Strict measures to prevent terrorism financing are prompting Muslim charities in Canada to withdraw humanitarian assistance from countries in need, such as Syria and Yemen, because they fear losing access to banking services if they operate there, a new study warns.
The study by University of Toronto law and history professor Anver Emon makes a dozen recommendations, aimed at various federal agencies, to help charities and other non-profit organizations provide assistance abroad without fear of repercussions.
The treatment of Muslim charities has come under scrutiny in recent years. Critics claim they have been unfairly singled out in the fight against terrorist financing.
A National Security and Intelligence Review Agency report released last October found “a lack of rigour” in the way the Canada Revenue Agency selects charities for audits over terrorism concerns. The report said the process introduces risks of bias and discrimination.
Emon, who co-authored an influential 2021 report on audits of Muslim charities, takes a broader look at Canada’s anti-terrorism financing measures and sanctions regime in the latest study.
The study acknowledges these mechanisms exist to protect the integrity of the financial system, prevent its misuse by criminals or terrorist organizations and uphold Canada’s international obligations as a member of the international Financial Action Task Force, which sets global standards.
It says the measures and tools also lead to unintended consequences.
Muslim charities are especially vulnerable because they are committed to providing humanitarian aid to hard-hit regions that Canada also deems high-risk for terrorist financing, the study says.
The consequences include a phenomenon known as “financial derisking” — where banks and other financial institutions cut off services to clients — and “humanitarian derisking,” where non-profits scale back or end humanitarian commitments due to the risk of running afoul of anti-terrorism measures or sanctions.
The study says that given the power imbalance between financial institutions and their clients, service contracts are typically drafted to maximize an institution’s discretion, giving it broad authority to end service.
“In practice, this can mean they terminate a client’s account with limited notice and without disclosing the reason. Clients must withdraw their funds within a set time frame, after which the institution ceases to provide services,” the study says.
“Once ‘derisked’ in this manner, Canadian organizations — including registered charities in good standing with the CRA — lose access to essential financial services and cannot fulfil their operational requirements.”
The study notes that when the Taliban regained control of Afghanistan in 2021, Canadian charities operating in the country suddenly faced the prospect of criminal liability — because humanitarian funds that could incidentally benefit the Taliban could also be considered support for a listed terrorist entity.
In 2023, Canada amended the Criminal Code to permit delivery of basic humanitarian assistance when reasonable efforts are made to minimize any benefit to terrorist groups. Development projects with longer timelines and broader goals are subject to a separate authorization regime administered by Public Safety Canada.
Charities providing humanitarian aid in jurisdictions considered to be at high risk for terror financing may rely on the Criminal Code’s humanitarian exception to avoid liability, the study says.
“However, the scope of ‘humanitarian’ aid under this exception remains unclear, leaving (non-profit organization) leaders and advocates uncertain when further assistance would trigger Public Safety Canada’s authorization regime,” it says.
The ambiguity exposes organizations to potential criminal liability and has led them to conduct their own risk assessments, often resulting in “self-imposed humanitarian derisking” from areas in urgent need of humanitarian and development support, the study adds.
Two Canadian Muslim charities shared their experiences with The Canadian Press but asked not to be named, citing a concern that speaking publicly might spook potential donors and make them reluctant to give money.
In one case, a charity relied on a donation processing platform used widely across the non-profit sector. The service was abruptly cut off without notice, formal explanation or recourse.
The platform cited its bank as the reason but provided no written rationale and offered no chance for the charity to present its case.
The difficulties meant the charity had to stop operating in three countries.
In a second case, a charity began a fundraising campaign for humanitarian projects in Syria after Canada amended its sanctions regime last year to facilitate humanitarian assistance.
After several months, the financial service provider froze the funds associated with the Syria campaign.
According to the charity, the provider initially was unaware of the applicable exemption under Canada’s Special Economic Measures Act sanctions framework that permitted the humanitarian activity. Even after the exemption was brought to its attention, the money remained frozen while an extended internal review continued.
The charity had already made humanitarian commitments in Syria and depended on access to those funds to carry out its programs. As the funds remained inaccessible, projects had to be slowed, delayed or stopped.
Research for Emon’s study was conducted under the auspices of Canada’s Office of the Special Representative on Combating Islamophobia, where he served as a special adviser. He said the study does not reflect the federal government’s views.
The study recommends that the Canada Revenue Agency’s charities directorate, with assistance from Public Safety, issue guidance to help charities understand the scope and limits of the new humanitarian exception and authorization regime in the Criminal Code.
It calls on the revenue agency and Public Safety to jointly organize semi-annual sessions to address the non-profit sector on compliance with the humanitarian exception and to advise on best practices when applying to the authorization regime.
The study also recommends the revenue agency and Global Affairs Canada jointly organize semi-annual sessions for non-profits to help them comply with Canada’s sanctions regime.
The revenue agency declined to discuss the study, saying it does not comment on third-party reports.
Public Safety Canada acknowledged the study’s recommendations and said it works closely with the revenue agency and other federal partners to support organizations seeking to learn more about the humanitarian exception and authorization regime process.
Since 2024, the two federal agencies have conducted regular outreach and interactive information sessions with charities, non-governmental organizations and other interested parties to provide guidance, share updates, answer questions and gather feedback on the authorization regime and its implementation, Public Safety said.
“This ongoing engagement helps support transparency and ensure stakeholders have access to timely information about the regime’s requirements and operation,” the department said.
The Finance Department said it is reviewing the study’s recommendations.
It said the federal government continues to engage with interested parties to ensure anti-terrorism financing measures remain effective, proportionate and responsive to emerging issues.
The department pointed to a commitment in the 2024 fall economic statement to engage with non-profits about illicit financing risks, evolving international standards and best practices, and to hear directly from organizations about the challenges they face.
It said the government is “committed to these dialogues” to ensure Canada’s measures protect Canadians and the integrity of the financial system, while managing unintended effects on non-profit organizations.
This report by The Canadian Press was first published Aug. 16, 2026.
By Jim Bronskill | Copyright 2026, The Canadian Press. All rights reserved.