Muslim charities are disproportionally targeted by CRA over suspicions of financing terrorism, report finds

Muslim charities are disproportionately subjected to secretive, dubiously sourced, and heavy-handed audits by a Canada Revenue Agency (CRA) department formed to surveil Canada’s charitable sector for signs of terrorism financing, according to a new report. 

The International Civil Liberties Monitoring Group (ICLMG), a coalition of dozens of Canadian civil society organizations, says in its report from May 2021 that the CRA’s Review and Analysis Division (RAD) is under guidance from a 2015 federal risk assessment to focus on Muslim organizations as potential terror threats. In its report, ICLMG says RAD’s audits are carried out in cooperation with national security agencies that have few, if any accountability measures, and ultimately lead to Muslim charities losing their status. 

“The Canadian government’s risk assessment 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,” reads ICLMG’s report. 

The CRA carries out both randomized audits of charities and audits targeting charities over specific complaints. According to estimates from the report, the CRA has likely audited 8,400 charities between 2003 and 2015. Only 355 lost their status during that time — and only eight were Muslim charities. This could have been for a variety of reasons, from suspicions of terror financing to violating basic tenets of Canada’s charity laws. Muslim charities make up less than half of 1 percent of all charities in Canada. Yet Muslim charities represent just over 2 percent of all charitable status revocations by the CRA. When the report’s researchers focused in on RAD-specific audits leading to the revocation of charitable status, they found 75 percent of revocations between 2008 and 2015 were for Muslim charities. 

Here’s a detailed breakdown of the report’s findings: 

What does RAD care so much about Muslim charities?

In 2003, just two years after the 9/11 attack in New York City, the RAD was formed to protect Canada’s charitable registration system against terrorism, according to the report, and take “a risk-based approach to detect, deter and respond to terrorist activity such as terrorist financing or links to it among Canadian charities.” While former CRA Charities Directorate Cathy Hawara was quoted in the report as saying the RAD’s role doesn’t involve criminal investigations, ICLMG’s report concluded that CRA staff work closely with counterparts in anti-terrorism financing departments at the RCMP and CSIS, Canada’s domestic espionage agency. 

To be clear, Canada was already involved in anti-terrorism financing activities before 9/11. According to the report, Canada participated in international efforts to curb money laundering and terrorism financing going back to its efforts as a founding member of the Financial Action Task Force in 1989. The FATF was established to promote international standards for anti-money laundering systems around the world. However, the report says the 9/11 attack sparked intense fear from Canada about the potential for Islamic-inspired terrorism. 

The reason for RAD’s fixation on Muslim charities, according to the report, is a 2015 risk assessment conducted by the federal Finance Department on terrorism financing in Canada. It identified 10 different terrorism groups as having some sort of “nexus” — or financial link — to Canada. All but two are either extremist Islamic movements or militant organizations from predominantly Muslim countries. ICLMG’s report says framing anti-terrorism around Muslim or Islamic organizations not linked to militant or extremist activity is dangerous. 

“In doing so, it both downplays the threat from other sources of violence — for example, white supremacist violence — and also leads to the stigmatization and profiling of Muslim and Arab individuals and communities as presenting an overwhelming threat,” the report reads.

How does a RAD audit work?

It isn’t clear to ICLMG’s researchers how RAD triggers an audit of a charity suspected of terrorism financing. There is no defined legal threshold for doing so. According to the report, evidence used to audit a charity can include anything from mainstream media reporting to complaints from individuals to classified intelligence. The latter is particularly concerning, ICLMG’s report says.

“The use of secret or unsourced intelligence also raises questions of provenance, motivation and, particularly troubling, quality,” the report reads. “There is no opportunity for the organization concerned to fully challenge the intelligence being used, placing them at a distinct disadvantage.” 

ICLMG’s researchers also didn’t have a formal description of a RAD audit, but says in the report that they include several distinct practices, including the confiscation of electronics from the charity in question, online audits of charities (including programming), and the presence of law enforcement officers within the audit team. 

These audits can take anywhere from two to three years — and the charity in question may not even know the real reason it is under investigation. According to the report, an audit for terrorism financing reasons can be carried out under the guise of a far more mundane investigation into noncompliance with basic charitable rules like “direction and control.” 

“This obscures the nature of audits and renders it difficult, if not impossible, to adequately respond to the underlying concerns of their investigation,” the ICLMG report says. 

Even if a RAD audit strips a charity of its status in Canada, the report says, that charity may never fully know the accusations it faces. In a Senate hearing in 2015, former RAD director Alastair Bland said his department only told about half of the charities under audit about its suspicions of their involvement in terrorism. 

Which charities have lost their status because of a RAD audit? 

Out of eight charities that lost their charitable status between 2008 and 2015 due to RAD audits, ICLMG’s report found six of them — including World Assembly of Muslim Youth, ISNA Development Foundation, and United Holy Land Fund — are Muslim. 

Citing news reports and the CRA’s official revocation notices to charities, ICLMG’s report says there is no clear evidence that any charities stripped of their status by a RAD audit have faced criminal charges. One of the organizations, IRFAN-Canada, has never been officially accused by the RCMP of knowingly supplying funds for violent purposes despite the fact it was placed on the Terrorist Entities List. 

“These RAD audits were conducted without clearly stating RAD’s involvement; the revocation letters they issued were redacted; and charities did not know when audits actually began and then waited years before a final decision is made,” the report says. “All in all, RAD audits are secretive and lack both transparency and accountability.”

Between 2016 and 2019, four Muslim charities had their status revoked following RAD audits, including ISNA Islamic Services of Canada, Ottawa Islamic Centre and Assalam Mosque, and the Anatolia Cultural Foundation. At least six Muslim charities are also currently under audit by RAD, the report says. 

What are ICLMG’s recommendations for the Canadian government?

In its report, ICLMG recommends the Canadian government review RAD’s processes through the National Security and Intelligence Review Agency “to ensure organizations are not being targeted due to racial or religious prejudice.” It also suggests the Minister of National Revenue, who directs the CRA, declare an immediate ban on the targeted audit of Muslim charities by RAD until that review is done. 

As well, ICLMG suggests the Finance Minister revisits Canada’s anti-terrorism regulatory, policy, and legislative landscape and its impact on Canada’s Muslim community. The report argues that these audits don’t just affect Muslim charitable staff — they also strip away social programming and services from Canadian communities, ultimately hindering the charitable sector. 

“By targeting legitimate Canadian Muslim organizations that are providing concrete programs benefiting the community, the CRA is not only taking away necessary programming for the Canadian Muslim community, but it is also hindering its own efforts,” the report says.

This story was updated.

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