How Bill C-2 Affects Your Charity: The Critical Role of Strong Bookkeeping

Canada's new Bill C-2, the Strong Borders Act, will change how charities handle donations and keep records. This law introduces strict rules about cash donations and new compliance requirements that could surprise many organizations.

The most significant change for charities is that accepting cash donations of $10,000 or more will become a criminal offence. Organizations must rethink their fundraising and financial management practices.

This isn't just about turning away large cash gifts. Charities need systems to track, document, and report all financial transactions properly.

We'll explore what these changes mean for your charity's daily operations. This includes donation processing and record-keeping requirements.

Understanding these new rules and strengthening your bookkeeping practices is about more than compliance. It protects your organization's reputation and helps you serve your community effectively.

What is Bill C-2?

Bill C-2 is An Act respecting certain measures relating to the security of the border between Canada and the United States and respecting other related security measures. The Canadian government introduced this legislation on June 3, 2025.

This bill is also called the Strong Borders Act. It aims to give law enforcement better tools to secure borders and fight organized crime.

Key Goals of Bill C-2

The legislation focuses on several important areas:

• Border security between Canada and the United States
• Combating transnational organized crime
• Stopping illegal fentanyl from entering Canada
• Cracking down on money laundering

What Makes This Bill Different

Bill C-2 is an "omnibus bill." This means it proposes changes to many different existing laws at once.

The bill would change several important pieces of legislation. These include the Customs Act, the Criminal Code, and the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Why This Matters for Charities

One major change affects how charities can accept donations. The bill would make it illegal for charities to accept cash donations of $10,000 or more in a single transaction or related transactions.

This rule applies to any organization that solicits charitable donations from the public. The goal is to increase transparency and prevent money laundering through charitable organizations.

The legislation passed its first reading and is now moving through Parliament.

Why Cash Donations Over $10,000 Are Risky

Large cash donations create serious challenges for charities beyond Bill C-2's legal restrictions. These transactions carry risks that can damage organizations.

Money laundering becomes a major concern with large cash gifts. Criminal organizations often use charities to clean dirty money.

When we accept big cash donations, we might unknowingly help illegal activities. Cash transactions make it extremely difficult to track where money comes from.

We cannot verify the donor's identity or income source easily. This lack of transparency puts our charity at risk.

Here are the main tracking problems:

• No paper trail from banks or financial institutions
• Hard to verify the donor's true identity
• Cannot confirm if the money came from legal sources
• Difficult to prove the donation was legitimate if questioned

The Canada Revenue Agency watches large cash donations closely. They want clear records of where money comes from.

Cash gifts over $10,000 trigger extra scrutiny from tax authorities. CRA concerns include:

• Potential tax evasion by donors
• Charity compliance with anti-money laundering rules
• Proper donation receipting procedures
• Adequate donor verification processes

Our reputation suffers when we cannot explain large cash donations. Donors, volunteers, and the public lose trust in organizations linked to suspicious money.

The new law makes large cash donations illegal, protecting charities from these dangers.

Implications for Charities

Bill C-2 creates new legal requirements that change how charities operate. The most immediate impact is the ban on cash donations of $10,000 or more in single transactions.

Most charities won't face major disruption. Large cash donations are rare in the sector.

Religious organizations and community groups that traditionally receive large cash gifts will be most affected. These charities must now redirect donors to banking systems for major contributions.

Governance Changes We Must Consider

Enhanced compliance responsibilities become mandatory under the new law. Charities must enroll with FINTRAC and follow stricter reporting rules.

Board members need to understand these new obligations. Failure to comply carries criminal penalties, not just administrative fines.

We must update our donation policies immediately. Staff training on cash handling limits is now essential for all fundraising activities.

Impact on Public Trust

The legislation aims to increase transparency in charitable giving. This could strengthen public confidence in legitimate organizations that follow proper procedures.

The criminal nature of violations creates reputational risks. Even unintentional violations could damage public trust in affected charities.

Donors may become more cautious about their giving methods. We need to educate supporters about acceptable donation processes under the new rules.

Organizations with strong financial controls will adapt more easily. Those with weak bookkeeping systems face greater compliance challenges and potential violations.

How to Stay Compliant and Protect Your Charity

Bill C-2 demands stronger financial controls from Canadian charities. We must adapt our practices to meet these new requirements.

