This section provides MAC’s response to the CRA Administrative Fairness Letter (AFL).
MAC submitted a 4 part submission (a cover letter, a summary, part 1 of MAC’s responses, and part 2 of MAC’s responses). The information has not been modified from the submission and is a consolidation of all 4 submissions.
Note: Any personal information such as names, emails, phone numbers, etc. in the MAC Response and the CRA AFL has been redacted.
Cover Letter to AFL Response
This letter addresses the inherent Islamophobia of the administrative fairness letter (the “AFL”) from the Canada Revenue Agency (“CRA”) dated March 17, 2021 concerning the audit for the period from July 1, 2012 to June 30, 2015. In particular:
In criticizing the Muslim Association of Canada (“MAC”), the AFL relies on discredited sources, such as articles that appeared in the Toronto Sun in 2015, while ignoring a large body of work by academic and independent experts. Toronto Sun articles, particularly discredited and withdrawn ones, are hardly a sound basis for public policy decisions by Canada Revenue Agency (the “CRA”), the Review and Analysis Division (“RAD”), or any other entity of the government of Canada – particularly when there is such an abundance of reputable sources upon which to rely.
The AFL places great importance on questions that it ultimately fails to address.
The AFL repeatedly makes claims that are not supported by the evidence.
The AFL demonstrates bias in interpreting the words and actions of MAC and its leaders.
The AFL attempts to apply to MAC standards that would, and could never justifiably, be applied to any other community of faith.
In order to establish these points, this letter covers the following topics: (i) an overview of MAC and its activities; (ii) evidence of prejudice and Islamophobia in the AFL; and (iii) errors in the AFL’s five key findings. This letter concludes with a request that RAD rescind the prejudicial and Islamophobic statements in the AFL, and that CRA accept a compliance agreement with MAC without the imposition of sanctions that will address technical issues while allowing MAC to continue its important work for Canadians.
MAC is the largest Muslim charitable organization in Canada, helping more than 150,000 people every year. Since the organization’s registration as a charitable organization in 1997, it has provided spiritual and educational services to Canadians of all backgrounds, including Muslims and non-Muslims alike.
MAC has also supported Canadian Muslims in the face of increasing hate crimes and Islamophobia in our country. Recently MAC, in partnership with the Government of Ontario, launched an online platform to combat Islamophobia in Ontario schools.
MAC has always been committed to playing a significant part in making Canada a better place for all of its citizens. MAC stands by Canada’s responsibility to ensure the charity sector is never abused or at risk of financing of terrorism. MAC has always supported governments at all levels in consultation and outreach to improve the sector. Since its registration as a charity, MAC has always demonstrated proactive communication and transparency with the CRA, as well as a proactive approach to implementing controls and demonstrating compliance.
Through the audit, MAC provided the CRA with all records that were requested, and access to all locations and staff. MAC is not aware of a single request made by the CRA that was not fulfilled. The audit team repeatedly thanked MAC for its cooperation.
As this is MAC’s first audit, MAC is disappointed and discouraged that it faces the threat of sanctions or revocation of its charitable status on the basis of a prejudiced audit that relies on Islamophobic sources, including individuals who have been widely criticized by mainstream academics and rejected by other Canadian government agencies and organizations, and discriminatory interpretation and application of the Income Tax Act.
The framing of the AFL, in both its allegations of extremism and its allegations of technical non-compliance, is inherently Islamophobic.
This is concretely demonstrated by:
The AFL refers to, and relies upon, articles published by Brian Daly in the Toronto Sun in 2015. These articles are unreliable and Islamophobic. They provide no evidentiary foundation for concerns about MAC. It is highly troubling that RAD would rely upon highly questionable journalistic sources, especially in the face of reputable studies from leading experts.
The AFL employs a particular world view, and invokes misinformation, to assess what qualifies as advancement of religion and what does not. Neither the CRA nor RAD is an authority to evaluate an individual’s or group’s understanding of Islam. Dr. Mohammed Iqbal Alnadvi, the chair of the Canadian Council of Imams and one of the leading Islamic scholars in Canada, expresses it well. He states:
“Would it be acceptable for the CRA to criticize a Catholic Church’s recommendations to sacrifice something for Lent? Or a synagogue’s celebration of Passover by abstaining from leavened bread? These are common faith positions for people practicing these religions which a government agency has no business or jurisdiction debating.
The CRA refers to their practice as a “public benefit test,” but it is essentially subjecting Islam in particular to a quasi-values test that undermines the Canadian value we can all agree on despite our differences—a value enshrined in our Charter: freedom of religion.
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It’s time for the CRA to better define its mandate and guidelines for charities and acknowledge that it is not within its purview to be auditing the religious beliefs and practices of Canadians.”
Neither the CRA nor RAD is a qualified authority to evaluate the history of a group such as the Muslim Brotherhood or to situate that group within the mainstream Muslim community. In fact, having failed to reach a conclusion as to what is MAC’s understanding of Islam is (or even the Brotherhood’s understanding of Islam for that matter), the AFL has simply fallen back on Islamophobic tropes that seek to exclude Islam from public life.
The approach adopted by the AFL strongly indicates prejudice. On the question of how MAC understood the ideas of the Muslim Brotherhood and how some of these ideas were reflected in MAC’s understanding of Islam, the AFL claims on page 13 that, “The response the CRA received from the head office was less than clear which prompted the CRA to seek clarity in the responses to the Organization’s other project locations. However, once it became evident that the Organization had prepared the project’s representatives on how to respond to this line of questioning…” One must question how a response that “was less than clear” somehow becomes “prepared” to the extent that implies deception.
Moving past this apparent contradiction, the AFL devotes considerable space to a supposed effort to seek “clarity” within MAC’s documents and correspondence as to the specifics of MAC’s understanding of Islam and of the thought of the Muslim Brotherhood. Given the extensive documentation collected from MAC this should not have been difficult. The educational material used by MAC with its members focuses entirely on the manifestation of faith in life through service, learning, education, activism, and outreach. Yet the AFL ultimately fails to articulate an answer to the question to which so much space is dedicated. If the question is so important, and given the ample resources, documentation, and time, why is it left unanswered? The only reasonable conclusion is that the question itself is a smokescreen.
Further, the AFL claims on page 20 that, “The Organization was registered with a purpose to advance the religion of Islam. During the registration process, very little was mentioned about what this meant.” This is in fact not true. From early on, the governing documents of MAC has contained references to MAC’s understanding of Islam and Imam Hassan Al-Banna. MAC’s by-laws has been amended a number of times, including with the addition of a statement of identity and purpose that further spelled out MAC’s understanding of Islam. Amendments to MAC’s charitable purposes would have been reviewed by the Charities Directorate for approval and changes to its by-laws were provided for the Charities Directorate’s file. Any claim that MAC has been less than clear or transparent about its understanding of Islam is simply false.
Finally, as already stated, neither the CRA nor RAD is a qualified authority to evaluate an individual’s or group’s understanding of faith. This pattern of raising the question, rejecting MAC’s own answers, then failing to provide a meaningful answer is a typical pattern of attack on Muslim activists that has consistently been deployed in hate campaigns.
This “hit-and-run” approach is further deployed in the AFL with one of the most egregious accusations. The CRA claims on page 18 that “preliminary audit findings appear to suggest that the Organization has connections to individuals or groups associated with extremism, violence, and/or terrorism.” However, a full reading of the subsequent sections of text reveals no such evidence.
The AFL acknowledges that there are different interpretations of the Muslim Brotherhood’s ideology, meaning that backing this very serious allegation requires evidence of specific connections with specific problematic individuals or groups. There is no such evidence anywhere in the AFL, and this misleading and dangerous allegation is never revisited.
This particular claim is so outlandish that even the prejudiced sources cited in the AFL do not make it. In fact, in his Senate testimony, Lorenzo Vidino specifically rejected the notion that the organizations he named, including MAC, “take orders from any Arab capital.” Instead, according to Mr. Vidino, the most important connection is ideology. This is precisely the position that MAC has maintained since inception and that the AFL rejects.
Prejudice is further demonstrated in the manner in which the CRA chooses to misconstrue actions by MAC’s leadership while ignoring context. Given the domestic and foreign anti-Muslim campaigns before and during the audit, it would have been either extremely naive or unconscionably irresponsible of MAC’s leadership not to address the reputational risk to the organization. Organizing a retreat to examine MAC’s internal and external communications around the relationship with the ideology of the founder of the Muslim Brotherhood, and the nuances of referring to the organization versus referring to the movement versus referring to the thought and ideas, was and is an appropriate action to be taken. Instead, the AFL on page 15 argues that such a discussion must be indicative of a desire to deceive.
It is difficult to imagine this standard being applied to any other organization whose leadership demonstrates concern over reputational risk and seeks to make its communications consistent across the entire organizational structure.
In fact, unlike MAC, which has no connections to foreign groups, the United Church of Canada and its predecessors have been engaged in global partnerships for more than 150 years. Over that time much has changed, including the Church’s understanding of itself and its mission in the world. In 2008, the Executive of the United Church of Canada’s General Council approved a “Statement and Affirmations on Global Partnership,” including 10 guiding principles. Even after 150 years of existence, the United Church of Canada continues to examine its practices in light of shifting world conditions and understandings. We doubt that the CRA or RAD has accused the United Church of Canada of a lack of transparency, or that the Church is modifying its guiding principles because it is concerned that what it “engages in could be considered contrary to public policy.”
Canada is a multicultural society. There are countless Canadians who choose to be involved in service work in their countries of origin, and countless Canadians who are involved to some degree in political work in their countries of origin. The AFL advances the thesis that MAC has to bear responsibility for every such involvement by any current or former member, including individuals who have left Canada and have returned to live in their countries of origin. Holding Muslims in general, and MAC in particular, to a standard that cannot possibly be applied to any other community is inherently prejudiced and Islamophobic (not to mention irrational). While the AFL states on page 20 that it “is not typically concerned with the activities of directors/employees outside of the Organization, as they are usually personal in nature. When the beliefs of a director, or employee, begin to affect or influence the Organization and manifest themselves in the activities of the Organization, that can be cause for concern if it negatively impacts the Organization or exposes the Organization to increased risk . . .” Nowhere in the AFL does the CRA demonstrate how such perceived relationships “manifest themselves in the activities” of MAC.
