Controlling against terrorist financing and money laundering

Charity trustees have responsibility for ensuring the adequacy of controls they have in place to prevent against loss of charity funds. These controls should be designed to prevent fraud and error. However, charity trustees should also consider, where relevant, the potential for loss through terrorist financing or money laundering.

The Commission will be producing specific guidance in 2018 to help charity trustees identify risk and introduce controls to prevent these matters.

The abuse of charities for terrorist purposes may take a variety of different forms, including exploiting charity funding, abusing charity assets, misusing a charity name and status and setting up a charity for an illegal or improper purpose. It may also include inappropriate expressions of support by a trustee for a proscribed organisation or designated person or entity.

Terrorism risks may arise when funds are raised and donations received, where grant funding is disbursed, and in the provision of services and other charitable activity.

Whatever the charity, its size, activities and areas of operation, those with strong governance arrangements, financial controls and risk management policies and procedures that fit their needs will be better safeguarded against a range of potential abuse, including terrorist abuse.

A a trustee you must act in your charity’s best interests, avoid exposing it to undue risk and make sure that its assets are used only to support its charitable purposes. You should, therefore:

• take reasonable steps to ensure your charity’s premises, assets, staff, volunteers or other resources cannot be used for activities that may, or appear to, support or condone terrorism or terrorist activities
• ensure that effective procedures are put in place and properly implemented to prevent terrorist organisations taking advantage of your charity’s status, reputation, facilities or assets
• take immediate steps to dissociate the charity from any activity that may give, or appear to give, support to terrorism or terrorist activity
• take all reasonable steps to ensure the charity’s activities are open and transparent so these cannot be misinterpreted
• exercise proper control over your charity’s financial affairs and safeguard its assetsA

Any person connected with a charity, whether a trustee, employee, volunteer, or beneficiary, should deal with the concerns of a charity’s possible links with terrorism responsibly. These must be reported immediately to the police and should also be reported simultaneously to the Commission.