Charities and Terrorist Financing
David G. Duff
UBC Faculty of Law
October 26, 2010
University of Toronto Law Journal, Forthcoming
A decade after the bombing of Air India Flight 182 in June 1985, many Canadians were shocked to learn that the Babbar Khalsa Society – a militant organization dedicated to the establishment of an independent state in northern India, members of which are believed to have planned the Air India bombing – had been granted charitable status in Canada. Although the organization’s charitable status was revoked in 1996, reports also suggested that funds collected to support Sikh temples in Canada may have been diverted to support Sikh militancy in India.
This article examines the relationship between charities and terrorist financing in Canada, reviewing Canada’s legal framework in order to evaluate its adequacy to limit the use or misuse of charitable organizations for terrorist financing. This evaluation is based on two important considerations. First, as experience with the Babbar Khalsa Society and Sikh temple funds sadly demonstrates, effective supervision and regulation of charitable organizations is essential to prevent their manipulation by individuals and groups who seek to exploit the legitimacy and fiscal benefits that these organizations enjoy in order to finance terrorism. Second, as many charities are small organizations with unpaid volunteers and very few have any connection with terrorist activities, charities should generally be viewed as allies in the struggle against terrorism rather than suspects. As a result, government supervision and regulation of the charitable sector should be proportionate and risk-based – emphasizing capacity-building and best practices to prevent the use or misuse of charitable organizations for terrorist financing, ensuring transparency and self-regulation to the greatest extent possible, scrutinizing transactions and organizations that pose the greatest risks for terrorist links, and limiting more serious regulatory sanctions to the rare instances where charities provide support to terrorist organizations.
Number of Pages in PDF File: 55Accepted Paper Series
Date posted: October 26, 2010 ; Last revised: October 28, 2010
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