ATF/AML Update
Feb 2022 Charity & NFP Law Update
Published on February 24 2022

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

Editor’s Note: On February 23, 2022, the government revoked the Emergencies Act. The following article provides charities and not-for-profits with information about some of the effects of this legislation while it was invoked, which may be similar to the effect that it may have if or when it is ever invoked again and a public order emergency declared.

Crowdfunding Platforms and Banks Required to Report Donations Flagged for Protest Group

Blockades in Ottawa and at the Canada-United States border due to protests earlier this month led the federal government to declare a national emergency and strengthen anti–money-laundering controls, which affected fundraising platforms used by charities. On February 14, 2022, the Government of Canada declared a “public order emergency” under Part II of the Emergencies Act (the “Act”), which grants extraordinary powers for dealing with public protests. The following day, on February 15, the government filed Emergency Measures Regulations (the “Regulations”), and an Emergency Economic Measures Order (the “Order”) under the Act. The Regulations prohibited public assembly that could lead to a serious disruption of transportation, interference with critical infrastructure or acts of serious violence against persons or property. Peace officers were empowered to ensure compliance with the Regulations, and penalties for failing to comply included criminal prosecution on summary conviction or by indictment with a maximum fine of $5,000 or imprisonment up to five years, or both.

According to a government announcement, the Order extended the scope of Canada’s anti–money-laundering and anti–terrorist-financing rules, such as those under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA), to cover crowdfunding platforms, as well as payment processors and included digital assets such as cryptocurrencies. Some charities with related money services businesses are already subject to due diligence and reporting requirements under the PCMLTFA. The Order required crowdfunding platforms and payment service providers “that are in possession or control of any funds that are owned, held or controlled by or on behalf of anyone involved in the illegal blockades … to register with and report suspicious or large value transactions to the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).” The Order directed banks and financial service providers to immediately cease providing financial services where an account was suspected of “being used to further the illegal blockades.” Federal and provincial government institutions were also given new authority to share information with banks and financial services providers, “if the information will help put a stop to the funding of illegal blockades and illegal activities.”

Read the February 2022 Charity & NFP Law Update