By Terrance S. Carter, Nancy E. Claridge and Sean S. Carter

Public Safety Canada Holds Stakeholder Meeting on Exception to Criminal Code on Terrorism Financing

On November 19, 2024, the Department of Public Safety Canada (“Public Safety”) held a stakeholder’s engagement session (the “Engagement Session”), titled Criminal Code Authorization Regime Update, to inform the charitable/not-for-profit sector on developments relating to the authorization regime brought by Bill C-41, An Act to amend the Criminal Code and to make consequential amendments to other Acts (“Bill C-41”).

As discussed earlier, most recently in our June 2024 AML/ATF and Charity Law Alert No. 54, Bill C-41 was passed on June 20, 2023, amending the anti-terrorist financing provisions in section 83.03 of the Criminal Code to allow humanitarian assistance exceptions and the establishment of an authorization regime for specific activities in terrorist-controlled areas, largely as a response to the Taliban’s takeover of Afghanistan in 2021. The stated purpose of Bill C-41 is to allow Canadian organizations and individuals to provide aid to regions of the world controlled by terrorist groups without being caught under anti-terrorism financing provisions in the Criminal Code.

In the Engagement Session, Public Safety reminded the attendees that it has set up a public website to support and provide guidance to those interested in the authorization regime. An online application interface and authorization requirement inquiry mechanism are also available to those interested in the authorization regime. Public Safety, along with Immigration, Refugees and Citizenship Canada (“IRCC”) and Global Affairs Canada (“GAC”) now have teams supporting the administration of the program.

The Engagement Session reported that there have been 12 applications for authorizations since the regime was launched. Of these 12 applications, 8 originated from government sponsored organizations while 4 were external. The specified purposes of these applications include 9 that are to provide health services, 7 for education services, 4 for livelihood support, and 2 for human rights support. Of these, one of the 4 external applications was withdrawn.

Public Safety reminded attendees that the authorization regime under Canada’s anti-terrorism laws applies to activities in any geographic area controlled by a terrorist group, not just Afghanistan. Prospective applicants may request written guidance from the Minister of Public Safety (the “Minister”) regarding whether specific activities in a particular region require authorization. The Minister’s response will be based on the circumstances at the time, including the nature of the activity and the region involved. This inquiry process is optional and does not replace the requirement to formally apply for authorization through the online application portal. For inquiries, applicants may contact authorization83.03autorisation@ps-sp.gc.ca. 

Canadian individuals, including citizens, permanent residents, and organizations, are eligible to apply for an authorization under Canada’s anti-terrorism laws. Organizations receiving government program funding are not required to apply directly, as the relevant government department serves as the primary applicant. External stakeholders, such as those not funded by the Government of Canada, can submit applications via the online interface. An authorization covers not only the applicant but also anyone directly or indirectly involved in carrying out the specified activity under the authorization. While applying for authorization is optional, it provides protection against criminal charges under section 83.03(2) of the Criminal Code for activities that might otherwise violate terrorist financing provisions.

Public Safety then provided an overview of the assessment process for authorization, which involves multiple stages. Initially, the Minister of Foreign Affairs and/or the Minister of Immigration, Refugees, and Citizenship Canada (IRCC) evaluates whether the application meets the criteria outlined in the Criminal Code. Applications that meet the criteria are referred to the Minister of Public Safety by GAC or IRCC. The Minister of Public Safety conducts a final assessment, which includes a national security review, and decides based on whether the benefits of the proposed activities outweigh the associated risks. 

The Minister is scheduled to table the first comprehensive review report on the authorization regime in December 2024, followed by the 2024 annual report on its operations in March 2025. In the fiscal year 2025/26, Public Safety will begin developing regulations to define the rules and scope of the authorization regime under the Criminal Code. Efforts are also underway to establish service standards to enhance transparency for applicants and the public.

While the implementation of the authorization regime is a step in the right direction and a positive development, the low number of applicants, and an almost negligible number of non-governmental applicants to date suggest that there may be apprehension by organizations that either currently work in, or plan to work in, areas controlled by terrorist entities. It remains to be seen whether this small number will increase as the authorization regime becomes known, notwithstanding the complexity of the application process and the significant government scrutiny that it involves.  

Financial Action Task Force Seeks Public Consultation on its Standards

The Financial Action Task Force (“FATF”), which is the global money laundering and terrorist financing watchdog, has opened a public consultation on proposed revisions to its Recommendations, aiming to align anti-money laundering and counter-terrorism financing (“AML/CTF”) measures with financial inclusion objectives. This initiative is part of FATF’s efforts to address unintended consequences of its AML/CFT framework, such as overcompliance and barriers to financial inclusion. The revisions focus on Recommendation 1 and its Interpretive Note, along with corresponding changes to Recommendations 10 and 15 and related Glossary definitions. The proposed updates aim to emphasize proportionality in applying the risk-based approach and simplified measures, promoting greater confidence among countries, supervisors, and financial institutions when implementing these measures. The FATF recommendations were last reported on in the November 2023 Charity and NFP Law Update.

Stakeholders are invited to submit feedback and drafting suggestions by December 6, 2024 to FATF.Publicconsultation@fatf-gafi.org with the subject line: “Comments of [author] on the proposed revisions to R.1/INR.1/INR.10/INR.15”. Submissions should include the respondent’s organization, activity type, and contact details. FATF will review the feedback before finalizing the revisions, with all submissions shared with FATF delegations and used solely for consultation and related engagement purposes.

Financial Action Task Force Holds Plenary Meeting in Paris

The Financial Action Task Force (“FATF”) concluded its October 2024 Plenary meeting in Paris, led by President Elisa de Anda Madrazo, with several notable developments for compliance professionals. Key updates included the completion of FATF’s fourth evaluation cycle, adjustments to the grey list (i.e. jurisdictions under increased monitoring), and updates to guidance on financial inclusion and risk-based assessments. The Plenary emphasized strengthening global network cooperation, advancing initiatives for gender diversity and inclusiveness, and addressing emerging standards and revised approaches to compliance. Russia’s suspension from FATF activities also remains in effect. These updates highlight important shifts and priorities within the FATF framework, offering critical insights for compliance professionals navigating evolving requirements.

To support financial inclusion, the FATF is revising its standards to encourage simplified measures in lower-risk scenarios, aiming for greater flexibility without compromising AML/CFT requirements. These updates, expected to be finalized in 2025, include revised guidance on national risk assessments to help countries, particularly those with limited resources, and better understand and address financial crime risks. Changes to grey-listing criteria are also expected to reduce the number of low-capacity jurisdictions listed, with stricter prioritization for review.

Compliance teams from Canadian charities and not-for-profits may want to review outcomes from this Plenary, adjust risk scores for affected countries, and ensure due diligence processes align with updated FATF standards. The next Plenary meeting is scheduled for February 2025.

​Read the November 2024 Charity & NFP Law Update