Checklist: protecting your charity against terrorism financing

Meet governance standard 5: duties of responsible persons

Summary: Charities must take reasonable steps to make sure that responsible persons are subject to, understand and carry out the duties set out in this standard.

Does your charity equip its responsible persons so they understand the charity’s unique risks, including the terrorism financing risks in the locations where your charity operates?

Charities must make sure that their responsible persons are meeting the duties as set out in governance standard 5. This includes making sure they understand the responsibilities that they are taking on as part of their role within the charity.

There are certain reasonable processes that a charity with overseas activities will need to have in place to make sure that their responsible persons can meet their duties.

Charities will all face risks that they need to manage, however those charities that operate overseas will often face risks which have more significant impacts, for example when considering occupational health and safety for staff working in warzones or where providing support in jurisdictions where there are well established terrorist groups or known corruption.

Steps you can take

To make sure that the charity’s responsible persons act with the expected degree of care and diligence the charity should take steps to:

  • understand the types of risks associated with their activities
  • manage those risks including the risk of accidentally being a channel for terrorism financing and
  • communicate all of this to their responsible persons. 

Questions to ask

  • Does your charity review it governance arrangements, financial controls, reporting and risk management policies and procedures?
  • Does your charity have a risk register to identify and monitor risks in relation to terrorism financing?
  • Do your charity’s responsible persons consider the risks faced by your charity and take steps to manage those risks?

Does your charity have financial controls that promote transparency and accountability?

Make sure appropriate controls are in place

When sending money overseas, charities may face particular risks of their charitable funds being diverted or otherwise misused, even if they are working with a local organisation which has similar charitable purposes. The ways an overseas charity will reduce this risk will vary according to its particular circumstances, such as its size, the sources of its funding, the nature of its activities, as well as the needs of the public. However, it will be necessary to have appropriate controls.

Being confident that funds are sent through the appropriate channels includes making sure that when your charity is not using the formal banking system, any alternative remittance service providers they use are registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) on the Remittance Sector Register.

AUSTRAC monitors the risk of money laundering, terrorism financing or the financing of people smuggling for those remittance service providers on the Remittance Sector Register.

Overseas aid and development organisations
A number of non-government aid and international development organisations are members of the Australian Council for International Development (ACFID), which is a peak body. All ACFID members sign up to the ACFID Code of Conduct (the ACFID Code). The ACFID Code promotes good practice and aims to improve international development outcomes and increase stakeholder trust by enhancing transparency and accountability of the members. Even if your charity is not a member of ACFID, complying with the ACFID Code of Conduct is a good way of promoting good practice and good governance.

Questions to ask

  • Does your charity have strong additional controls and audit trails to protect your charity’s funds and show how and when they were used?
  • Does your charity have appropriate delegations and separations of authority over the collection, handling and depositing of cash and the issuing of receipts?
  • Does your charity transfer money using normal banking mechanisms or through an alternative remittance service provider?
  • Does your charity check if its remittance service provider is registered with AUSTRAC?

Steps you can take