Accurate bookkeeping forms the foundation of compliance. Every transaction needs proper documentation with clear paper trails.

We should record all donations, expenses, and transfers immediately. Digital bookkeeping systems help us track transactions automatically.

These tools reduce human error and create permanent records that auditors can review. Documenting donations becomes critical under the new rules.

We must record donor information, payment methods, and transaction amounts for every gift. Cash donations over $10,000 face new restrictions.

We need policies that guide staff on handling large cash gifts properly. Key documentation requirements include:

• Donor name and contact information
• Date and amount of donation
• Payment method used
• Purpose of the donation
• Receipt number

Regular financial reviews protect us from compliance issues. Monthly reviews help catch problems early before they become serious violations.

We should create review checklists that cover:

• Transaction accuracy
• Documentation completeness
• Policy adherence
• Unusual patterns or amounts

Training our staff on these new requirements prevents costly mistakes. Everyone handling donations must understand the compliance rules.

Board members need regular updates on our compliance efforts. They should review our financial controls and approve any necessary policy changes.

Strong internal controls reduce our risk under Bill C-2. We must treat compliance as an ongoing responsibility, not a one-time task.

Why Strong Bookkeeping Matters More Than Ever

Bill C-2 brings stricter compliance requirements and higher penalties for financial violations. Your charity needs precise financial records to avoid administrative monetary penalties that can reach $20 million and to meet new audit standards.

Accurate Tracking of Donations and Cash Flow

The new $10,000 cash payment prohibition affects how your charity receives donations. We must track every cash donation under this limit with detailed records showing the donor, amount, date, and purpose.

Your bookkeeping system needs to flag transactions approaching the $10,000 threshold. This prevents accidental violations that could trigger administrative monetary penalties.

Key tracking requirements include:

• Individual donor contribution limits
• Payment method documentation
• Transaction timing and frequency
• Source verification for all donations

Cash flow monitoring becomes critical under the mandatory compliance agreement regime. If your charity receives an administrative monetary penalty, you'll enter a compliance agreement with FINTRAC.

Strong bookkeeping helps demonstrate good faith compliance efforts. This can reduce penalty amounts since FINTRAC now considers your "ability to pay" when setting fines.

Ensuring Audit-Ready Financial Records

FINTRAC's expanded powers mean your charity could face surprise audits with little notice. We need financial records that auditors can access immediately without confusion or gaps.

The new "reasonably designed, risk-based and effective" compliance standard requires detailed documentation. Your bookkeeping must show how you identify and manage financial risks.

Essential audit-ready elements:

• Complete transaction histories
• Supporting documentation for all entries
• Clear audit trails for donations and expenses
• Regular reconciliation records

Digital bookkeeping systems work best for quick audit responses. Paper records slow down the process and increase audit stress.

Your financial records must prove compliance with the enhanced AML requirements. Poor bookkeeping can escalate violations from "serious" to "very serious" categories.

Risk Reduction and Legal Protection

Strong bookkeeping protects your charity from compliance orders and penalties. When FINTRAC issues a compliance order, detailed records show you're following required changes.

The mandatory compliance agreement regime means one violation leads to ongoing FINTRAC oversight. Good bookkeeping lowers the risk of follow-up violations and additional penalties.

Protection strategies include:

• Monthly financial reconciliations
• Donor verification procedures
• Expense categorization systems
• Regular internal audits

Your bookkeeping system should flag suspicious transactions automatically. This meets reporting requirements and shows proactive compliance.

Well-organized financial records protect against new criminal offences for providing false information. Accurate bookkeeping ensures you never mislead regulators during investigations.

Increased penalty amounts make bookkeeping errors extremely costly. We can't afford mistakes when fines reach millions of dollars for serious violations.

Why It's Time to Rethink Your Accounting Practices

The charity sector is changing fast. New rules like Bill C-2 require better record-keeping systems than ever before.

Old accounting methods can hurt your charity in several ways:

• Slow donor tracking
• Poor audit preparation
• Missing compliance requirements
• Wasted time on manual tasks

Technology offers solutions, but people still matter most. We need staff who understand both modern tools and charity rules.

Modern accounting practices help charities in key areas:

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The timing is perfect to upgrade our systems. We shouldn't wait for problems to force change.

