by Dev User | Feb 16, 2020 | Uncategorized
January 2020 Charity & NFP Law Update
US Global Fragility Act of 2019
On December 20, 2019, the US Global Fragility Act of 2019 (the “GFA”) was signed into law as part of the US budget bill, Further Consolidated Appropriations Act, 2020, establishing for the first time a comprehensive approach to the US’ diplomatic, development and security efforts, involving all relevant Federal departments and agencies in coordination with relevant international and multilateral development and donor organizations, to address the root causes of violence and instability around the world. The GFA requires the President of the US, in coordination with the Secretary of State, the Administrator of the United States Agency for International Development (“USAID”) and other high-ranking officials, to establish and implement a 10-year Global Fragility Strategy to help stabilize conflict-affected areas and lead international efforts to prevent extremism and violence. The President will also be required to select certain countries as “priority countries” for the purposes of implementing the Global Fragility Strategy and report to Congress every two years. The GFA will also replace the Relief and Recovery Fund with a new Prevention and Stabilization Fund to support stabilization of areas affected by armed conflict, and establishes the Complex Crises Fund to support programs and activities to prevent or respond to emerging or unforeseen events overseas.
EU Renews its Terrorist List
On January 13, 2020, the Council of the European Union renewed its EU terrorist list, which sets out persons, groups and entities subject to restrictive measures, including the freezing of assets in the European Union. This sanctions regime is separate from the European Union regime implementing United Nations Security Council resolutions 1267 (1999), 1989 (2011) and 2253 (2015) and targeting Al-Qaida and ISIL/Da’esh. The European Union also has its own sanctions regime with respect to ISIL/Da’esh and Al-Qaida and persons and entities associated or supporting those organizations.
OSFI Ceases Publishing Lists of Designated Persons
After regulatory amendments which came into force in March 2019 removed the monthly reporting requirement of federally regulated financial institutions under Canada’s sanctions regime, the Office of the Superintendent of Financial Institutions (“OSFI”) has recently ceased publication of lists of designated persons. However, OSFI has stated that the lists are still available from other public sources accessible online, such as Global Affairs Canada’s Listed Persons website and Public Safety Canada’s Listed Terrorist Entities website.
Read the January 2020 Issue
The CRA’s Guidance on Journalism: Clarifying Tax Credits, QCJOs and RJOs
Advisory Committee on the Charitable Sector Holds December Meetings
Legislation Update
– Provisions of Budget Implementation Act No. 1, 2019 Now In Force
– Proposed Changes to Employee Stock Option Regime Delayed
– 2020 Budget Consultations in Ontario
– Ontario Regulations under the Connecting Care Act, 2019
– Alberta Senate Election Act
– Nova Scotia’s Plastic Bags Reduction Act
– Yukon’s New Liquor Act
Corporate Update
– ONCA Coming into Force Delayed
– Updated Policies on Corrections of Articles or a Certificate for Business and Not-for-Profit Corporations
– Corporations Canada Makes Changes for Online Services to Not-for-Profits
– Certain Amendments to Ontario’s Co-operative Corporations Act in Force
– New Brunswick’s Cooperatives Act Proclaimed in Force
Voluntary Association’s Constitution and By-Laws Found to be Contractual
Tax Court Decision on Split Receipting and Donative Intent Upheld on Appeal
Federal Court of Appeal Holds that Atheism is not a Religion
CRA Technical Interpretation Regarding Loanbacks by a Qualified Donee
CRA Technical Interpretation on Prescribed Rates and Undue Benefits
Termination Clause Found to be Void and Unenforceable by the Court of Appeal
The Federal Court Establishes the Test for a Site-blocking Order
Alberta Court of Appeal Rules that Charter Applies to Freedom of Expression by Students on University Campus
Anti-Terrorism/Money Laundering Update
– Global Fragility Act of 2019
– EU Renews its Terrorist List
– OSFI Ceases Publishing Lists of Designated Persons
Charities Legislation & Commentary, 2020 Edition Now Available
by Dev User | Feb 15, 2020 | Uncategorized
February 2020 Charity & NFP Law Update
Further Amendments to Regulations under the PCMLTFA
On February 15, 2020, new proposed Regulations Amending the Regulations Amending Certain Regulations Made Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, 2019 (the “Proposed Amending Regulations”) were published in the Canada Gazette, Part I, and will be open for comment from interested persons for thirty (30) days from the date of publication. The Proposed Amending Regulations introduce further amendments to the previously amended regulations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “PCMLTFA”), discussed in the August 2019 Anti-Terrorism/Money Laundering Update.
The Proposed Amending Regulations would align Canada’s AML/ATF Regime with recommendations of the Financial Action Task Force (“FATF”), including the FATF’s Guidance for a Risk-based Approach for Virtual Assets and Virtual Asset Service Providers, discussed in the June 2019 Anti-Terrorism/Money Laundering Update, the recommendations from the 2018 five-year parliamentary review of the PCMLTFA, discussed in the AML/ATF and Charity Law Alert No. 48, as well as the Dirty Money reports commissioned by the Government of British Columbia and released in 2018 and 2019.
Of note, the Proposed Amending Regulations would introduce stronger customer due diligence requirements for designated non-financial businesses and professions (“DNFBPs”), such as accountants and accounting firms, British Columbia notaries, casinos, departments and agents of the Crown, dealers in precious metals and stones, as well real estate brokers, sales representatives and developers. As such, when required to verify the identity of an entity, DNFBPs would have to collect beneficial ownership information describing the ownership, control and structure of an entity, including corporations and trusts. DNFBPs would also be required to take reasonable measures to confirm the accuracy of the information obtained and keep records of the information and the measures taken to comply.