The most shocking part of the AFL is the one centred around the organizational link between MAC and the “Muslim Brotherhood Organization”. Any given Christian church group would be expected to maintain contacts and engage in correspondence, visits, exchanges of experience, meetings, conferences, joint campaigns, and other activities with churches around the world belonging to the same denomination. The same is true of labour unions, political parties, environmental movements, athletic associations, boy scouts, girl guides, hobbyist clubs of all kinds, and any other organization that professes a commitment to ideals, beliefs, values, or goals that are transnational in character. In fact the example shared above demonstrates that the United Church of Canada works with over 100 global partners. The AFL accuses MAC of being in furtherance of the Muslim Brotherhood organization, which claim is false. At the same time, the United Church maintains a Partner Council that ensures that the voices of global partners are represented in its governance structures, providing advice and feedback to the Church from a global perspective. Yet the CRA does not perceive such steps as the United Church furthering the goals of foreign organizations.
In the case of MAC, RAD has chosen to interpret any such activity as sinister, deceptive, and evidence of MAC furthering the goals of a foreign organization. This is discriminatory on its face. MAC is routinely invited to conferences attended by individuals, intellectuals, and organizations who subscribe to the principles of the Muslim Brotherhood or are engaged with issues of worldwide Islamic significance. MAC leaders find themselves on email lists to which others advertise information or share news. Given that MAC’s governing documents since inception have highlighted our belief that these ideals are the best articulation of Islam in modern times, none of these facts should be surprising. RAD appears to set a standard for MAC of complete isolation from the rest of the world, a standard that is indicative of problematic interpretive prejudice. A similar interpretive bias is clear in many of the inflammatory conclusions RAD draws from examining MAC’s correspondence, emails, and other documents.
The AFL on page 14 references the Canadian Arab Federation v. Canada (Citizenship and Immigration), 2013 FC 1283 “[p]rivate statements are often more indicative of a person’s true state of mind, than public statements” as an approach the CRA uses to gain a “realistic glimpse at the Organization’s true intentions.” Justice Zinn goes on to qualify the statement by adding “This may be especially true of political figures.” This comment was made in obiter and is not indicative of substantive law that should be applicable to the Charity.
The comment made by Justice Zinn was in response to the question of “Was the Minister’s Decision Tainted by a Reasonable Apprehension of Bias?” The Justice concludes that the private emails of the Minister conclude that the Minister had made up his mind about the issue at hand and “his only interest was in pursuing the means to reach his end goal of terminating the relationship CIC had with CAF.” The Justice also states “I conclude, despite the Minister’s public statements and assertions to the contrary, that his private actions revealed that he would not truly consider CAF’s submissions – that any efforts by CAF short of changing its leadership were futile. His mind was closed.”
As such, CRA RAD’s true intentions can be revealed when examining communications from Canada’s national security regime, which show a preconceived outcome of criminal activity in the Charity, despite not finding any. This is clearly seen in a communication between FINTRAC and RCMP in which the following is stated to the RCMP officer: “We will not acquiesce to your demand for conformity to the predetermined scenario you have formulated.” INSET continued to pressure FINTRAC even after they were told to stop as they wanted FINTRAC to conclude MAC was engaging in criminality. In correspondence of June 11, 2014, FINTRAC says the RCMP had “an outright bias against [MAC]”. FINTRAC further indicates to the RCMP that although the data is not supporting the pre-determined conclusions on the RCMP with respect to MAC, that FINTRAC was providing other avenues on a “more prudent path forward” for the RCMP, which appears to be an indication there were other ways for the Government of Canada to impugn MAC. The final report of FINTRAC to the RCMP indicates that MAC is a “non-starter as far as potential prosecutorial actions” go and that FINTRAC recommended that the RCMP cease using resources investigating them. This report was released around the time the RAD audit commenced and appears to be the alternative path forward suggested by FINTRAC. Furthermore, the CRA, having access to the Quiggin report prior to its publication and relying on the Toronto Sun stories, as well as having no interest in engaging in a discussion about these issues with the Charity before the audit, demonstrates the CRA’s unjustified predetermination of compliance concerns of the Charity advancing/supporting the Muslim Brotherhood. This is further observed in the CRA’s insistence that the Charity’s responses where “less than clear”, “prepared”, and “deceptive” because the CRA had made up its mind.
As in the case of the Minister’s treatment of CAF, the Charity is concerned that CRA has been pursuing the audit as a means to reach an end goal of a revocation or sanction. With that said, the CRA has not provided a single example in which the Charity’s public statements were inconsistent with it’s private statements.
These examples highlight systemic Islamophobia across many of Canada’s agencies in their view and approach toward many Canadian Muslim Charities.
Furthermore, the AFL has not demonstrated a single example where the private statements of individuals have contradicted the public position of the Charity. The Charity has been consistent in its representations to the CRA during the audit, in its governing documents and in its public website.
The introduction to the AFL highlights five key findings that attempt to demonstrate MAC has not been transparent and contradictory in its representations. These principal conclusions are unfounded, disconnected from their context, and prejudiced, despite the fact that full responses have been provided in MAC’s filings with the CRA.
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Background Check on Organizations or Individuals
The AFL alleges that “In 2011, the Organization invited a controversial group, Islamic Education and Research Academy, to speak at the Centre Communautaire Laurentien (CCL). In preparation for the media attention, the Organization’s President, [REDACTED], contacted a public relations firm to prepare a statement and acknowledged that the Organization does “not run background checks on organizations or individuals.” The Organization subsequently issued a public statement advising “MAC does however undertake a background check on each group that makes a request to rent” the facilities to ensure “they do not promote nefarious causes or engage in hateful speech.”
In 2011 [REDACTED] was a newly elected president of MAC’s board of directors. The board is responsible for governance and oversight over the management of the activities and affairs of MAC. The question asked by the public relations firm was an operational question, not a governance question, and therefore a matter that [REDACTED] would not have full knowledge of. In an attempt to demonstrate that the Charity’s public statement was contradictory to its internal communications, the AFL highlights an email by [REDACTED], but ignores a follow-up email within the same hour by the Executive Director, [REDACTED], who has an intimate understanding of MAC’s operations and practices. RAD was aware that [REDACTED] clarified and confirmed that in fact MAC does due diligence on guests.
RAD had access to both these emails. It is perplexing that RAD would choose to ignore an email that was part of the same dialogue, and instead slander the previous President of MAC and allege a lack of transparency.
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Fundraising Trip
The AFL alleges that “During the audit interview, the CRA was told that Al-Otrojah’s project manager, [REDACTED], travel to Kuwait in 2015 was not for fundraising purposes. [REDACTED] indicated that the trip was personal and that the Organization did not pay for the ticket. In the Organization’s emails, the CRA found: a trip report that indicated the travel was for fundraising purposes, records indicating the Organization paid $2,073.12 for the flight and that [REDACTED] was provided a letter by [REDACTED] which stated that [REDACTED] was travelling on behalf of the Organization ‘to collect funds needed for the projects.’ This is contrary to the Organization’s representations.”
This allegation is false. First, [REDACTED] travelled twice to Kuwait, once in 2014 (which is during the audit period) and again in 2015 (which is outside the audit period). [REDACTED]’s answer related to the trip that occurred during the audit period. The 2015 formal fundraising trip by Mr. [REDACTED], with the Director of Fundraising, was outside of the audit period. As a result, in responding to the audit MAC did not – and was not required to – provide information related to the 2015 trip. Second, the interview notes on which the AFL relies inaccurately represent the response of [REDACTED] concerning this matter. Even according to the disputed interview notes, the CRA never explicitly inquired about 2015. Mr. [REDACTED] was correct to understand the CRA was asking about Mr. [REDACTED]’s trip during the audit period. This 2014 trip was personal and unpaid by MAC and therefore not mentioned to the CRA in the context of MAC fundraising trips.
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Activities outside Canada
The AFL alleges that “The Organization stated during the audit interview that it did not fund projects outside of Canada. Further, its General Operating By-Laws indicate that it “is a wholly independent Canadian organization that only operates within Canada,” and its website that its “mission is to establish an Islamic presence in Canada that is balanced, constructive, and integrated, though distinct, in the social fabric and culture of Canada.” However, a review of the Organization’s records appears to suggest that it undertook activities outside Canada in Libya and Turkey.”
This allegation is false. The fact is that MAC has never had any activities in Libya, Turkey or anywhere outside of Canada. Indeed, MAC’s records made available to the CRA do not in any way demonstrate any effort of MAC to establish international schools in Libya and Turkey before, during, or after the audit period, as set out in MAC’s submissions. Despite the CRA’s attempt to allege that MAC has an “international school network” or “international school program”, MAC had demonstrated in its submission that MAC does not have any international activities.
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IRFAN-Canada
The AFL alleges that “When allegations about the Organization supporting the International Relief Fund for the Afflicted and Needy (IRFAN-Canada) arose in the media, Mr. [REDACTED] issued a statement stating “MAC has not supported IRFAN in any way since the allegations that led to its delisting as a charity by the Government of Canada in 2011.” During the audit interview, Mr. [REDACTED] stated that once IRFAN-Canada had its charitable status suspended the Organization no longer provided any money to IRFAN-Canada. According to the Organization’s own documentation, the Organization not only continued its relationship with IRFAN-Canada, but it allowed IRFAN-Canada to fundraise and promote itself at the Organization’s events and properties.”
These allegations are false and misleading. The fact is that in 2009 MAC ceased to distribute relief designated funds to IRFAN-Canada. This is exactly as MAC reported to CRA through the audit process. In response to false allegations by media outlets, which the CRA has relied upon, the RCMP has confirmed that MAC’s contributions to IRFAN-Canada were legal as provided in the submission. Instead of relying on these articles, the CRA had the authority to seek clarification from the RCMP about the allegations in these articles. The INSET communications provided in the January 12, 2022 submission confirm that immediately before the audit began, FINTRAC concluded that there were no concerns with MAC. Furthermore, the 2020 letter from the RCMP Commissioner finally confirmed the same conclusion.
After IRFAN-Canada’s charitable status was revoked, it continued to operate as a not-for-profit organization. MAC did maintain an insignificant relationship with IRFAN-Canada in a manner that was in full compliance with the law. Registered charities are not required to discontinue activities with a revoked charity if it continues to operate as a non-profit organization. Therefore, since IRFAN-Canada continued to remain a well-regarded non-profit organization in Canada’s Muslim community, MAC continued a relationship as permitted by law, but MAC no longer provided gifts or access to its resources without consideration it as it was no longer a qualified done.
Contrary to the allegations in the AFL, IRFAN-Canada never fundraised at MAC’s events or properties, as addressed in our submissions.
Throughout the audit, MAC was accurate and truthful on all matters, including IRFAN-Canada.
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Muslim Youth Soccer League
The AFL alleges that “During the audit interview at the Islamic Community Center of Ontario (ICCO), the CRA asked the Organization’s representatives about its relationship with the Muslim Youth Soccer League (MYSL). In response, the Organization denied anything more than a casual working relationship. Our review of information provided by the Organization, combined with publicly available sources, suggested that MYSL is in fact more likely to be viewed as the Organization’s activity.”
