sorry to say that it is a little bit more complicated. I am a dutch native speaker. Thinking about the canals of Amsterdam we would certainly say :gracht or grachten (plural). And nowadays the water is so clean that one can swim in it, but that is only a modern development. We also use the word: "Kanaal" but more for canals that are still used for commercial transport like the Amsterdam-Rijn Kanaal. swimming there would be dangerous because of the fast moving big ships. https://nl.wikipedia.org/wiki/Amsterdam-Rijnkanaal So water with houses on both side is a : gracht: like the herengracht. https://nl.wikipedia.org/wiki/Herengracht_(Amsterdam) onterwise we speak about a Kanaal.
canal = kanaal, canals = kanalen.
Channel also can have a geographical meaning http://en.wikipedia.org/wiki/Channel_%28geography%29
The Channel (between France and England), which obviously is a channel, is called het Kanaal. Though I believe that in Dutch a channel, like the Channel, is referred to as a "zeestraat" or "zee-engte" and not as a "kanaal". That the Channel is called het Kanaal is probably a result of the English name as in Dutch a "kanaal" typically refers to a "canal".