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

Renewed Attention to FARA Under U.S. Domestic Terrorism Directive

As background, our September 2022 Charity & NFP Law Update discussed the potential implications of the United States’ Foreign Agents Registration Act (“FARA”) for Canadian charities and not-for-profits (“NFPs”) engaged in policy, advocacy, or charitable work south of the border. Enacted in 1938, FARA requires individuals or entities acting on behalf of a “foreign principal” to influence U.S. public opinion or government policy to register as “agents of a foreign principal.”

In early 2025, though, enforcement of FARA was effectively paused. That pause has now ended. On September 25, 2025, President Donald J. Trump issued a National Security Presidential Memorandum (NSPM-7) titled Countering Domestic Terrorism and Organized Political Violence. The memorandum directs multiple U.S. departments and agencies, including Justice, Treasury, Homeland Security, and the Internal Revenue Service, to coordinate investigations into networks, entities, and organizations alleged to be involved in “political violence, terrorism, or conspiracy against rights.”

Notably, paragraph 2(c)(ii) of the memorandum explicitly references FARA, instructing the U.S. National Joint Terrorism Task Force (JTTF) to investigate:

“non-governmental organizations and American citizens residing abroad or with close ties to foreign governments, agents, citizens, foundations, or influence networks engaged in violations of the Foreign Agents Registration Act (22 U.S.C. 611 et seq.) or money laundering by funding, creating, or supporting entities that engage in activities that support or encourage domestic terrorism.”

This language signals that FARA enforcement will be integrated into broader counter-terrorism and anti-money-laundering efforts, extending its reach beyond traditional lobbying or foreign influence contexts. By directing the JTTF and the DOJ to pursue potential FARA violations linked to domestic unrest, the memorandum repositions the Act as a tool of national security enforcement rather than merely a transparency regime.

The memorandum also calls on the Secretary of the Treasury to “identify and disrupt financial networks that fund domestic terrorism and political violence,” emphasizing the use of financial intelligence tools, suspicious activity reporting, and inter-agency cooperation. In tandem, the Commissioner of the Internal Revenue Service is directed to ensure that “no tax-exempt entities are directly or indirectly financing political violence or domestic terrorism.” These provisions collectively suggest heightened scrutiny of NFP and charitable organizations whose activities, whether intentional or inadvertent, might intersect with politically sensitive causes or cross-border funding streams.

For Canadian charities and NFPs with operations, partnerships, or advocacy efforts in the United States, this development warrants careful attention. As noted in the September 2022 Charity and NFP Law Update, the definitions within FARA are extremely broad: a “foreign principal” can include not only foreign governments but also foreign corporations, foundations, and charities. An “agent of a foreign principal” may be any individual or organization acting “at the request, order, or under the direction or control” of such a principal, including those financed “in whole or in major part” by a foreign entity.

Under the new directive, U.S. authorities may interpret these provisions more aggressively when investigating potential links between foreign funding and politically motivated activities, particularly where advocacy, demonstrations, or public communications are involved. Even indirect support or cooperation with U.S. intermediaries (for example, a 501(c)(3) partner) could attract attention if the activities are perceived as influencing policy debates related to national security, immigration, or law enforcement.

While the precise scope of renewed enforcement remains to be seen, NSPM-7 represents a clear shift toward reactivating FARA as part of a broader effort to counter perceived “foreign influence” within domestic political and civil movements within the US. The memorandum’s explicit reference to financial tracking, tax-exempt compliance, and NFP operations suggests that charities, advocacy groups, and social-justice organizations could face additional due diligence consideration when funding or collaborating across borders.

Canadian organizations engaged in advocacy, human-rights work, or other cross-border initiatives in the United States should monitor these developments closely and seek legal advice before undertaking activities that could be interpreted as influencing U.S. public policy or government officials. As enforcement resumes, early awareness and proactive compliance may help mitigate the risk of inadvertent registration obligations or reputational exposure under an expanded interpretation of FARA.