This allegation is false. MYSL was and is not a MAC program. MAC sponsors various community programs that offer public benefit., and MAC was not involved in the day-to-day operations of this program. MAC supported MYSL through storage space, use of address, registration location, etc. MAC did not provide financial sponsorship, as demonstrated in our letter of December 3, 2021.
MAC is a national organization. It is the largest Muslim charitable organization in Canada, helping more than 150,000 people every year.
The AFL aims to delegitimize important charitable activities in Canada and mainstream balanced Islamic work to advance religion. It undermines MAC’s positive reputation through findings that are supported with evidence that is neither credible nor trustworthy. The overwhelming bulk of the evidence relied upon by RAD in the AFL is neither objective nor impartial, and in fact is highly biased.
MAC is made up of respected community members, volunteers and staff. These are all people of integrity who have committed their lives to serving Canadians.
The AFL singles out many individuals for criticism. Rather than offering objective findings that allow for a fair response, the language and tone of the AFL continuously attempt to paint individuals as deceitful and dishonest.
MAC is supported by donors, domestic and foreign who support its work.
The AFL inappropriately includes names of donors and makes unsubstantiated allegations against them.
The AFL has been written to smear the reputations of these individuals. Such unjustified targeting of individuals may have a negative effect on their mental health, their careers, their banking arrangements, and their public reputations.
For years, Canada’s Muslim community has been victim of Islamophobic rhetoric that claims that the vast majority of mosques and Islamic institutions are associated with radicalism and terrorism.
The AFL continues this victimization, by referencing discredited Islamophobic sources, and essentially endorses this Islamophobic rhetoric by attempting to deny Canadian Muslims their religious freedoms. This belief is rooted in the idea that Muslims have a very fundamental allegiance to something else or someone else in the world.
The AFL measures Muslims’ understanding of their faith by an arbitrary, and unstated, yardstick. And it arrogates to the CRA and RAD the authority to interpret Islam and adjudicate the place of various Muslim organizations in the community, an authority that neither the CRA nor RAD nor any other government agency is competent to exercise.
If made public because of either revocation or the imposition of sanctions, the AFL will ring false with Canadian Muslims. The people we serve know MAC by our daily work. They know how MAC practices a moderate interpretation of Islam. Frankly, they would read the AFL’s collection of unsubstantiated allegations for what it is: an expression of systemic bias and Islamophobic prejudice. How else could one react to a government agency that, after a five-year audit, resorted to quoting discredited newspaper articles as if they were legitimate source of evidence for allegations about connections to international terror?
This prejudiced approach does not serve public interest. Rather, it relies upon and feeds into extreme Islamophobic narratives. It is not aligned with Canadian values, and seeks to delegitimize Muslim activists and groups whose understanding of Islam entails a commitment to freedom, justice, and democracy.
The majority of the AFL claims are unfounded and have been responded to in a way that demonstrates compliance by MAC. MAC believes any issues that need to be addressed should be done so through a fair compliance agreement. This would be a reasonable approach by the CRA and consistent with the agency’s practices with other charities.
A revocation or sanction against MAC based upon prejudiced and biased allegations buttressed by technical faults which can be addressed without sanction would have far reaching impacts on the services and programs upon which tens of thousands of Canadian Muslims and other beneficiaries. It would cause a significant negative impact on the entire Canadian Muslim community and its trust in government agencies. It would be nothing less than a signal that systemic Islamophobic bias is tolerated by agencies of the Government of Canada. It would encourage Islamophobia outside of government and it would undermine the efforts of all who promote tolerance.
MAC believes that the audit and the AFL have infringed MAC’s rights under the Charter of Rights and Freedoms. It is for this reason that unless the CRA can ensure a fair and impartial audit of the organization, MAC will have no option but to file a notice of a Charter Challenge to Ontario Superior Court Of Justice.
MAC is requesting that the Director of the Charities Directorate rescind elements of the AFL that promote Islamophobic narratives. MAC requests that the Director maintains an education first approach, in accordance with the commitment of the CRA to the charity sector. As such, given the complete evidence-based response by MAC in response to the AFL allegations, MAC requests that the Director agree to a fair compliance agreement without sanctions.
Submission - Introduction
Before addressing the specific allegations and issues raised in the AFL, it would be helpful to provide background on MAC’s purpose of advancement of religion, the climate in which the audit was initiated, and factors that have changed since the audit that impact CRA’s allegations in the AFL.
As has been explained during out video conference calls MAC plays an important role as a trusted charity within the Muslim community in Canada that does immense good across the country. Presently, MAC has established chapters in 13 major cities across the country alongside 20 mosques, community centers and 30 full-time and part-time schools. Annually, MAC serves over 150,000 Canadians through its various programs, events, centers and services.
Through its presence across Canada for twenty-four years, MAC has had four main areas of impact: developing a Muslim Canadian identity; upholding a balanced and mainstream message of Islam; delivering programs and services to thousands of Canadians across the country; and creating spaces for Muslims in Canada to find belonging. Through these four areas of impact, MAC has enabled multiple generations of Canadians to serve their communities through volunteerism and giving.
In addition to the 30 full and part-time schools noted above, MAC runs 4 full-time, licensed daycare programs that provide programs according to provincial mandates along with an Islamic component. While each channel of education fulfills a specific objective, overall, MAC schools aim to cultivate an enriched learning atmosphere fostering academic excellence, leadership, and Islamic values in the same manner as other Canadian private religious schools. MAC schools are focussed on developing students who seek success and excellence in all parts of their life, while embracing their identity as Canadian Muslims who are fully engaged within their community.
As a movement, MAC’s mission is to, “establish an Islamic presence in Canada that is balanced, constructive, and integrated, though distinct, in the social fabric and culture of Canada.” Nowhere is this more important than in the development of Canadian Muslim youth. The goal of MAC is to develop youth who reject the false tension between being Canadian and being Muslim. Through the youth work in all 13 chapters across Canada, MAC aims to create a positive environment through structured activities that will encourage youth to meet their complex needs of belonging, autonomy, sense of purpose and achievement. These activities include intellectual and spiritual programming, sports and arts activities, camps, volunteer opportunities, and civic engagement, all of which are different dimensions of religious identity in Islam. Through grounding youth in their faith, helping them connect to their local and global communities, and presenting them with opportunities to help others, MAC delivers programs to help youth achieve their full potential.
For Muslim women in Canada, MAC actively works to promote spaces of participation within all spheres of society. MAC continues to encourage women’s participation in all areas of leadership and engagement and has also developed programs focussed specifically for women, where it can further support the engagement of women within spaces of leadership.
MAC has developed a community service model that fosters a sense of purpose and develops resilience, through the service of others and philanthropy. Such service programs are often driven by youth in
various chapters. The projects include tree planting, park clean-ups, interfaith dialogues, developing and running food drives, blood donation drives, senior support programs and other initiatives that enable members and volunteers to give back to their communities as a practical manifestation of their faith.
During the Syrian refugee crisis, MAC connected the community together to build sponsorship and settlement programs across the country. During the Fort McMurray wildfires of 2016, MAC worked with groups on the ground to provide immediate support for the community. After the Quebec-city mosque massacre, MAC connected with the local and national communities across the country to support and heal in the wake of such a tragedy. Since MAC understands Islam as a complete way of life, all these spheres of engagement and service are as much a part of the advancement of religion as worship services.
In understanding Islam as an all-embracing system which encompasses every sphere of life, MAC sees participation in wider public discourse as an integral component to an Islamic presence in Canada.
Throughout the years, MAC has engaged in critical dialogue at local and national levels. Community leaders and partners have often visited MAC centers, mosques, schools, and events, sharing their vision for their communities. MAC has played a pivotal role in connecting leaders to a significant minority group and understanding the needs of Muslims in Canada. MAC has served in consultation with the government on issues that pertain to policy and legislation. MAC has collaborated with leaders across major organizations to offer insight and voice to add depth and context to emerging realities in Canada.
At the advent of the COVID-19 pandemic in Canada, MAC recognized the need to quickly pivot and respond to the immediate needs of Canadians. This required a consolidation of community leadership and resources, combined with technical expertise to transition programming onto virtual platforms, along with an understanding of the community’s needs that needed immediate attention.
At the core of the COVID-19 response initiatives has been the MAC Community Food Share initiative. The pandemic exposed and magnified many existing social challenges in Canadian society and families and individuals in need of charitable food programs rose within the first weeks of the pandemic. Within weeks, youth teams across ten chapters from Vancouver to Montreal took the responsibility to partner with more than 30 local businesses, shelters, and organizations to adopt a policy for distribution of food and basic hygiene products within the community. As Canada rolled out its vaccination programs, MAC mosques and centers partnered with regional health units to offer pop-up vaccine clinics that would enable accessibility for members of the community and also consider the diversity-based accommodation needs.
Below we have set out preliminary and summary responses to the previously unaddressed allegations in the AFL as well as the balance of the AFL. As noted above, a complete response to all the allegations and additional information related to the audit will be provided by December 13, 2021.
We also wish to note that at all times MAC has regularly sought and relied upon professional advice on issues or in compliance matters. As examples:
MAC’s legal counsel advised on all capital purchases, on major vendor contracts, and on reputation matters, including false media articles.
MAC’s external auditors were consulted on compliance matters. For instance, MAC’s cost per pupil calculation as discussed herein was reviewed and approved by 3 different auditors, including Deloitte LLP. Deloitte has prepared the T3010 for MAC since 2014.
MAC’s public relation partner was regularly consulted on responding to false media articles and communication with the public.
As you are aware, the Charity was formally advised on December 22, 2015 through an audit commencement letter that it was selected for audit. The audit related to the operations of the Charity during the Audit Period, which initially was for the period from July 1, 2012 to June 30, 2015. The Audit Period was subsequently expanded on October 5, 2016 to include all of the Charity’s real property purchases to that point in time.
After completion of an extensive audit as outlined in this letter, the CRA issued the AFL on March 17, 2021. The Charity was provided 90 days to respond to the AFL, and was subsequently provided a 120-day extension to October 13, 2021, and a further 60-day extension to December 13, 2021.
As well, we wish to note that in correspondence addressed to MAC dated August 5, 2021 and in a letter of the same date received on August 17, 2021, attached as Schedule “3”, the CRA referred to the AFL as a “Sanction Administrative Fairness Letter” of “SAFL”. The CRA does not appear to have any public record of this in its administrative policies or guidances concerning its interpretation of the law. Your letters attached at Schedule 3 initially refer to an “Administrative Fairness Letter” (AFL) as being a letter that the CRA may send to a registered charity during an audit when the CRA has found compliance concerns with the operation of the registered charity.