Strong bookkeeping protects our charity's future. It helps us respond quickly to new rules and keeps donors happy.

Clear financial records make audits easier. When investigators ask questions, we can answer fast with proper documentation.

At Charity Accounting Firm, we help Canadian nonprofits navigate changes like Bill C-2 with clear, CRA-compliant systems. Our bookkeeping services cover donation tracking and audit preparation to keep you ahead.

We must move beyond traditional practices now. Better accounting isn't just about numbers – it's about protecting our mission and serving our community.

Final Thoughts

Bill C-2 brings big changes to how Canadian charities handle cash donations. The $10,000 limit is criminal law, not just a suggestion.

We recommend taking action now, even before the bill passes. Strong bookkeeping systems protect your charity from compliance issues and legal risks.

Consider these immediate steps:

• Update your donation policies to address cash limits
• Train staff on new requirements and procedures
• Review your record-keeping systems for accuracy
• Establish clear protocols for large donations

The regulatory landscape is changing rapidly. Charities that prepare early will have a major advantage.

Peace of mind comes from preparation. When you have solid financial systems, you can focus on your mission instead of worrying about compliance.

Your donors trust you with their contributions. Strong bookkeeping honours that trust and protects your organization's reputation.

We've seen many charities struggle with regulatory changes because they weren't prepared. Don't let that happen to your organization.

Start strengthening your financial processes today. Investing in proper bookkeeping pays off with less stress, better compliance, and stronger donor relationships.

Ready to strengthen your charity’s financial management? Partner with us for expert bookkeeping tailored to Canadian nonprofits. Learn more about the importance of charity bookkeeping and how we can help.

Frequently Asked Questions

Many charity leaders have questions about Bill C-2's cash donation limits and compliance requirements. The new rules create specific obligations for financial record-keeping and transaction reporting.

What is the Strong Borders Act summary?

The Strong Borders Act focuses on three main areas. It aims to secure the Canada-U.S. border, fight organized crime, and stop illegal financing.

The bill includes immigration changes that affect refugee claims and temporary residents. It also gives politicians new powers to cancel permits and residency status.

For the charity sector, the key change is the $10,000 cash donation limit. This rule applies to single transactions and related transactions that total $10,000 or more.

What steps should charities take to ensure compliance with the amendments introduced by Bill C-2?

Start by reviewing your current donation processes. Check how you handle cash gifts and document these transactions.

Set up clear policies for cash donations under $10,000. Train staff to recognize when multiple smaller donations might be related transactions.

Update your donor communication materials. Let supporters know about payment options like cheques, e-transfers, and wire transfers for larger gifts.

Create a system to track and report cash transactions. This helps you stay below the legal limits and maintain proper records.

Can you describe the potential penalties for failing to meet the standards set by Bill C-2?

The bill states that accepting prohibited cash donations is an offence. Specific penalties are not clearly outlined in the available information.

The Minister of Public Safety mentioned stricter enforcement of penalties for illicit fundraising. This suggests the government plans to take violations seriously.

We expect more details about fines and consequences as the bill moves through Parliament. Charities should prepare for significant penalties.

What are the best practices for maintaining strong bookkeeping in light of Bill C-2's provisions?

Document all cash donations with detailed records. Include donor information, amount, date, and purpose of the gift.

Create a tracking system for cash transactions throughout each day. This helps prevent accidentally exceeding the $10,000 limit through multiple donations.

Implement daily cash reporting procedures. Staff should record transactions immediately and reconcile totals at the end of each day.

Set up alerts when cash donations approach the $10,000 threshold. This gives you time to suggest alternative payment methods to donors.

Keep detailed records of all financial transactions, not just cash. Strong bookkeeping practices help during any government reviews.

How will Bill C-2 change the way charities need to handle audits and financial reviews?

Auditors will likely focus more on cash transaction controls and documentation. They will want to see clear policies for handling large donations.

Auditors will pay closer attention to your internal controls around cash handling. Your bookkeeping system must show how you prevent prohibited transactions.

Financial reviews may include specific testing of cash donation limits. Auditors will check that you are properly tracking related transactions.

You will need to provide clear evidence of compliance with the new cash limits. Documentation requirements will become more stringent.

Regular internal reviews of cash handling procedures will become essential. These reviews help you identify potential issues before external audits.