the CRA nor of RAD – a testament to how little is known about this component of Canada’s counter-terrorist financing activities. Nor did the NSIRA examine RAD in its first annual report, published in 2020.3 While it may be a future area of review for this nascent agency, there is no legislated mandate to do so. NSIRA is also empowered to accept complaints, but only in regards to CSIS, the Communications Security Establishment (CSE) and the RCMP; an individual or organization that wishes to file a complaint regarding the CRA’s national security-related activities is not able to do so.

This lack of oversight not only allows RAD and the CRA to continue targeting Muslim charities, it also allows the CRA and its departments to act on intelligence that may be flawed, out of context, weak, politically motivated and/or out-dated. It can also result in prejudiced decisions being taken against Muslim charities without accountability or external review. It is essential that this lack of independent accountability be addressed.

Based on this, we are making the following recommendations:

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, to ensure organizations are not being targeted due to racial or religious prejudice. The review must investigate the source of past audits of Muslim charities, active audits of Muslim charities, and Muslim charities identified for audit.

2. That the Minister of National Revenue declare an immediate moratorium on the targeted audit of Muslim charities by RAD until the review has concluded. This does not preclude the audits of Muslim charities selected at random by the CRA outside of RAD.

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.

4. That the federal government amend the NSIRA Act to allow for complaints from the public regarding the CRA’s national security-related activities.

5. That NSIRA and the National Security and Intelligence Committee of Parliamentarians (NSICOP) coordinate to carryout regular reviews of the CRA’s anti-terrorism activities – including the Charities Directorate and RAD – going forward.