The Canada Revenue Agency was restricted in sharing information about charities suspected of terrorist financing, years after it was mandated to screen those groups, the Air India inquiry heard on Wednesday.

Donna Walsh of the CRA said her agency had no legislative authority to share information about the cash flow of suspicious charities with FinTRAC, the government agency that monitors Canada's financial system.

"Information that CRA provided to CSIS and the RCMP could not be used in their own investigations," Walsh said. "Its use was restricted to the administration and enforcement of CRSIA," referring to the Charities Registration (Security Information) Act, passed as part of the Anti-terrorism Act after the attacks of Sept. 11, 2001.

"These problems were addressed with the passage of Bill C-25 last December," she said.

One of the inquiry lawyers, Roger Bilodeau, wanted to know why it took so long to get information flowing after CRSIA was passed.

"With any new legislation, there is a period of some maturation, and some working out of how it works and whether it works, and I think that's what happened in this case … so it took a while," Walsh said.

The public inquiry into the investigation into the 1985 Air India bombing has moved into a new phase and is now focusing on why there have been no convictions under Canada's terrorist financing laws.

John Major, the inquiry's commissioner, let it be known on Monday that he doesn't think Ottawa is giving police and intelligence agencies the money they need to stop extremists from fundraising in Canada.

Major was delving into figures compiled by FinTRAC. In 2005, The agency reported it had identified $206 million in transactions that might be connected to terrorism.

Of the 329 people on Air India Flight 182, 280 were Canadian citizens and 82 were children. The bombing brought down the plane over the Atlantic Ocean off the west coast of Ireland.

A separate luggage bomb destined for a second Air India flight killed two Japanese baggage handlers at Tokyo's Narita airport.

Talwinder Singh Parmar, the suspected mastermind of the plot, was arrested in November 1985 on weapons, explosives and conspiracy charges, but the charges were dropped for lack of evidence. He died in India in 1992 in what officials said was a shootout with police.

Two other men, Ripudaman Singh Malik and Ajaib Singh Bagri, were acquitted of all charges in 2005 after the costliest investigation and prosecution in Canadian history.

Bomb maker Inderjit Singh Reyat was imprisoned for manslaughter in a 2003 plea bargain.