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

Proposed Bill C-2 Poses Potential Issues for Charities and Not-for-Profits

Bill C-2, introduced on June 3, 2025, and known as the Strong Borders Act, is a proposed omnibus bill containing a wide array of proposed changes across federal laws. Our initial coverage of Bill C-2 in our June 2025 Charity and NFP Update focused on its proposed amendment to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act that would prohibit charities from accepting cash donations of $10,000 or more, including related transactions. “Cash” covers Canadian and foreign currency, with values based on Bank of Canada or usual business exchange rates. Violations could result in fines up to three times the amount accepted, and charities would therefore need to encourage alternatives like cheques, e-transfers, or wire transfers for large donations. Violating this prohibition would carry serious penalties. On summary conviction, offenders would face a fine, while conviction on indictment could result in a fine up to three times the payment, donation, or deposit. An offence could be proven through the actions of an employee or agent, regardless of whether they are identified or charged. Proceedings could be initiated up to eight years after the offence arose.

The Bill’s extensive scope includes other provisions that could significantly affect the operations of charities as well as not-for-profit organizations. One such provision is the expansion of powers granted to government agencies to access and share information. Amendments to the Customs Act would allow the Canada Border Services Agency to access goods destined for export at certain locations and grant officers free entry to premises where such goods are reported, loaded, unloaded, or stored. They would also have authority to open containers or remove packaging. For charities and not-for-profits engaged in international aid or humanitarian relief, this heightened scrutiny may result in increased oversight and potential delays at the border.

Bill C-2 also introduces proposed new provisions purported to modernize access to data in the context of investigations. Amendments to the Criminal Code and the CSIS Act would allow peace officers or public officers to demand subscriber information from telecommunications service providers where they have reasonable grounds to suspect an offence has occurred or may occur. The scope of “subscriber information” would be expanded beyond the limited categories recognized by the Supreme Court of Canada to include pseudonyms, account numbers, types and timelines of services, and device identifiers. Importantly, these demands could be made without prior judicial authorization and service providers may be required to respond within twenty-four hours. Courts would also be able to order the production of all subscriber information related to specified data, and Canadian authorities would have new powers to compel disclosure in response to requests from foreign states.

Another important feature is that electronic service providers subject to these requests would be prohibited from notifying affected parties for up to one year. This secrecy period could raise governance challenges for charities that must balance confidentiality obligations to donors, staff, or beneficiaries against compliance with undisclosed state access.

For charities that rely on U.S.-based or other foreign service providers, Bill C-2 also signals the potential for greater sharing of Canadian data with foreign governments under future international arrangements.

Beyond issues of information access, Bill C-2 proposes significant changes to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. In addition to prohibiting cash donations over $10,000, the Bill also restricts third-party cash deposits and prohibits anonymous or fictitious names on accounts. The Bill increases administrative penalties, introduces a mandatory compliance agreement regime, expands the number of entities required to enroll with the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC), and authorizes FINTRAC to disclose information to the Commissioner of Canada Elections. The director of FINTRAC would also become a member of the Financial Institutions Supervisory Committee, with the ability to exchange information with other federal financial regulators. These changes are complemented by amendments to the Personal Information Protection and Electronic Documents Act to support the Integrated Money Laundering Intelligence Partnership, a collaboration between financial institutions and law enforcement with the intention of detecting and deterring money laundering activity.

Notably, FINTRAC would be required to publish the details of serious compliance violations, including the names of entities and the penalties imposed. This could expose charities and not-for-profits to reputational damage if they are found non-compliant, even inadvertently. The Bill also authorizes the collection and use of personal information without consent in certain circumstances, underscoring a broader shift toward expanded surveillance in the financial sector. For charities and not-for-profits, the combination of proposed higher penalties, mandatory compliance obligations, and the risk of public disclosure makes it more important than ever to ensure robust financial controls and risk management.

