Dr. Anver M. Emon, a professor and the Canada research chair in religion, pluralism and the rule of law at the University of Toronto, recently published a report entitled Humanitarianism & the Exclusion of Muslim Charities from the Financial Sector (the “Report”). The Report examines the impact of Canada’s anti-money laundering, anti-terrorist financing, and sanctions regime on Muslim-led charities and the broader not-for-profit (NFP) sector and offers recommendations on how Canada can mitigate against these unintended consequences that Canadian charities and NFPs are currently experiencing. The topic was referenced in Charity & NFP Law Bulletin No. 532, which discussed the National Security and Intelligence Review Agency’s findings from its review of the Canada Revenue Agency’s Review and Analysis Division (“RAD”) and the concerns raised that Muslim charities had been disproportionately targeted for RAD audits.
The Report notes that while protecting charitable funds from misuse remains important, Canada has acknowledged that the risk is limited. The Report argues that current compliance frameworks can disproportionately affect Muslim charities, especially those working in higher-risk regions, and raise broader concerns about financial access and fairness across the NFP sector. The Report underscores the important role charities play in Canada and abroad, including the religious and humanitarian work of Muslim charities. It also notes that the Financial Action Task Force (“FATF”) has recognized that AML/ATF measures can create unintended consequences, including over-securitization and financial derisking by financial institutions.
There are three main unintended consequences highlighted in the Report: (1) bias and privacy concerns in compliance and risk assessment, (2) financial derisking that limits access to banking and payment services, and (3) humanitarian derisking that discourages work in higher-risk regions. It warns that these pressures can restrict the delivery of humanitarian aid.
The Report also points to earlier reviews of CRA audit practices involving Muslim charities, including concerns about disproportionate audits and weaknesses in national security risk methods. It recommends greater transparency in CRA audits, better reporting on financial derisking, stronger financial inclusion measures, and clearer guidance for charities operating under sanctions and anti-terrorism rules. With the FATF expected to release its Mutual Evaluation Report on Canada later in 2026, the Report calls for a coordinated response that balances national security with the realities faced by charities.
For charities and NFPs, the Report is a reminder that AML/ATF compliance can affect banking access, international operations, and humanitarian work. Organizations operating abroad, especially in higher-risk jurisdictions, must maintain strong governance, due diligence, recordkeeping, and risk management practices while monitoring evolving guidance and policy developments.