New Guidance on FATF’s Unintended Consequences Process for Non-Profits

The Financial Action Task Force (FATF) Unintended Consequences (UIC) Process (the “UIC Process”) is a new mechanism designed to address situations where countries’ implementation of anti-money laundering (AML) and anti-terrorist financing (ATF) standards inadvertently harms legitimate nonprofit organizations (NPOs). The European Center for Not-for-Profit Law’s August 2025 guide explains how NPOs can effectively engage in this process to mitigate negative regulatory impacts.

The FATF is an inter-governmental body which exists in order to set standards and promote effective implementation of measures for combating money laundering, terrorist financing and other international threats. It has a list of 40 Recommendations, which according to their establishing document, “set out a comprehensive and consistent framework of measures which countries should implement in order to combat money laundering and terrorist financing.” The FATF Standards comprise the Recommendations and their interpretive notes, as well as a glossary which accommodates these documents.

The UIC Process provides a formal pathway for NPOs and other stakeholders to raise concerns when FATF standards, particularly Recommendation 8 (Terrorist financing risks and protections for non-profit organizations), are misapplied or lead to restrictions on legitimate charitable activities. It emphasizes collaboration among key actors, including FATF members, regional bodies (FSRBs), the IMF, World Bank, and the NPO sector itself.

The procedure involves four phases:

1. Triggering the process: At least two qualifying parties (such as a FATF member and another institution) must report the same issue to initiate review. Coalition-building among stakeholders is critical at this stage.
2. Initial review: FATF’s Evaluation and Compliance Group (ECG) co-chairs conduct a preliminary assessment, gathering information from reporting parties, the affected country, and NPO representatives. Information considered includes reports and evidence from the trigger parties, the affected country’s response, input from the NPO community (including from within the affected country), previous FATF assessments, reports from international institutions, and any solutions proposed by the trigger parties. This stage is the NPO’s opportunity to provide evidence as to the overreach, and meaningful commentary on how FATF is stifling their legitimate activities.
3. Decision: If the concern meets the threshold, FATF circulates a decision paper and considers possible actions. Ranging from weakest to strongest, these are: requesting country reporting on steps to resolve the issue, requiring a technical compliance re-rating, issuing a public statement about the country, imposing enhanced measures with serious consequences, and referring the matter to a regional body for Financial Action Task Force-style regional body (FSRB) members. This step of the UIC Process allows for the NPO to meet with its FATF delegation, as well as propose specific solutions during the decision process.
4. Final decision: FATF’s Plenary, comprising all member countries, approves actions and directs follow-up. It is recommended that the NPO monitor the implementation of the decision to ensure the government in question follows through.

The UIC Process outlines an approximate 12-week sequence from issue identification through post-meeting advocacy, underscoring that engagement opportunities arise at each stage. Early detection of harmful regulatory effects and sustained advocacy are presented as keys to success.

Strong reports should include specific laws causing harm, clear evidence of impact, links to FATF standards, and proposed solutions. The guide stresses coordination among stakeholders, timely submissions, and providing technical, solution-oriented input rather than general complaints. By participating strategically, civil society actors can help ensure that legitimate charitable work is protected from disproportionate regulatory effects.

For Canadian charities and NFPs engaged internationally, the UIC Process represents an important avenue for advocacy and protection. FATF standards are increasingly used by governments to shape financial oversight, and their misapplication can restrict cross-border giving, delay humanitarian aid, or discourage financial institutions from serving the sector. By understanding and participating in the UIC Process, organizations can help ensure that legitimate charitable activities are not inadvertently constrained by AML/ATF measures. NPOs working through international networks may wish to monitor FATF developments and be prepared to contribute evidence or commentary should Canada or another country’s implementation of FATF standards begin to negatively affect their operations. Early, informed engagement is key to preserving the ability of charities and NFPs to carry out their missions within a compliant but enabling regulatory environment.

​Read the October 2025 Charity & NFP Law Update