The Proposed Amending Regulations would also help address new emerging risks involving virtual currencies. Consistent with the FATF’s 2019 guidance on virtual assets, the Proposed Amending Regulations would introduce the “travel rule” of customer due diligence as a requirement for banks and other financial institutions such as money services businesses.
US 2020 National Strategy for Combating Terrorist and Other Illicit Financing
On February 6, 2020, the US Department of the Treasury released its 2020 National Strategy for Combating Terrorist and Other Illicit Financing (the “2020 Strategy”). The 2020 Strategy provides a “whole-of-government approach to guide the public and private sectors in addressing 21st century illicit finance challenges”, identifying the most significant threats and vulnerabilities that allow illicit proceeds to enter the US financial system, such as the abuse of charitable organizations and unlicensed money transmitters to move money around the world.
A central focus of the 2020 Strategy is the adoption of a risk-based approach applying simplified or enhanced measures in response to different risks and focusing resources in the areas of highest risk in order to make the greatest impact.
In this regard, the 2020 Strategy also identifies enforcement priorities and supporting actions, such as improving communication of priority illicit finance threats, vulnerabilities, and risks. In this regard, the 2020 Strategy states that:
U.S.-based tax-exempt charitable organizations play an important role in delivering aid to communities worldwide and in countering terrorist propaganda and recruitment. Treasury and interagency partners will continue to engage with charitable organizations and financial institutions to evaluate and communicate the actual risk that these organizations may be misused to support terrorism and that financial institutions apply the risk-based approach to the opening and maintenance of charity accounts, as the vast majority of U.S.-based tax exempt charitable organizations are not high risk for terrorist financing.
We note that this language is consistent with the US Treasury’s 2018 National Terrorist Financing Risk Assessment, discussed in the March 2019 Anti-Terrorism/Money Laundering Update, which stated that US tax-exempt charitable organizations operating domestically in the US faced a low risk of abuse but that a “small number of US tax-exempt charitable organizations that operate in high risk regions” faced a greater risk.
The 2020 Strategy also identifies vulnerabilities and enforcement priorities in relation to the collection of beneficial ownership information of legal entities, as well as money services businesses, broker-dealers, and casinos. As well, the 2020 Strategy acknowledges the value of artificial intelligence and data analytics to support law enforcement.
UN Working Paper on Impact of Counter-terrorism Legislation on Humanitarian Action
On February 13, 2020, the Inter-Agency Standing Committee (“IASC”) of the United Nations (“UN”) General Assembly published a working paper containing key recommendations from a desk review of main articles and papers published between 2011 and 2019 on the impact of counter-terrorism legislation and measures on principled humanitarian assistance (the “Paper”). The Paper identifies a number of problems caused by counter-terrorism legislation on humanitarian work, such as:
- The absence of humanitarian safeguards or exceptions in counter-terrorism legislation and sanctions regimes, causing humanitarian actors to make different choices about where to work and who to serve;
- The broad and vague definitions of terms such as “terrorism”, “material support” and “assistance” in counter-terrorism legislation, which do not explicitly exempt humanitarian activities;
- Difficulties in collecting evidence of the impact of counter-terrorism legislation and measures on principled humanitarian action, by failing to engage constructively with civil society actors on counter-terrorism legislation;
- Financial de-risking, where banks refuse to provide services to humanitarian organizations to avoid onerous compliance requirements; and
- The increased burden of counter-terrorism legislation on donor agreements including provisions regarding recruitment, procurement and programming where such obligations must be passed on to any implementing partners, contractors or sub-grantees.
In this regard, the Paper also offers a few key recommendations targeted to the UN Security Council, donors and the FATF. These recommendations include adding humanitarian exemptions and exceptions to counter-terrorism legislation and measures; improving wording and language of UN Security Council Resolutions; increased systematic monitoring of and reporting on the impact of sanctions regimes and counter-terrorism measures on humanitarian work; greater transparency and accountability of UN counter-terrorism bodies; and the development of risk-sharing measures among donors, humanitarian organizations and financial institutions.
Read the February 2020 Issue
Competition Bureau’s Role in Digital Advertising: Implications for Charities and Not-for-Profits
CRA News
– Excise and GST/HST News No. 107
– CRA Introduces Digital Processes for Authorizations
– CRA Charities and Information Sessions and Webinars
CAGP Provides Update on Gifts of Life Insurance in B.C.
Legislation Update
– Bill C-7, An Act to amend the Criminal Code (medical assistance in dying)
– Ontario Bill 175, Connecting People to Home and Community Care Act, 2020
– Ontario Bill 136, Provincial Animal Welfare Services Act, 2019 Now Proclaimed
Donation Receipts Signed by and in Favour of Charity Officer Denied
Tax Court of Canada Rejects Charitable Donation Scheme… Again
Ontario Court Rules on Trusts in Scouts Land Ownership Dispute
One Incident of Sexual Harassment Justified Termination for Cause
BC Court Finds Indigenous Ceremonies in School Did Not Violate Freedom of Religion
Ministry of Health Revokes its Hospital Naming Directive
Recent Issues in Privacy: Case Law Update
New Canadian UDRP Provider for Resolving Domain Name Disputes
Anti-Terrorism/Money Laundering Update
– Further Amendments to Regulations under the PCMLTFA
– US 2020 National Strategy for Combating Terrorist and Other Illicit Financing
– UN Working Paper on Impact of Counter-terrorism Legislation on Humanitarian Action
Essential Trademark Issues for Charity and Not-For-Profit Lawyers
Theresa L.M. Man Named to CRA Technical Issues Working Group
