How to check if a list is blank and then take action based on the result.

You may rely on Understanding query evaluation and query folding in Power Query - Power Query | Microsoft Learn instead of using native query.  Power Query generates SQL in background, you may use M-script only.   In your case it could be

let
    lstFund = {"a", "b"},
    lstFY = {2024},
    Source = Sql.Database("SQL5200", "Data"),
    GetData = Source{[Schema="dbo",Item="JRNL_CA"]}[Data],
    SelectColumns = Table.SelectColumns(
        GetData,
        {"REC_NO", "FUND_CD", "SFUND_CD", "UNIT_CD"}
        ),
    
    FilterTable =
        if List.Count(lstFund) > 0
        then  Table.SelectRows(
            SelectColumns,
            each List.Contains(lstFund, [FUND_CD])
                and List.Contains(lstFY, [FY_DC])
            )
        else SelectColumns
in
    FilterTable

It's easy to break query folding, you may check on each step from right click menu if native query was generated till this step or not.

For the above script generated sql (which works directly on server) will be like

select [_].[REC_NO],
    [_].[FUND_CD],
    [_].[SFUND_CD],
    [_].[UNIT_CD]
from 
(
    select [REC_NO],
	[FUND_CD],
    	[SFUND_CD],
    	[UNIT_CD]
    from [dbo].[JRNL_CA] as [$Table]
) as [_]
where ([_].[FUND_CD] in ('a', 'b')) and ([_].[FY_DC] in (2024))

but in most cases you may not care which sql was generated.