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

Ottawa Release 2025 National Risk Assessment on AML/ATF Issues

The federal government’s 2025 National Risk Assessment on Money Laundering and Terrorist Financing is, at first glance, a technical document focused on public safety risks in Canada. However, for charities and not-for-profits (NFPs), several sections carry important implications. While the charity and NFP sector continues to be recognized as a low-risk player overall, the report highlights both vulnerabilities and regulatory approaches that could directly affect organizations, particularly those engaged in international or humanitarian work.

The report acknowledges that Canada’s non-profit sector is vast, with roughly 246,000 organizations, including 85,518 registered charities. Most are domestically focused, with simple structures and transparent operations. For this large majority, the terrorist financing risk is considered low. However, the report notes that a small subset of organizations – especially those raising and disbursing funds internationally – are more exposed to potential misuse, such as diversion of funds or exploitation in conflict zones. Importantly, these risks do not apply across the sector but only to a narrow group with higher exposure to cross-border or high-risk activities.

A second theme in the report is the challenge of “de-risking.” Some charities and NFPs have reported difficulty accessing banking services because financial institutions, wary of regulatory risks, prefer to cut ties rather than manage risk on a case-by-case basis. The government warns that financial exclusion can impede legitimate humanitarian aid, push organizations toward informal or less transparent channels, and even increase overall risk. Instead, regulators and institutions are encouraged to adopt proportionate, risk-based approaches that safeguard the financial system without unduly disrupting charitable operations.

The report also highlights new oversight mechanisms that charities should be aware of. The Canada Revenue Agency’s Review and Analysis Division continues to play a role in monitoring risks within the registered charity sector. In addition, Global Affairs Canada may apply extra anti-terrorist financing measures for charities and NFPs seeking federal funding to work in high-risk jurisdictions. The report further notes the existence of the Criminal Code’s authorization regime, introduced in 2023, which provides protection from criminal liability for humanitarian actors operating in terrorist-controlled areas. Charities and NFPs using this regime, however, must meet conditions imposed by Public Safety Canada, including potential reporting requirements, which has proved difficult in practice for many organizations.

Engagement with the sector is another recurring theme. The government points to ongoing work with the CRA’s Advisory Committee on the Charitable Sector, as well as new interdepartmental dialogues launched in 2024, designed to improve communication with charities and NFPs on money laundering, terrorist financing, and sanctions evasion risks. The CRA has also developed educational resources for charities to better understand terrorist financing risks and how to mitigate them. This suggests a recognition that effective oversight requires partnership with, not just regulation of, the sector.

Finally, the report notes methodological changes in the way risks are assessed. A “residual risk lens” has been adopted to account for existing safeguards and to reduce the chance of overstating sector-wide risks. The aim is to ensure that oversight and enforcement focus on the relatively small number of organizations with higher exposure, while avoiding unnecessary burdens on the majority of charities and NFPs that pose little risk. This reflects a shift toward more nuanced, proportionate regulation, which the sector has long advocated for.

For charities and NFPs, the practical takeaways are threefold. First, while most organizations remain low risk under federal assessments, those engaged internationally – particularly in conflict-affected regions – should expect continued scrutiny. Second, organizations facing banking challenges may find some relief in the government’s recognition of the harms of de-risking, although whether this translates into policy change remains to be seen. And third, the government appears committed to engaging with the sector and refining its oversight tools in ways that balance security concerns with the need to preserve the vital contributions of charities and NFPs.

As always, directors and senior management should ensure that their organizations maintain strong internal controls, understand their obligations under anti–money laundering and counter–terrorist financing rules, and stay attuned to evolving federal guidance. The 2025 National Risk Assessment does not reflect new law, but it does provide important insight into the regulatory mindset and the areas where charities may encounter closer scrutiny in the years ahead.

UN Consultations on Sanctions: Calls for Input on Remedy and Humanitarian Action

The United Nations Special Rapporteur on the negative impact of unilateral coercive measures has launched two consultations, both of which close on 20 October 2025. These initiatives highlight the ways in which sanctions regimes affect human rights, humanitarian action, and accountability, and they offer charities and not-for-profits an important opportunity to contribute to shaping international guidance.

The first consultation relates to a draft Guidance on Effective Remedy, Responsibility and Redress in Unilateral Sanctions Environment. The Special Rapporteur has identified persistent barriers to justice for individuals and organizations harmed by unilateral sanctions, including the widespread over-compliance by businesses and financial institutions. The draft guidance sets out obligations for states and international organizations under international law, the responsibilities of businesses, and the rights of affected individuals and groups. It emphasizes accountability for wrongful acts, access to legal aid, and the need for full restitution and compensation. Civil society input is sought to ensure these principles are practical and responsive to real-world impacts.

The second consultation addresses the humanitarian consequences of sanctions. In many cases, sanctions and related restrictions have hindered the delivery of aid, disrupted supply chains, and created a chilling effect that deters humanitarian engagement. Even where exemptions exist for humanitarian work, over-compliance by banks and suppliers often prevents organizations from transferring funds or obtaining essential goods. Humanitarian actors are sometimes forced to scale back or modify their work due to donor restrictions and risk-averse policies, undermining the principles of humanity, neutrality, impartiality, and independence. The draft Principles and Guidance on Humanitarian Action aims to tackle these challenges by offering standards to protect the delivery of assistance while clarifying the obligations of states and businesses in sanctions environments.

For Canadian charities and not-for-profits with international operations or partnerships, these consultations highlight both the risks and the opportunities in the current sanctions landscape. They underscore the importance of robust due diligence, careful management of funding and partnerships, and ongoing awareness of how sanctions can affect programming. They also present a chance for the sector to provide input into the development of global standards that may help reduce barriers to humanitarian work and ensure that individuals and communities retain access to justice and remedies when adversely affected by sanctions.

​Read the September 2025 Charity & NFP Law Update