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Charities urged to report suspicious donations

25 Jun 2021 / regulation Print

Charities urged to report suspicious donations

Charities that receive suspicious donations should make a report to Revenue, a Charities Regulator webinar entitled ‘Protect Your Charity’ heard this week (23 June).

It was clearly spelt out that those charities with strong governance codes, risk management policies and procedures, and good financial controls, would be better protected against a range of potential abuses, such as money-laundering or the financing of terrorism.

Minutes

Trustee meetings should always have minutes kept, as a proper record of discussions and decisions made, the webinar heard.

Thomas Mulholland (Charities Regulator director of compliance and enforcement) stressed that trustees were responsible for all decisions of the charity.

It would not be acceptable for a charity to accept an anonymous donation of €10,000 without knowing its source, he added.

Money laundering

“You have to be sure that the source of those funds is not criminal, or money-laundering,” he said.

“It’s up to the charity to put procedures in place to make sure donations do not come from a criminal source,” he said.

Neville McCormack, of the Garda Síochána financial intelligence unit, said that illegally sourced funds were moved into the legal economy through cash, accounts and crypto-currency.

He said that, while money-laundering had a profit motive, the financing of terrorism was ideological, and concerned with the promotion of ideas.

McCormack added that protecting the NGO sector from terrorist abuse was a critical component of the global fight against terrorism. Charities have a risk profile, in that funds may be diverted through fraud.

He spelt out the requirements on non-profits under the Criminal Justice (Money Laundering and Terrorist Financing) Act 2010, and the dangers of misapplied charity donations.

Charities can be misused and exploited, he said, and if trustees are living abroad, they may not provide sufficient oversight and control.

Conduits of terrorist financing

Terrorist organisations may pose as legitimate entities, or exploit legitimate entities as conduits of financing. 

McCormack added that there was a risk relating to charitable services operating in close proximity to an active terrorist threat in areas of conflict.

Money could be used for recruitment, travel, acquiring of weapons, or providing logistical support, he said. 

He added that self-regulation and internal financial controls were crucial in providing direct oversight of charitable endeavours.

Remittance systems

Trustees should be aware that the use of cash or alternative remittance systems is always a risk.

Any information that would provide material assistance to a money-laundering or terrorist-financing investigation should always be reported to gardai.

One case was cited of a returnee from Syria, who falsely presented himself as an agent of good works delivering humanitarian aid.

Charities should always know where their money is going, and background checks should be run on both employees and trustees.

Mr Mulholland said that money was what made the headlines in charity governance.

Financial issues can have a detrimental effect on the internal functioning of a charity, on fund-raising, and can even have a knock-on effect on the charity sector as a whole.

Warning signs of a badly run charity include a lack of contact details, and failure to file an annual report with the Charities Regulator.

Gazette Desk
Gazette.ie is the daily legal news site of the Law Society of Ireland