Proposed amendments to federal anti-money laundering legislation could soon change how charities and non-profits receive and manage cash donations.
Introduced by the federal government, Bill C-2, also known as the Strong Borders Act, proposes significant amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (the “Act”).
While intended to curb financial crime, these measures could create real-world compliance challenges for organizations that rely on cash fundraising methods, including community events, collection plates, and volunteer-led campaigns.
With consultations underway and Bill C-2 moving through Parliament (first reading on June 3, 2025, and second reading in progress), now is the time for charities and non-profits to understand the implications, prepare for stricter rules, and adapt internal processes accordingly.
Two key measures in Bill C-2 that will impact charities and non-profits
Bill C-2 proposes two major anti-money laundering measures that will affect charities and non-profits:
- a broad prohibition on cash transactions of over $10,000; and
- restrictions on third-party cash deposits accepted by banks.
Prohibition on large cash donations
Bill C-2 proposes adding the following new provision to the Act:
77.5(1) Every person or entity that is engaged in a business, a profession or the solicitation of charitable financial donations from the public commits an offence if the person or entity accepts a cash payment, donation or deposit of $10,000 or more in a single transaction or in a prescribed series of related transactions that total $10,000 or more.
The proposed punishment for an organization that accepts a large cash donation in violation of this provision is a fine (of an unspecified amount) upon summary conviction, or a fine of not more than three times the amount of the donation accepted upon conviction on indictment.
Although the proposed new subsection 77.5(1) specifically refers to “charitable” donations, the Department of Finance clarified during consultations with representatives from the non-profit sector that the policy intent is for the restriction to apply to all cash donations, including those made to non-charitable entities (e.g., non-profits).
While opportunities to launder funds through donations are limited (particularly in instances where a donation receipt is not issued), the Department of Finance suggested that exempting certain sectors or organizations could make them more attractive to money launderers and therefore potential targets for increased criminal activity.
Certain sub-sectors of the charitable and non-profit sectors deal frequently with cash donations. For example, small charities and non-profits may carry out cash fundraisers (such as bake sales), and places of worship often collect cash donations from their congregations. It is possible that the cumulative amount of cash collected from multiple donors in these scenarios could exceed $10,000.
The Department of Finance advised that the intention is not for these scenarios to be caught under the prohibition on “a prescribed series of related transactions that total $10,000 or more.” Instead, this prohibition is meant to capture situations where it is obvious that a person is providing cash in multiple instalments in a deliberate attempt to avoid triggering the $10,000 threshold.
The details of what constitutes a “prescribed series” of transactions will be set out in regulations. It is not yet clear what will be expected of charities and non-profits to verify that cash donations come from multiple donors and do not constitute a prescribed series of transactions.
Of course, alternatives to cash donations that leave a paper trial (including payments by cheque, credit card, debit card, wire transfer, e-transfer, etc.) will continue to be permitted, regardless of the amount.
Restrictions on third-party cash deposits
Bill C-2 also proposes a restriction on third-party cash deposits to be implemented by deposit-taking institutions (i.e., banks). The proposed provision is as follows:
9.2.1 Except in prescribed circumstances, every entity referred to in paragraph 5(a), (b), (d), (e), (e.1), (f), or (l) is prohibited from accepting cash deposits into an account from a depositor who is not the holder of the account or authorized to give instructions on the account.
This means that a bank will be required to refuse any attempted deposit by an individual who has not been explicitly authorized to make any cash deposits (regardless of the amount) into the account of a charity or non-profit. This includes donors as well as employees or volunteers who have not been pre-authorized. For clarity, this restriction will not apply to non-cash deposits (e.g., payments by wire transfers, e-transfer, etc.).
Concluding thoughts
While the anti-money laundering policy justification for these proposed measures is clear, many charities and non-profits will face the added administrative burden of ensuring they do not break the law when accepting certain donations. This is especially true for charities and non-profits that customarily collect cash donations from various donors without necessarily verifying the source of each donation. If and when these measures come into effect, charities and non-profits will also need to ensure that bank authorization is provided to any individual or entity that may make cash deposits into their bank accounts.
Our Charities and Not-for-Profit Group is actively monitoring Bill C-2’s progress through the legislative process and its potential impact on fundraising, banking practices, and organizational compliance. Connect with a member of our team to assess your current practices, understand your obligations, and develop a compliance strategy tailored to your mission.