The AFL gives the applicant or registered charity the opportunity to respond to CRA’s concerns and explain why the organization should be eligible for charitable status or why it should remain a registered charity. The AFL specifically states that the Director General of the Charities Directorate will decide on the appropriate course of action which may include no compliance action, issuing an educational letter, resolving the issues through a compliance agreement, a penalty and/or sanction, or a revocation.
In this regard, the CRA’s persistence on referring to the AFL as a SAFL in its correspondence with the Charity has prejudiced the Charity to a particular outcome even before the CRA has had a chance to review the Charities’ response to the results of the audit. The word “SAFL” inherently removes any possibility of an outcome not involving a sanction despite the AFL stating possible outcomes to the audit on its final page that do not involve a sanction.
In addition, the AFL summarizes some background to the audit at pages 2-4, before commenting on solicitor-client concerns raised following the field audit. However, this summary does not adequately indicate the extent of the audit, and thanks to an access to information request obtained by MAC and confidential documents which were leaked to MAC as discussed below, additional context to the CRA’s comments throughout the AFL is lacking.
In this regard, the AFL repeatedly alleges a lack of transparency by the Charity. For example, page 6 of the AFL alleges that, “…it appears to the CRA that the Organization has been less than forthright with the public, the media, and with the CRA about its activities and how it undertakes them”. As well, on the same page CRA alleges that “[t]he CRA has identified numerous instances where the Organization has made representations on an issue only to be contradicted by the Organization’s own documentation and financial records.” In addition, with respect to the numerous allegations in the AFL related to MACs purported association with the Muslim Brotherhood as an organization, the CRA alleges at page 13 that the Charity was “… less than clear” or “…failed to provide clarity” during interviews with the Charity’s representatives.
The position taken in the AFL that MAC has been anything but transparent prior to, during, and after the audit process is categorically rejected. As acknowledged in the AFL, on May 30, 2014, our office had emailed Cathy Hawara, who was then the Director General of the Charities Directorate, to raise concerns about the untrue reports in the media related to the Charity, specifically a report written by Thomas Quiggin published on May 27, 2014, offering accurate information to respond to these misinformation attacks. Unbeknownst to our office at the time, as noted in the attached ATIP results at Schedule “4”, this communication was shared with Alastair Bland, who was then the director of the Charities Directorate Review and Analysis Division (“RAD”). A written fact sheet about the Charity was also sent as a follow up to Cathy Hawara by our office on May 30, 2014, which was again forwarded to Alastair Bland. Lastly, on June 2, 2014 Alastair Bland instructed Cathy Hawara not to meet with the author of this letter or the Charity despite their request to do so. Mr. Bland suggested that there was no need to meet when he said “we do not anticipate the need to meet the organization at this time.” He offered written representations to provide to the Charity if it was concerned about the accusations in the report. That same day Cathy Hawara sent Alastair Bland’s suggested response to Terrance Carter.
In this regard, prior to the media reports and our office’s transparent communication with the Charity, it is apparent from the ATIP results that the CRA was already investigating the Charity and which neither our office nor the Charity were advised of. This is further evidenced by an email communication dated May 23, 2014 where a CRA employee, Stephanie Descary, requested a copy of the MAC file from RAD. In addition, five days before the Thomas Quiggin report was publicly published on May 27, 2014, on May 23, 2014 an email was sent to Alastair Bland flagging a chain of emails confirming that RAD had a report published by Thomas Quiggin titled “The Muslim Brotherhood in North America (Canada/USA)”. This is discussed later in this submission,
As a result, questions are raised as to why the CRA would have had access to this report prior to its publication date, as well as to the role that disinformation had in inciting the CRA to make its claims against MAC. Despite having access to this report and relying on it to inform the CRA’s understanding of the Muslim Brotherhood, the CRA did not raise this report during the audit, ignoring the fact that they were aware that MAC had concerns about the report’s authenticity and veracity.
Prior to and during this internal communication at the Charities Directorate, more recently the Charity has anonymously received leaked internal government communications from the Financial Transactions and Reports Analysis Centre of Canada (“FINTRAC”) and the RCMP in relation to the Integrated National Security Enforcement Teams (“INSET”) attached as Schedule “5”. In this regard, on April 29, 2014 Michael Boole (current manager of the Intelligence Sector / Anti-Money Laundering Unit in FINTRAC) had written to RCMP INSET Asst. Commissioner James Malizia and Staff Sergeant Ken Derakhshan concerning requests for more detail in relation to MAC in support of warrants for the INSET Action Group. At that time, Mr. Boole wrote that:
“We are clarifying our position on our findings regarding MAC Canada.
In our report of October 8, 2013, we outlined all patterns of activity that we identified as actionable. We went on to raise concern that there was the potential to make inferences and connections in regards to overseas transactions, which although conducted with parties of interest to, “Project Sapphire”, may have been innocuous to us and part of the normal course of business for this charitable organization
We are submitting again, to you, through our NSJOC representative, our previous analysis of patterned financial misrepresentations. We caution that you may imperil your ability to proceed in further action against this and other similar organizations in Canada should this not be resolved”. (Emphasis added)
In a subsequent communication on May 12, 2014, Mr. Boole wrote again in response for an expedited request in relation to FINTRACs analysis of MAC stating that,
“There is potential for inaccurate, (criminal), connotations to be applied to what, in reality, are innocuous transactions or correspondences. This will, in our opinion, imperil the entire ability for this task force to pursue remedy from the courts in the form of further applications for discovery, electronic wire taps & other surveillance.
We ask that you allow for this process to play out and that we are allowed the appropriate time & space to conclude our review without added distraction in the form of intensified pressure to provide a predetermined finding of criminality. This, we humbly submit, is to the benefit of all interested parties subscribed to this matter”. (emphasis added)
On May 21, 2014, Mr. Boole wrote to provide FINTRAC’s preliminary review and stated that, “Our findings, thus far, indicate no transactions that meet the criteria for intentional criminality. The data we have analyzed follows a pattern of activity that we have ascertained to be within the lawful confines of the activity expected from such organization” (emphasis added). However, on May 29, 2014, Mr. Boole evidently has to write again in response to requests for an expedited final report and must indicate that, “We advise that these pressure tactics denote a more political aspect to your inquiry related to MAC. We cannot formulate findings to conform to any theory of criminality you may have concluded to be fact. It is also not part of our mandate, either in this project or in general, to target certain groups or manipulate data to fit certain agendas.” (emphasis added)
However, on June 11, 2014 FINTRAC again had to respond to repeated demands for predetermined answers in indicating that,
“I will put this as diplomatically as possible. This is unacceptable. We will not acquiesce to your demand for conformity to the predetermined scenario you have formulated. This is not how we do business. Our function is that of fact finders and truth tellers. We are not an instrument of your agency and do not answer to your directorates.”
In advance of providing a final report, Mr. Boole wrote again on June 25, 2014 to indicate that, “To date we cannot isolate any single, or chain, or transactions that can definitely be categorized as illegitimate. In fact, many of the threads you have provided may not even qualify as suspicious. We are, in this case, referring to your most recent inquiry on the MAC evidence.” (emphasis added). In this regard, FINTRACs final report was provided on July 16, 2014, but on July 12, 2014 Mr. Boole wrote to state that, “… I will say, that your theory regarding MAC Canada, (area of primary concern), was not substantiated by our findings”.
It would also appear that after providing this report FINTRAC was provided with additional “evidence” to consider. On September 8, 2014, Mr. Boole wrote to indicate that the data provided, “…did not overlap with any pattern of activity which would indicate malfeasance.” The summary concluded that,
“We recommend that you suspend the use of resources in relation to this organization and divert those assets towards the other organizations within this final submission which shows promise in regards to activity of concern. It is our conclusion that this organization, Muslim Association of Canada (MAC), is a non-starter as far as potential prosecutorial actions for the INSET Group.” (emphasis added)
As you also know, shortly after our video conference on April 16 2021, on April 23, 2021, we provided you with correspondence from the Charity dated September 14, 2020 to Commissioner Brenda Lucki concerning Project Sapphire, together with a reply from Commissioner Brenda Lucki to MAC dated October 1, 2020, concerning Project Sapphire and MAC. This correspondence is again enclosed as Schedule “6”. The letter from Commissioner Brenda Lucki stated that,
“… That being said, I can confirm certain facts. Notably, until IRFAN’s charitable status was revoked in 2011, it was perfectly legal to make donations as they were a legitimate registered charity. Based on information from the Canada Revenue Agency, the Muslim Association of Canada was identified as a significant contributor to IRFAN. No charges were laid against your organization as a result of this investigation.”
The conclusion to be drawn from the fact that neither FINTRAC, nor the RCMP, nor anyone at INSET could determine any wrongdoing in relation to MAC is that there was no wrongdoing, and yet MAC still received a lengthy AFL from you containing vague allegations related to terrorism and other matters that are addressed later in this letter.
On July 22, 2021 the Government of Canada held a National Summit on Islamophobia. Prime Minister Justin Trudeau opened the summit by reiterating the government’s solidarity with Muslim communities across Canada and its commitment to combat and denounce Islamophobia and all forms of racism and discrimination.1 The Prime Minister specifically stated “There’s no question that there is work to be done within government to dismantle systemic racism and Islamophobia. Because from the Canada Revenue Agency (CRA) to security agencies, institutions should support people, not target them. We hear that.”2
We wish to note that on December 16, 2021, the ministerial mandate letters for the current Canadian government were provided to each minister from the Office of the Prime Minister. In this regard, attached at Schedule “7” is the mandate letter provided to Minister Lebouthillier (the “Mandate Letter”).
The Mandate Letter includes a statement asking that the Minister, “Provide support to the Taxpayers’ Ombudsperson for their study to address the concerns of charitable organizations, so that no equity-deserving organization is subject to bias.” In this regard, the Taxpayers’ Ombudsmen study was requested by Minister Lebouthillier following the Government of Canada’s National Summit on Islamophobia3, in order to conduct a systemic examination into issues expressed by certain Muslim-led charities4. As indicated in our letter of December 3, 2021, it was following the National Summit on Islamophobia the Government of Canada announced a grant of approximately $350,000 for the Charity’s “Ballers for Hope” program in relation to sports activities which the AFL has alleged are not charitable.
The concerns raised by Muslim-led charities, including MAC which was present at the summit, arose from the conduct of this audit, together with similar experiences from other Muslim-led charities.
