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A Toronto-area organization that was suspended by charities regulators and fined $550,000 over concerns it may have funded armed militants in Pakistan has been awarded a federal summer jobs grant.

Although the Islamic Society of North America-Canada is serving a one-year suspension imposed by the Canada Revenue Agency, it was approved for 2019 Canada Summer Jobs funding.

Based in Mississauga, Ont., the group is to receive $25,787 from Employment and Social Development Canada to create five summer jobs, a department spokesperson said.

ISNA-Canada is one of only two Canadian non-profit groups currently serving suspensions, meaning it cannot issue tax receipts to donors.

During Question Period on Thursday, Employment Minister Patricia Hajdu said the government condemned violent extremism and would review the grant.

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“I’ve asked the department to look into, review this matter to ensure that the organization is in compliance with the terms and conditions of the program,” she said.

“If it’s found that the organization is not, then they will not receive reimbursement for that student.”

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She was responding to a question from the Conservative critic for the program, John Barlow, who said 1,500 community groups had been denied summer jobs funding and asked whether the prime minister would revoke the grant.

“Under your ministry, summer camps for children and faith-based charities have been deprived of summer job funding for not passing your government’s ‘values test,'” Barlow wrote in a subsequent letter to the minister.

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“Meanwhile, a suspended organization with possible links to terrorism has received a substantial federal grant.”

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The CRA sanctioned ISNA-Canada following an audit that alleged it had “failed to conduct any meaningful due diligence” when money was transferred to Kashmir, where Hizbul Mujahideen militants have been fighting Indian troops.

The auditors wrote that ISNA-Canada “may have, knowingly or unknowingly, provided the benefits of its status as a registered charity to support the efforts of a political party and its armed wing.”

“It is the CRA’s view that the society’s resources may have, directly or indirectly, been used to support the political efforts of Jamaat-e-Islami and/or its armed wing Hizbul Mujahideen,” according to CRA documents.

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Hizbul Mujahideen is a listed terrorist group in India and the European Union, the CRA added.

“ISNA-Canada is grateful to have been a recipient of this grant,” the group said in a statement Thursday.

“ISNA-Canada abhors and rejects terrorism in all its forms, and categorically denies any terrorist links. We remain politically impartial and are not linked to any political or extremist group.”

The statement said the CRA audit had dealt with activities a decade ago and that since then it had transformed into “a new organization.”

“The main reason for CRA’s decision is the fact that ISNA had issued tax receipts on behalf of other organizations and used its donations for non-charitable purposes,” it said.

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According to CRA documents, ISNA-Canada no longer operates overseas and has improved its governing structure and removed the official allegedly responsible for transferring the money.

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The summer jobs program, which funds employment for 15-to-30-year-olds, became controversial when the Liberal government imposed a so-called “valued test” aimed at excluding employers that opposed abortion.

But the department responsible for the program said national security and charitable status fell outside its mandate.

The government began receiving applications for 2019 job grants on Dec. 17, 2018 — three months after ISNA-Canada was suspended. The program provides funding for jobs up until Sept. 1, 2019. The ISNA-Canada suspension does not expire until Sept. 11, 2019.

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A department spokesperson said ISNA-Canada had also received job funding last summer and “on-site monitoring” was conducted in July 2018.

“During this monitoring, the department did not find any instances of breaches of the provisions in the agreement, nor cause for revocation of funding for this organization,” Christopher Simard said.

“This season, the department will conduct on-site monitoring of the project with the Islamic Society of North America-Canada to ensure that CSJ funding is used according to the terms and conditions.”

Pakistan is a “particularly elevated risk for terrorist financing activity,” according to the 2018 report of the Financial Transactions and Reports Analysis Centre of Canada.

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Stewart.Bell@globalnews.ca