In addition to Canada's current role of building and training local and regional security forces, the Commons finance committee wants the government to target ISIL's administrators, financial collectors and distributors.
In a report tabled Thursday, the MPs also urge the government to consider expanding the investigative capacities of the RCMP and other Canadian security agencies in order to ensure that they can address terrorist financing.
They recommend the RCMP set up a specialized and dedicated terrorist financing unit within the force.
In addition, the committee says the Canada Revenue Agency should be encouraged to work more closely with charities to ensure their compliance with anti–terrorist financing laws.
The Canadian Security Intelligence Service told the committee that ISIL raises funds through activities in Syria and Iraq including selling oil on the black market, taking over banks, extortion, kidnapping and taxing economic activity in the areas it controls.
"In CSIS's view, these diverse fundraising methods and complex financing networks make it difficult to investigate terrorist financing and to enforce related laws," the report says.
The opposition New Democrats support the majority report, but argue in a supplementary opinion that the government has fumbled the fight against terrorist financing.
The NDP says the federal revenue agency's anti-terrorism budget has remained stagnant for years, even as the Conservatives found $13.4 million for the agency to audit charities — including many prominent environmental organizations.
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