Furthermore, the audit began at a time of political turmoil tainted with Islamophobia, such as the “barbaric cultural practises” hotline, anti-immigrant and anti-refugee discourse, and vilifying the Muslim Brotherhood, particularly by some within the former federal government. Today, many politicians who played an active role in either unconsciously or consciously promoting anti- Muslim debate have reversed course and apologised publicly. Some examples include former Conservative MP Tim Uppal, who was the spokesperson for the niqab ban as the Minister of State of Multiculturalism in the Harper Cabinet, and who has apologized for not pushing back at the time against his party’s culturally divisive policies.5 MP Michelle Rempel Garner apologized for her role in discriminatory policies during the Harper era as well and stated “the discrimination the Muslim community faces in Canada is real and must be stopped. If we are to maintain our peaceful pluralism, we must collectively take action to stop racism and hate in all its forms.”6 Others include former cabinet ministers Jason Kenney and Chris Alexander. While the political landscape that gave rise to Islamophobia in political speech and debate is being reversed, the AFL is not in line with the new mandate of the government and continues to rely on historical government positions.
Contrary to the comments noted above alleging that the Charity was not transparent with the CRA, before the CRA announced on December 8, 2015 that MAC would be the subject matter of an audit there were many attempts by the Charity and its legal counsel to communicate with the CRA and provide clarification to the spread of misinformation about MAC as noted above. Instead of engaging with the Charity, the CRA chose to adopt the misinformation that, “the Organization’s adherence to the Muslim Brotherhood ideology was the dominant theme about the Organization raised in the media”, and on this basis called for an audit, while accusing the Charity of not being transparent or forthright.
In this regard, while the AFL provides some background to the audit, it is important to provide additional context that is missing. As noted above, on December 8, 2015, the Charity received notice from the CRA indicating that the organization would undergo an audit. This is the first time MAC has been contacted for an audit from the CRA. In 2016, seven CRA officials came to MAC’s head office in Mississauga to retrieve documents and conduct interviews. At the head office the CRA officials interviewed MAC officials, collected documents, and reviewed accounting procedures.
The CRA officials were satisfied with what they had found and in fact praised the Charity for its cooperation and efficiency during the field audit. Two audit team members confirmed in a meeting that the T3010 and the petty cash fully reconciled and it was expressed how astonishing this was considering the amount of petty cash the organization manages. Following this feedback, the auditors who had supplied it were dismissed, and it became evident to the Charity that, despite the extensive controls and compliance the Charity had demonstrated, the audit team’s leadership was determined to produce results that fit a preconceived narrative, which was akin to the goal of the Project Sapphire probe in this regard.
The audit continued with the CRA visiting chapters of the Charity across Canada conducting interviews and data collection. The CRA auditors [Names Redacted] in different cities conducted interviews. Our comments concerning the audit “interviews” will follow.
CRA officials searched every office, room, closet and drawer in every MAC location, often without informing MAC representatives. They took photographs of all books and teaching materials. The CRA invested significant resources into the auditors [Names Redacted], who in the course of their duties were caught copying files from a MAC official’s computer without consent, for which they later apologized through correspondence as discussed further in this letter.
Members of the CRA audit team, [Names Redacted], also pressured MAC officials with administrative requirements that were not in regular practise. CRA officers also requested personal emails of several MAC employees and volunteers, which was not standard practise and cost MAC tens of thousands of dollars to vet personal information and communication subject to solicitor client privilege before handing over emails.
The MAC audit lasted thirteen months and was long and draining financially and otherwise. The charity has incurred over a million dollars in expenses as a result of the audit. It had a significant impact on the organization’s programming and general function. All of the CRA site visits were consistently cut down by at least one day because all of their document requests were prepared and organized for their arrival. MAC was transparent and thorough in its response and submissions.
At no point during the extensive audit or even after the audit did the CRA identify or raise any concern with regard to any of their requests not being fulfilled by MAC. To the contrary, MAC was praised repeatedly for being efficient and making the teams’ job easier. Despite the extensive series of interviews, the CRA did not ask for documents they perceived as missing or clarification on matters they felt were not consistent.
In total, over the course of the audit the CRA extracted large quantities of data, such as:
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The CRA downloaded over 1 million financial transactions from 2012-2015.7
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The CRA downloaded 181 Gb of email data. This accounts for 415,874 emails.
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27.5 Gb (96,485) of this email data belongs to the Executive Director Mr. [REDACTED]
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The CRA downloaded 63,532 files that include excel, word, pdf, power point, videos, and photos.
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This accounts for 746 Gb of data.
Despite MAC providing the CRA with every financial transaction, the CRA also conducted third- party financial records requests from Paypal and MAC’s Bank. This has contributed to de-risking and financial exclusion for MAC by financial institutions as an unintended consequence to the CRA’s audit practise, without any recourse for the charity. This has also resulted in multiple financial institutions raising concerns about the Charity and to further increase in scrutiny of the Charity as a consequence of the CRA having made them aware of the audit during the course of their request for information.
After these extensive field audits and massive extractions of data, it was not until five years later that the AFL was received. Given the above noted correspondences between FINTRAC and the RCMP, there have been no grounds for charges to be laid in relation to Canada’s anti-terrorism laws or any other matters under the Criminal Code of Canada, nor any grounds for the imposition of a certificate under the Charities Registration (Security Information) Act.
Notwithstanding the above, the AFL included numerous vague and suggestive references to terrorist financing and other equally serious findings that included:
274 uses of the word “appear”, with Page 94 having 8 uses of the word “appear”, including 5 times in one paragraph
223 uses of the word “may”
69 uses of the word “suggest”
29 uses of the word “apparent”
27 uses of the word “unclear”
6 uses of the word “potential”
4 uses of the word “unlikely”
In total the AFL has 631 uses of suggestive wording, which resulted in an average of 4 uses of suggestive wording on each page of the 151-page AFL.
Early in the audit, MAC’s Executive Director communicated to the CRA team that Charity’s goal was to utilise the audit to close compliance gaps and, if necessary, improve the organization’s policies and processes. Over the course of MAC’s existence, this has been the standard practise. The AFL has highlighted that in many instances MAC had previously taken steps to address compliance concerns even prior to the audit.
In this regard, as was noted in our correspondence of July 14, 2021, attached as Schedule “8”, which set out a proposed outline of terms for a compliance agreement without sanctions in order to begin negotiations to a close concerning the ongoing audit, there are many areas where the Charity has already complied with the Income Tax Act (Canada) (“ITA”), begun or is willing to improve with respect to compliance. However, given the above review of government correspondence, it is clear that the AFL is an attempt to use unfounded allegations of terrorism links, which no other security agency found actionable, to name and shame the Charity in the guise of an audit under the ITA. If any of those matters were true, it is likely that there would be grounds to revoke the charitable status of the Charity, as was the case with IRFAN-Canada which the AFL references 84 times despite the Commissioner of the RCMP raising no similar concerns about the involvement of the Charity and IRFAN-Canada. Instead, the AFL raises compliance concerns concerning the ITA in tandem with groundless matters related to anti-terrorism which are responded to in full in this response to the AFL.
As noted at page 4 of the AFL, as part of the audit, the CRA undertook a series of audit visits to interview key officials, visit the Charity’s centres and schools, and collect documentation on the Charity’s activities. Copies of the audit interviews were provided to the Charity on April 18, 2017 as “transcripts” of these interviews. The AFL indicates that some representations were made concerning the interview notes and states at page 4 that “…the CRA has considered these representations in our analysis and findings”.
For additional context, the Charity had requested that the meetings which now took place half a decade ago be recorded. This request was refused by the CRA. In this regard, copies of the audit notes were requested by letter from our office on February 1, 2017. As noted above, on April 18, 2017 Mr. [REDACTED] received a letter enclosing a CD containing copies of what is described as the “transcripts” of the audit interviews of each field visit.
On September 1, 2017, we provided a letter to the CRA which included preliminary concerns in relation to the audit interview transcripts and raised a number of clarifications attached as Schedule “9”. On September 11, 2017, we received a response attached at Schedule “10”, which agreed that in order to, “… eliminate further confusion over the use of the word “transcript” we will henceforth use the term interview notes,” thereby acknowledging that the notes did not have the force and effect of a transcript.
On December 21, 2018, we provided a further letter, attached as Schedule “11”, and indicated that while it was appreciated that use of the term “transcript” would no longer be used, a number of issues still required clarification. An additional submission was provided on February 20, 2019, attached as Schedule “12” which provided additional comments on the notes.
On March 11, 2019, CRA acknowledged our letter of February 20, 2019, but stated that,
“As noted in our letter of April 18, 2017, the CRA will not be making any modifications to the existing interview notes. The CRA will include the Organization’s representations in the audit file and consider them in our analysis. When an audit findings letter is issued, the letter will be fully sourced and will identify any interview notes that were used to arrive at our preliminary audit findings. The Organization will have an opportunity to provide representations to the CRA in response to the audit findings letter.”
However, when the AFL was issued on March 17, 2021, the audit interview notes were referenced extensively throughout the AFL. In fact, the very first footnote on page 2 of the letter refers to an audit interview that occurred in 2016, 5 years before the AFL was issued. The interview notes provided by the CRA were relied upon as primary evidence to support many allegations of the CRA.
In total, there are 143 references to the audit interviews notes. As admitted by CRA, these notes are not “transcripts”, but the AFL continues to treat them as such, notwithstanding that our prior communications have identified numerous issues related to their accuracy. Throughout the interview process, the Charity maintained its own notes of the meetings. After reviewing the CRA interview notes, MAC found significant errors, which were provided in part to CRA through our numerous communications. These errors include:
Statements that were never said;
Statements that were rearticulated to suggest responses that were not said;
Responses that include added verbiage that was not said;
Incorrect identification of people and projects; and
Responses documented for the wrong question.
While the audit interview notes were previously commented upon, the Charity has identified many mistakes, corrections, clarifications and has documented these in Schedule “13”. Given the CRA’s refusal to allow the interviews to be recorded, the CRA’s refusal to address the Charity’s concerns with significant errors in the notes at the time these concerns were raised, and the long timespan between the interviews and the final issuing of the AFL, the probative weight attributed to these interview notes which are referenced throughout the AFL is seriously in question and should not be relied upon in the AFL as being authoritative.
Pages 4 to 6 of the AFL discusses our correspondence related to solicitor-client privilege. In this regard, the AFL identifies our correspondence of April 10, 2017 attached as Schedule “14” as raising for the first- time concerns related to the extraction of emails during the site visits that occurred in 2016 to which the CRA responded on April 28, 2017.