Taken together, the Strong Borders Act, if passed into law, represents a far-reaching package of legislative changes that will have significant implications for Canada’s charitable and not-for-profit sector. For charities and not-for-profits, these developments will require careful monitoring, proactive compliance, and thoughtful risk management to ensure that they can continue serving their communities while adapting to an evolving regulatory environment.

Public Safety Canada Releases Annual Report on Authorization Regime

Public Safety Canada has released its annual report (the “Annual Report”) on the Authorization Regime to allow for certain activities (such as, provision of aid) to be carried out in areas controlled by terrorist groups. As discussed in AML/ATF and Charity Law Alert No. 53 and AML/ATF and Charity Law Alert No. 54, in June 2023, Bill C-41 amended the anti-terrorist financing provisions in section 83.03 of the Criminal Code to provide an exception for humanitarian activities and created an Authorization Regime to facilitate other activities in areas controlled by terrorist groups. These amendments provide a defence from criminal liability for organizations and individuals conducting necessary activities in areas controlled by terrorist groups which may incidentally benefit such groups.

As stated in the Annual Report, the authorizations are processed on a case-by-case basis. At the first stage of the process, there is an initial assessment by the Minister of Foreign Affairs and the Minister of Immigration, Refugees and Citizenship Canada to verify that there is a real and important need in the proposed geographic area, the proposal responds to such need, and the applicant can direct the funds and report on its use. At the second stage, the proposal is referred to the minister of Public Safety for final approval and a security review. The Minister of Public Safety provides an annual report on authorizations for funding allocated to Canadians or Canadian organizations under the humanitarian exception.

The 2024 Annual Report, released on June 23, 2025, stated that there have been 14 applications for authorizations to date, 12 of which occurred in 2024. As of June 2025, 2 authorizations have been granted. Of the 14 applications, 10 were sponsored by the government and 4 were external applications. The proposed purpose of these applications included providing health and education, with a few focusing on livelihood support, human rights programming and government operations. The proposals involved activities to be conducted in Afghanistan, Gaza and Syria.

The Annual Report then provided an overview of the next steps for the Authorization Regime. The report noted that Public Safety alongside other departments and agencies will continue to engage with stakeholders and use their feedback to ensure consistency in the administration of the Regime with the needs of those impacted by the program. They also seek to prioritize efforts to secure funding to meet the statutory obligations of the Criminal Code and ensure the continued administration of the Regime. Lastly, efforts are underway to dedicate resources to begin developing regulations concerning the statutory authorities of the Regime and its administration.

Though originally lauded as an important step forward for the Canadian charitable sector, significant issues remain with the Authorization Regime. The risk of falling afoul of the Authorization Regime as well as the onerous and time-consuming application process may be deterrents for organizations that might otherwise be interested – a possible reason why so few non-governmental entities have applied for Authorization to date. 

FATF Releases New Guidance on Financial Inclusivity

The Financial Action Task Force (FATF) is an inter-governmental body that sets global standards through its 40 Recommendations to combat money laundering, terrorist financing, and related threats, forming a comprehensive framework known as the FATF Standards.

In June 2025, FATF provided new guidance in promoting inclusivity in the formal financial sector while ensuring continued protection against the risk of money laundering and terrorist financing. The updated guidance underlines that the effectiveness of anti-money laundering and terrorist financing measures are strengthened by transparency and integrity in the financial sector.

With the new updates, countries are expected to take a risk-based approach when implementing new measures. In doing so, FATF highlights the importance of considering the benefits and risks of both excluding certain people from the formal financial sector and bringing more people into the sector. In conducting such risk assessments, countries will be able to provide financial services to low-risk individuals while also enhancing security measures for high-risk situations. FATF has also updated their assessment methodology to reflect the updates to their guidance and highlight more of a risk-based approach.

The new guidelines also included examples of how others have already implemented these guidelines. For example, the Sweden Bankers Association with the Swedish Migration Agency established a process to allow the identification of asylum seekers to open bank accounts. Although it remains to be seen whether a risk-based approach will increase financial inclusivity, these changes are a step towards achieving that purpose.

​Read the August 2025 Charity & NFP Law Update