The AFL then notes an almost two-year gap between our response on December 21, 2018 attached as Schedule “11” containing a USB key with copies of site visit email accounts that had been vetted for privilege. The CRA responded indicating that it agreed to verify it had not used any emails that might contain information that was protected by solicitor-client privilege and agreed to use the new email accounts provided by the Charity if additional analysis was needed. This recited exchange concluded with our letter of April 30, 2019 attached as Schedule “15”.
The CRA’s summary, though, of the history and facts as it relates to the solicitor-client privilege issue in the AFL is a sweeping oversimplification, and references only a portion of the relevant facts that suit the CRA’s predetermined narrative regarding MAC. The fact is that both the CRA and MAC know that MAC clearly asserted solicitor-client protection over the relevant documents and emails during the audit process, it was an identified issue from the beginning and the CRA knew that MAC would be asserting their rights with respect to solicitor-client communications (not that an overt, positive affirmation is needed). The fact is that the CRA chose not to return documents collected during site visits, and otherwise, which MAC had clearly communicated to the CRA contained privileged documents. Rather than returning the documents so a proper review could occur for privileged documents, the CRA simply, in effect, told MAC to “trust” that the CRA would not review any solicitor-client communications. This, of course, is at the very least illogical because for the CRA to identify any privileged documents, it necessitates at least some review by the CRA, breaking the confidentiality and privacy that is at the heart of solicitor-client privilege. The CRA’s conduct is not only antithetical to solicitor-client privilege and associated caselaw, but it threatens the foundational right of MAC to confidentially retain and instruct legal counsel.
As noted above, the CRA had been keenly aware from the beginning of the audit of MAC’s assertion of privilege over solicitor-client privileged documents. In several instances prior to a collection of documents from MAC by the CRA, there was an agreement with the CRA that ensured that MAC would be able to review email accounts and other documents prior to the CRA collecting them, so that privileged communications could be clearly identified, while allowing for the CRA to confirm the integrity of document collection broadly. In addition, the CRA expanded the scope of document collection as it related to the Audit Period, and after collecting an initial retrieval of documents from MAC initially (nearing terabytes in size), the CRA returned and directed the additional production of personal email accounts of a select number of volunteers and employees (the “Secondary Personal Email Account Scoop”).
The scope of the demand for documents was overly expansive, but at least in the example of the Secondary Personal Email Account Scoop, the directors of MAC were afforded the opportunity to identify and separate privileged documentation prior to the rest of the documents being produced to the CRA. The CRA would not recognize the foundational privilege of solicitor-client protected communication, however, in the other document “scoops” of giga or terabytes of other information. The issue of the amorphous scope, especially in terms of the relevant time period of the audit, which is unaddressed in the AFL, is closely tied to the examples of refusing to acknowledge and respect basic solicitor-client privilege.
In the AFL, the CRA states that it is transparent about how it reaches audit conclusions, and that it takes solicitor client privilege seriously. However, the AFL then goes on to state that, “…the CRA would review emails and other documentation outside the audit period if it pertained to something that occurred within the audit period. Such instances were rare, but the CRA felt it was necessary to include them as it showed a consistent pattern of activity that occurred during the audit period that either began before, or continued after, the audit period.”
However, based upon a review of the emails relied upon by the AFL at Appendix A, these instances were not rare and the Charity has identified many examples of where it is unclear how CRA obtained emails or used emails outside the Audit Period not to show a consistent pattern but rather to fit within a predetermined narrative. In this regard, the Charity has identified at least 17 examples where CRA has accessed information outside of the audit period to build assumptions or conclusions of non-compliance.
In several cases the CRA has accessed documents attached to emails. In many, if not all, of these cases the AFL relies upon unapproved, in draft, or work in progress documents. These are some problematic examples of how the CRA made “findings” based on information that is from outside of the Audit Period or not provided as part of the solicitor-client privileged email exchange:
The CRA states at page 50 that, “While the CRA recognizes that these statements were made after the Audit Period, we would advise that support for ECHO, ECCD, and the ERC is not charitable. Furthermore, the Organization appears to have failed to conduct the necessary due diligence in relation to these groups.” This is an example where the AFL identifies incidents unrelated to Charity after the Audit Period and retroactively applies them to the Charity to reach conclusions.
At page 64 of the AFL the CRA states, “The Organization’s records indicate it received a considerable amount of funding from QC before and during the audit period.” The CRA expands its search outside of the Audit Period to build a picture of, “considerable amount’’ of funding.
At page 101, the CRA accessed emails outside the Audit Period that were not provided to CRA and stated, “An additional 15 emails referencing staff budget approvals occurred after the Audit Period for the 2015-2016 and 2016-2017 budgets for some of the Organization’s schools.”
Also at page 101, the AFL states, “Budget submissions to the ID appear to have occurred on a more regular practise after the audit period, but the Organization has only provided documentation for some of the schools and not all of the Organization’s projects.” The Charity is not sure how the CRA has made this observation, as such data was not provided to the CRA.
At page 108, CRA states, “However, the CRA identified that OGS paid $3,490 to Ms. [REDACTED] in December 2015, and $19,544650 to Ms. [REDACTED] in December 2016 in relation to the international school.” It is not clear how the CRA had access to these financial transactions as this is outside of the audit period and financial transactions were not given to the CRA by the Charity for this period.
At page 137 CRA states, “Due to limited source documents available for review during the audit period, the CRA looked at the documentation maintained since the audit period, for 2016 and 2017 years.” It is unclear to the Charity how the CRA accessed these documents. They were not provided by the Charity.
Also at page 142 CRA states, “As detailed in section 1.5.2.2 above, the CRA identified two additional PayPal accounts belonging to MAC Islamic Center of Verdun (ICV) and the MAC Youth Montreal Chapter that were used during and after the audit period.” It is unclear to the Charity how the CRA accessed these documents. They were not provided by the Charity.
Finally, the Charity takes great exception to the AFL including copies of emails and newsletters in Arabic language without professional and accurate translations or being provided in the right context. The Charity takes even more exception to the CRA accessing Mr. Sharafeldin’s personal email without permission and through means unknown to the Charity or the owner of the email account.
The AFL on page 40 states “the CRA plays an important role in Canada’s national counter-terrorism strategy and as such it is incumbent on the CRA to review any instance where a charity’s resources may have been used in a manner contrary to public policy. Allegations of such conduct have been prevalent within the media prior to the beginning of the audit and such questions were to determine the validity of this reporting and to assist the CRA in understanding the Organization’s activities.” The CRA audit was clearly concerned with the negative media reporting in 2014 – 2015. The Charity was very aware of the false reporting at the time and had taken the appropriate actions to respond to the accusations.
Throughout 2014 there were a number of website blog posts or articles that were spreading misinformation about Canadian Muslim organizations, including MAC. The increase in this misinformation discourse was connected to a small number of Islamophobic individuals, including Marc Lebuis8 who operates Point de Bascule and is associated with the Toronto Sun and Rebel Media, and Syed Sohail Raza9 who is also associated with Point de Bascule, PEGIDA Canada and The Council of Muslims Facing Tomorrow, among other authors. Both these individuals are connected with Thomas Quiggin and a few others in a network of individuals who have actively spread misinformation as pseudo experts, bloggers and journalists. These individuals tend not to rely on accredited academic sources but on their own unsupported opinions that they then attempt to amplify by referencing each other as authorities.
As discussed earlier, in May 2014, Thomas Quiggin published a report titled “The Muslim Brotherhood in North America (Canada/USA).” This report made allegations against MAC and many individuals associated with MAC, among many other Canadian Muslim organizations. The report discusses many prominent Canadian Muslim leaders. The report warns its readers of possible Islamic infiltrations in Canada. Following the report’s publication, the fearmongering text was repeatedly quoted by right-wing and Islamophobic centers, bloggers and institutions. The Quiggin report defamed a number of community leaders. Some of these individuals filed a lawsuit against Quiggin. The Toronto Sun, which had published a story on the report, reached a settlement and removed the piece off its website.10
In November 2014, at the Standing Senate Committee on National Security and Defence hearing Syed Sohail Raza, Director of Muslims Facing Tomorrow, made accusations against NCCM and MAC suggesting that they play a role in radicalization.11 Between February and May 2015, there were a few more mentions of MAC at the Standing Senate Committee on National Security and Defense. Each statement cited either Point de Bascule, the Quiggin report, or unspecified media reports. The statements were factually incorrect (e.g. in one case an MP claimed that MAC’s charitable status had been “withdrawn.”) (attached as Schedule “16”)
On May 11 2015 at the The Standing Senate Committee On National Security And Defence hearing, Prof Lorenzo Vidino, director of the program on extremism at George Washington University and author of The New Muslim Brotherhood in the West (Columbia University Press, 2010), made the following statement: “The Muslim Association of Canada would be the first name that comes to mind. There are clear links there where you have prominent individuals that for 20 or 30 years have been involved in
Brotherhood groups both in Canada and in the United States. What used to be called CARE Canada, it’s the same thing. There are charities like Islamic Relief. Irfan is gone but it was part of that… If you look at these eight to ten organizations, you basically see that it’s always kind of the same people that are involved in them. That’s kind of the milieu.”12 According to the Ottawa Citizen article he further says: “While they don’t take orders from any Arab capital, they “are part of an informal network where you have strong links based on personal and financial connections, and at the end of the day what matters the most: ideology. They all embrace a certain world view.” 13
Following Vidino, on May 28 2015 the Senate Committee also invited Thomas Quiggin who repeated Vidino’s statement and said “Dr. Lorenzo Vidino, who is perhaps the world’s leading expert on the Muslim Brotherhood outside of the Middle East itself, recently testified at the Senate of Canada on May 11 of this year. His view, as he expressed it to the Senate, is that the Muslim Brotherhood has some eight to ten front groups in Canada, but the four best known ones are the Muslim Association of Canada, CAIR-CAN, otherwise known as NCCM, and Islamic Relief Canada. He identified IRFAN as the fourth, although of course they have been put out of business as of this year when they were declared a terrorist entity.”14
These statements were repeated in media articles or blog posts.
In January 2015 QMI and the Sun published a series of articles by Brian Daly that targeted MAC. They alleged that MAC had links to IRFAN-Canada and that it was named in an RCMP warrant.15 Brian Daly specifically alleged that IRFAN-Canada or MAC (unclear) “was named in a search warrant related to Project Sapphire, a probe into terrorist financing. Warrants indicate MAC sent nearly $300,000 in the 2000s to IRFAN-Canada, a group that raised millions for Hamas.”16 Some of these articles have since been removed by Postmedia after an internal investigation demonstrated these articles advanced false accusations without supporting evidence or adherence to professional standards in reporting as further discussed below and attached at Schedule “17”. As will be noted further in the response, the CRA audit is primarily based on and framed by the accusations in these articles.
In response to the Sun articles, MAC issued a statement denying these false allegations and followed-up with the RCMP inviting them to discuss any concerns by letter dated January 28, 2015, which was provided to CRA by our firm by email on February 25, 2015. No response was received. MAC issued an internal memo to its membership to set the record straight about the false allegations in the Sun articles. (attached as Schedule “18”) The RCMP has never taken action against the Charity. In a meeting later that year, the RCMP did not acknowledge any investigation against MAC and in fact requested that MAC work with them on several community engagement and refugee settlement projects. This meeting signaled a positive response to the letter and the RCMP has remained keen on working openly with MAC. In 2020 the RCMP Commissioner issued a letter regarding Project Saphire and the Sun article allegations as it relates to MAC and confirmed that MAC’s funds given to IRFAN-Canada were legal and legitimate and there was no wrongdoing.
It has always been MAC’s position that the Quiggin report on the Muslim Brotherhood was inaccurate and false. The accusations were baseless and without context. MAC denied the accusations and this was also reported in the media.17
These series of comments in the media and Senate hearings appear to have been an orchestrated campaign to defame MAC with false information, all originating from a network of few but vocal Islamophobes using their platforms to spread misinformation.
Many of the CRA’s allegations tie back to the narrative published by Brian Daly in the Toronto Sun articles. As you are aware, on April 23, 2021, the Charity provided the CRA a copy of a letter dated April 11, 2021 from Lucinda Chodan, Senior Vice-President, Editorial, Postmedia, attached as Schedule “17” stating that those articles were removed from Postmedia’s websites, removed from the Infomart electronic archive, and that Postmedia had requested that Google de-index the articles. The AFL largely focuses on the organization’s connections to other groups and its expansion, notably in terms of assets, in order to establish claims about the organization’s advancement of non-charitable purposes. A strong connection can be drawn between these subjects and the Toronto Sun articles headlined “Canadian Muslim group funnelled $300K to Hamas-linked charity” and “Muslim group linked to terror organization buying buildings across Canada,” which have since been removed.
Notwithstanding those articles, however, which were relied upon by the CRA and have since been taken down, the CRA’s media, social media and internet searches, which were the primary investigative approach used in the audit, should have identified the positive coverage about the Charity and this should have also been considered in the audit. The Charity has served in consultation with the Government of Canada on issues that pertain to policy and legislation. The Charity has also collaborated with leaders across major organizations to offer insight and voice to add depth and context to emerging realities in Canada.
In this regard, former Prime Minister Stephen Harper and the current Prime Minister of Canada Justin Trudeau have both recognised the Charity and its programs, as well as current and former provincial premiers and mayors. Below are some examples.
May 2021: Ontario Minister Monte McNaughton meets with MAC leadership to discuss getting the Skills Development Fund to diverse communities, funding education programs to train refugees to enter the workforce, and to enhance the manufacturing sector.18
May 2021: Liberal MPs meet with MAC leadership to celebrate Ramadan and discuss the 2022 Budget. Liberal MPs spoke about the impact MAC has had on Canadians coast to coast19
May 2021: Mississauga Mayor Bonnie Crombie recognised the great work of MAC Olive Grove School20
May 2021: Premier Jason Kenney meets with MAC to discuss Alberta Government and its work with the Muslim community21
April 2021: Toronto Mayor John Tory met with MAC22
October 2020: MAC met with Conservative Leader Erin O’Toole to discuss issues important to the Muslim community23
July 2020: Ontario Minister Monte McNaughton attended MAC Eid celebrations in London24
June 2020: MP Kelly McCauley recognised MAC in the legislature25
May 2020: Prime Minister Justin Trudeau recognised MAC for its important impact on Canada26
May 2020: Premier Doug Ford recognised MAC for its efforts during COVID1927
May 2020: Minister Bill Blair recognised MAC and its work for Canadians28
May 2020: Minister David Lametti acknowledged MAC and the Muslim community29
May 2020: Minister Ahmed Hussen recognising MAC30
April 2020: Ontario Premier Doug Ford and Minister Rod Philips organize a webinar with MAC31
February 2020: Premier Jason Kenney met with MAC to consult on government strategy on diversity and inclusion32
August 2019: Premier Ford Attends MAC Eid Festival33
July 2019: Premier Jason Kenney recognised MAC in the Alberta Legislature34
Members of the Charity’s leadership often contribute to public discourse through media outlets on issues pertaining to local and national policies, social issues that impact Canadians, and emerging areas of thought.
The Star: Coming together in faith and prayer to tackle poverty (Executive Director Sharaf Sharafeldin co-authored with Daniele Zanotti, CEO of United Way)35
Global News: Hate crimes are rising and Muslims are increasingly targets (Board Member Memona Hossain)36
The Star: As bushfires ravage Australia, Canadians must hold themselves accountable (Board Member Memona Hossain)37
Edmonton Journal: Affordable housing is more than just brick and mortar (Executive Member Issam Saleh)38
The Star: What Muslims expect from the Liberal government in 2020 (Executive Director Sharaf Sharafeldin)39
Ottawa Citizen: On International Women’s Day, #ChooseToChallenge gender discrimination in Canada – and everywhere (Abraar Principal Nimao Ali)40
CBC: Unique challenges faced by Black Muslim community warrant better understanding, attention (Abraar Principal Nimao Ali)41
National Observer: Activism gives Muslim youth a way to connect amid pandemic social isolating (Executive Member Sarah Attia)42
Ottawa Citizen: Faith-based mental health supports for students need a boost (Abraar Principal Nimao Ali, Maple Grove School Principal Rania Lawendy)43
Rabble: Ramadan, Passover and Easter: time for hope in the age of uncertainty (Executive Member Abdussalam Nakua)44
TheStar: ‘Our hearts can stay open’: how faith-based organizations are fighting hunger (Chapter Head Waqqas Shafique)45
TheRecord: Grassroots Muslim group at forefront of fighting COVID-19 hunger in Waterloo Region (Chapter Head Asif Manzoor)46
TheStar: For this year’s Eid festival, Muslim communities can connect online (Sharaf Sharafeldin)47
London Free Press: Muslim community has stepped up to help out amid virus crisis (Chapter Head Saboor Khan)48
Calgary Herald: Alberta mosques are setting a high bar in the COVID fight (Executive Member Issam Saleh)49
The Hill Times: Faith communities should be responding to MMIWG report (Chairman Nabil Sultan)50
The Rabble: Bill 21 — new battles, old wars (Executive Member Abdul Nakua)51
Al Ameen: The Pandemic Can Bring Us Together In Service—Let’s Start By Giving Blood (Chapter Head Mohammad Hassan)52
Policy Options: Islamophobia is on the rise during COVID-19 (Director Khaled Al-Qazzaz)53
The Spec: Community organizations play a critical role in getting vaccines to the most vulnerable (Director Khaled Al-Qazzaz)54
The Charity’s positive work and activities have been regularly reported on by Canadian media.
While the audit was triggered by the 2015 Sun articles, the AFL does not reflect any effort to look at the considerable positive media coverage, op-eds, and favorable political acknowledgement of the Charity from various parties at the federal and provincial levels of governments. It thus fails to properly contextualize the biased reporting that appears not only to have triggered the audit but to construct much of the predetermined narrative that appears in evidence throughout the audit process and the AFL.
8 http://islamophobiacanada.net/individual/marc-lebuis/
9 http://islamophobiacanada.net/individual/sohail-raza/
10 https://www.canadaland.com/postmedia-removes-story-following-lawsuit/
11 https://sencanada.ca/en/Content/Sen/Committee/412/SECD/11ev-51766-e
12 https://sencanada.ca/en/Content/Sen/committee/412/secd/52124-e
13 https://ottawacitizen.com/news/politics/beware-of-the-muslim-brotherhood-expert-warns
14 https://www.ourcommons.ca/DocumentViewer/en/41-2/SECU/meeting-72/evidence
15 https://web.archive.org/web/20171203230802/https://torontosun.com/2015/01/28/canadian-muslim-group-funnelled-300k- to-hamas-linked-charity-documents/wcm/2b8e3db1-fd84-4173-bb83-e8b3cce0cb6d ; and https://web.archive.org/web/20171104184126/https://torontosun.com/2015/01/29/muslim-group-linked-to-terror-organization- buying-buildings-across-canada/wcm/d9e2a616-ee8d-497a-a190-c8cd09796a16
16 Quote from the Original Sun Article that is now deleted
18https://twitter.com/MACNational/status/1390101303179845633 https://www.youtube.com/watch?v=uXHXy5uPGVs&t=436s
19 https://twitter.com/MACNational/status/1387549941950779403 https://www.youtube.com/watch?v=lvJBrK1nuIw&t=1917s
20 https://www.facebook.com/MACNational/posts/927698087801606 21https://twitter.com/MACNational/status/1388670954339983364 https://www.youtube.com/watch?v=KorIto2F4JE
22 https://twitter.com/MACNational/status/1385007989397073924 https://www.youtube.com/watch?v=wNuO_cAicrQ
23 https://twitter.com/MACNational/status/1318340030230941698
24 https://twitter.com/MonteMcNaughton/status/1289223082381586432
25 https://www.facebook.com/watch/?v=3249552655090992
26 https://www.youtube.com/watch?v=rTdEJ1_0Pc8&t=1s
27 https://www.youtube.com/watch?v=K4RD5nXfOOM
28 https://www.youtube.com/watch?v=jS0imADQq34
29 https://www.youtube.com/watch?v=YymP4ZF8rAc
30 https://www.youtube.com/watch?v=YRuTB76GbsQ
31 https://twitter.com/krasheedmpp/status/1251177993088704513 https://www.youtube.com/watch?v=EEFcRXIR8v0
32 https://twitter.com/LeelaAheer/status/1228108484131950592
33 https://twitter.com/MACNational/status/1160602791372632064
34 https://twitter.com/MACNational/status/1146268318891991042
36 https://globalnews.ca/news/5360274/muslim-hate-crime-canada/ 37https://www.thestar.com/opinion/contributors/2020/01/07/as-bushfires-ravage-australia-canadians-must-hold-themselves- accountable.html
41 https://www.cbc.ca/news/opinion/opinion-black-history-month-muslim-canadians-1.5897571?cmp=rss
We understand that this audit was conducted by the Review and Analysis Division of the Charities Directorate under its mandate of countering the financing of terrorism in the charitable sector as part of Canada’s obligation to comply with the Financial Action Task Force (FATF).
Recommendation 8 (R8) of the FATF requires Canada to apply measures using the risk-based approach to non-profit organizations, which includes registered charities and not-for-profit organizations, identified as “vulnerable to terrorist financing abuse” in order to “protect them from terrorist financing abuse.” The Interpretative Note to R8 (INR8) reiterates the need for countries to adopt a risk-based approach in the application of focused measures while upholding “the need to ensure that legitimate charitable activity continues to flourish.”55
Unfortunately, MAC’s experience of the CRA’s implementation of FATF R8 has not reflected the stated expectations of the FATF’s intention. INR8 lays out the steps governments are expected to take in implementing R8. These include conducting a national risk assessment to assess the risk of terrorist financing so that measures taken are proportionate to risk, and also reaching out to NPOs to conduct an additional risk assessment of the non-profit sector. Furthermore, the FATF recommends the adoption of the following measures to effectively implement R8:
a risk-based approach
measures that are proportionate to risk and targeted to NPOs at risk
measures that do not disrupt the activities of legitimate organizations,
remaining in line with states’ international human rights and humanitarian obligations, and
adopting and effective approach to indetify, prevent, and combat terrorist abuse of NPOs that includes “(a) sustained outreach, (b) targeted risk-based supervision or monitoring, (c) effective investigation and information gathering and (d) effective mechanism for international cooperation.”
First of all, in both the letter sent by the CRA in December, 201,5 informing MAC of the audit, the introductory sessions with the audit team, and in the AFL, there is no evidence that the CRA audit was prompted by a comprehensive risk assessment of the Charity to demonstrate a high risk of financing of terrorism by the organization. The AFL relied upon negative news articles that contained inflammatory and unfounded allegations as indicated in this response, which the CRA could have confirmed were false through its information sharing powers with the RCMP.
Although the audit discovered a number of technical non-compliance concerns, the resources expended on it and the sanctions threatened against MAC are completely out of proportion to the objective, particularly given that the audit did not uncover a single supported finding of terrorism-related financing. The audit caused severe disruption to the Charity’s activities, and the Charity has been placed effectively in limbo as a result of the audit remaining unresolved for now more than 6 years.
The FATF’s September 2016 Mutual Evaluation Report of Canada (2016 MER)56 documents that in Canada, “[i]n instances where prosecution is not deemed to be the best avenue to protect the public or human sources, or is not possible, a wide-range of disruption techniques is employed. Such techniques typically include: […] revocation of the charitable status of NPOs identified as having been used for TF purposes.” This has certainly been the case for the Charity in which the RCMP Project Sapphire investigation did not find any criminal activity by the Charity, around the time the RAD audit commenced. Since the release of the 2016 MER, the FATF has released Canada’s Fourth Enhanced Follow-up Report & Technical Compliance Re-Rating57 in October 2021, downgrading Canada’s compliance with R8 from compliant to partially compliant.
Above all MAC wishes that the CRA had chosen to reciprocate MACs transparent and open approach in relation to the audit.
We understand that this audit was conducted by the Review and Analysis Division of the Charities Directorate under its mandate of countering the financing of terrorism in the charitable sector as part of Canada’s obligation to comply with the Financial Action Task Force (FATF).
Recommendation 8 (R8) of the FATF requires Canada to apply measures using the risk-based approach to non-profit organizations, which includes registered charities and not-for-profit organizations, identified as “vulnerable to terrorist financing abuse” in order to “protect them from terrorist financing abuse.” The Interpretative Note to R8 (INR8) reiterates the need for countries to adopt a risk-based approach in the application of focused measures while upholding “the need to ensure that legitimate charitable activity continues to flourish.”55
Unfortunately, MAC’s experience of the CRA’s implementation of FATF R8 has not reflected the stated expectations of the FATF’s intention. INR8 lays out the steps governments are expected to take in implementing R8. These include conducting a national risk assessment to assess the risk of terrorist financing so that measures taken are proportionate to risk, and also reaching out to NPOs to conduct an additional risk assessment of the non-profit sector. Furthermore, the FATF recommends the adoption of the following measures to effectively implement R8:
a risk-based approach
measures that are proportionate to risk and targeted to NPOs at risk
measures that do not disrupt the activities of legitimate organizations,
remaining in line with states’ international human rights and humanitarian obligations, and
adopting and effective approach to indetify, prevent, and combat terrorist abuse of NPOs that includes “(a) sustained outreach, (b) targeted risk-based supervision or monitoring, (c) effective investigation and information gathering and (d) effective mechanism for international cooperation.”
First of all, in both the letter sent by the CRA in December, 201,5 informing MAC of the audit, the introductory sessions with the audit team, and in the AFL, there is no evidence that the CRA audit was prompted by a comprehensive risk assessment of the Charity to demonstrate a high risk of financing of terrorism by the organization. The AFL relied upon negative news articles that contained inflammatory and unfounded allegations as indicated in this response, which the CRA could have confirmed were false through its information sharing powers with the RCMP.
Although the audit discovered a number of technical non-compliance concerns, the resources expended on it and the sanctions threatened against MAC are completely out of proportion to the objective, particularly given that the audit did not uncover a single supported finding of terrorism-related financing. The audit caused severe disruption to the Charity’s activities, and the Charity has been placed effectively in limbo as a result of the audit remaining unresolved for now more than 6 years.
The FATF’s September 2016 Mutual Evaluation Report of Canada (2016 MER)56 documents that in Canada, “[i]n instances where prosecution is not deemed to be the best avenue to protect the public or human sources, or is not possible, a wide-range of disruption techniques is employed. Such techniques typically include: […] revocation of the charitable status of NPOs identified as having been used for TF purposes.” This has certainly been the case for the Charity in which the RCMP Project Sapphire investigation did not find any criminal activity by the Charity, around the time the RAD audit commenced. Since the release of the 2016 MER, the FATF has released Canada’s Fourth Enhanced Follow-up Report & Technical Compliance Re-Rating57 in October 2021, downgrading Canada’s compliance with R8 from compliant to partially compliant.
Above all MAC wishes that the CRA had chosen to reciprocate MACs transparent and open approach in relation to the audit.
At the outset, the Charity recognizes that not all of its practices have been in complete compliance with the ITA, which is not unusual for any registered charity Notwithstanding this, the Charity’s board of directors has always relied and acted in good faith based upon legal, tax, and accounting advice that they had received at the time with regard to the operations of the Charity in order to achieve what they had understood followed the CRA guidances and other regulatory compliance.
In this regard, the CRA’s policy “Guidelines for Applying Sanctions”1 (the “Guidelines”) states that, “[as] a general rule, the Directorate intends to start with educational methods to obtain compliance, and then move progressively through compliance agreements, sanctions, and the ultimate sanction of revocation, if necessary.”
While there are areas of compliance with the ITA by the Charity during the Audit Period where it can do better, those areas of non-compliance are limited and were not intentionally carried out by the board of directors of the Charity, who had legal and accounting advice throughout the Audit Period. As well, beneficiaries, donors, or funders of the Charity have not been adversely impacted in any way by the areas of actual non-compliance by the Charity.
Moreover, the Charity has always represented that it is willing to and has been taking active steps to bring itself into compliance with the ITA by being transparent with the CRA throughout the audit process.
Further, the Guidelines state that, “In cases of aggravated non-compliance, we will likely move directly to revoking the charity’s registration.” The Guidelines state that examples of such aggravated non- compliance are limited to where:
the organization has a previous record of serious non-compliance, and the current form of non- compliance is both serious and intentional;
the non-compliance has resulted in a substantial adverse impact on others (beneficiaries, donors, or funders), particularly where the organization cannot or will not remedy the harm done; and
the organization cannot or will not bring itself into compliance.
While there are acknowledged instances of non-compliance with the ITA by the Charity during the Audit Period, those areas of non-compliance were not intentionally carried out by the board of directors or senior management of the Charity. As such, it is submitted that the more appropriate remedy is to have the Charity enter into a compliance agreement with the CRA on reasonable terms, which the Charity is willing to do and abide by the terms therein, as opposed to revocation of charitable status or the imposition of penalties or suspension of receipting privileges.
As well, this was the first time that the Charity has been audited by the CRA. The Charity intends to be in full compliance with the requirements of the ITA. The Charity has demonstrated through the findings in the AFL that it has never disregarded non-compliance indicators. The Board has taken proactive steps to remedy any activities that are non-compliant.
Examples that can be noted throughout the AFL include:
The use of unapproved third-party payment processors was shut down, transactions were reconciled, and policies were reinforced;
The use of a PayPal account different than the Charity’s centrally controlled account was identified early on and remedied by the head office; and
Issuing of gift cards to employees not reported in T4s was identified and procedures were enacted to ensure that future reporting was corrected.
As well, the Charity has regularly sought professional advice on issues or on compliance matters. Specifically:
The Charity’s legal counsel advised on all capital purchases, on major vendor contracts, such as the SASCO solar panels, and on reputation matters including false media articles; and
The Charity’s external auditors were consulted on compliance matters. For instance, the Charity’s cost per pupil calculation was reviewed and approved by 3 different auditors including Deloitte LLP. Deloitte has prepared the T3010 for the Charity since 2014.
Submission - Responses
1.1 Advancement of an unstated non-charitable collateral purpose
Conclusion
This submission represents the Charity’s complete response to the areas of non-compliance alleged by the CRA during the course of the audit as they relate to the legislative and common law requirements applicable to registered charities.
The Charity has provided thorough responses supported by supporting documentation, as to why the Charity’s status as a registered charity should not be revoked or it should not be imposed a monetary penalty.
As noted above, the leaked documents and confirmation from the RCMP indicate that the Charity does not pose the security threat the AFL attempts to frame it as. The AFL is filled with descriptions of different reports and security analysis concerning different groups, but the AFL fails to find any substantive connection between the Charity and these groups other than baseless allegations founded on innuendo and guilt by association. The entire basis of the audit is that there were questionable articles and reports, which have since been retracted, and the leaked documents from FINTRAC, which indicate that there was no basis whatsoever for any investigation into the Charity. As a result, anything beyond a compliance agreement without sanctions would be an admission that the CRA is attempting to indirectly do what it cannot do directly by penalising the Charity for technical non-compliance under the ITA when the punitive measures are in reality a result of unfounded allegations and unjustified concerns.
We understand that the CRA has a mandate to effectively support national security and public safety priorities, this authority must be exercised without bias. The AFL dedicates many pages to describing alleged links to groups with concerns of terrorism and violence, when in reality the AFL does not actually demonstrate any connection to MAC in relations to these matters. The CRA has a responsibility to ensure false and empty accusations are not made in an AFL. As a result, the Charity is keenly aware that the AFL, when read by a specific audience, will promote Islamophobia and false allegations against the Charity. The CRA has approached this audit with a reckless indifference towards the truth and in doing so has endangered the Charity and the trust of the thousands of Canadians who rely on it.