Released: March 2018

This guide is intended to help people in charities understand and manage risks involved in operating overseas, and their obligations to the ACNC.

Overview

Charities that work overseas must be able to identify and manage risks, handle money safely and protect staff and beneficiaries. Overseas activities are often harder to monitor than activities at home and charities may be exposed to greater risks as they may work in areas with:

  • political instability or conflicts
  • inadequate services and infrastructure
  • presence of terrorist or other criminal groups and activities
  • inadequate financial systems and oversight
  • different cultures, practices and employment rules.

If your charity operates overseas – or intends to – it must have strong policies, processes and controls to mitigate the risks it may face overseas. When applying for registration with the ACNC as a charity, you can expect questions about your charity’s overseas operations and governance.

Clear policies and processes for overseas activities will help your charity demonstrate that it has taken appropriate steps to safeguard its funds, assets, staff, and beneficiaries.

Even when it is working through overseas partners, agents, or contractors, your charity is responsible for ensuring that all aspects of its operations are conducted in accordance with the ACNC’s Governance Standards.

Your charity will be able to better mitigate risks that come with operating overseas if it:

  • can demonstrate a clear understanding of the specific risks of operating in each location overseas
  • has clear policies and procedures for overseas operations (financial management policies and procedures for checking partner organisations)
  • develops clear project plans explaining how it will implement, monitor and evaluate programs, and mitigate risks
  • regularly monitors and evaluates its overseas operations to ensure resources are only being used for its charitable purposes.

The ACNC encourages charities to review the information about governance practices featured on the ACNC website and to research other resources and practices for good governance of overseas operations.

Use the following checklist and guidance to help identify and manage the risks and challenges of operating overseas, and to ensure your charity complies with ACNC Governance Standards and other ACNC obligations.

Assessing risk

  • Does your charity have a detailed project plan for its overseas activities?
  • Does your charity have a risk assessment policy for overseas operations?

Monitoring funds

  • Do your charity’s Responsible Persons maintain oversight of overseas operations, including how the charity spends funds and how it carries out activities?
  • Does your charity verify that the funds or other assets it sends overseas are used for the intended charitable purposes?
  • Does your charity keep up-to-date financial and operational records, including records of its overseas transactions, activities and the details of third parties involved?
  • Do your charity’s Responsible Persons regularly review the charity’s financial and operational records?

Working with overseas partners

  • Does your charity verify the credentials and reputation of its overseas partners and check that they have the capability to undertake the work required of them?

Protecting staff and beneficiaries

  • Does your charity have policies and procedures to protect vulnerable beneficiaries, as well as the health and safety of its staff and volunteers?

Protecting against terrorism

  • Do your charity’s Responsible Persons ensure the charity does not provide support to individuals and organisations associated with terrorism, or that contravene Australian sanctions laws?
  • Does your charity have a policy on what to do if someone notices any suspicious activity?

Protecting against fraud and financial crime

  • Does your charity have procedures for sending funds and assets overseas (with controls and clear financial delegations) that promote transparency and accountability?

Governance Standard 1 requires a charity’s funds to be used for its charitable purposes and in accordance with its character as a not-for-profit.

The Responsible Persons of a charity have a duty to ensure that their charity is working towards achieving its charitable purposes, both inside and outside Australia.

It can be easy for charities to lose sight of exactly how their funds are being used overseas. It is essential to carefully plan, monitor and evaluate activities to check that your charity’s contributions are used for the intended charitable purposes.

Even when it is working with third parties (partner organisations or agents, for example), your charity is responsible for ensuring that all overseas operations work towards its charitable purposes.

Questions to answer:

Does your charity…

  • have a formal assessment process for approving an overseas project?
  • monitor and evaluate its activities to make sure they are carried out as intended?
  • require proof of how money has been spent?
  • keep financial records of income, expenses and financial transactions relating to overseas operations?
  • receive regular evaluation and acquittal reports for overseas programs to ensure that funds are being used for their intended charitable purposes?
  • visit the sites of its overseas projects so it can monitor their progress to ensure that funds are being used for their intended charitable purposes?
  • know who uses its overseas facilities and for what purpose (for example, its office or meeting space, name, bank account, credit cards, website, computer system, telephone)?

Working with partners?

Then also answer these questions:

Does your charity…

  • have clear written agreements with third parties, in Australia and overseas, to ensure projects are consistent with the charitable purpose and funds are going to the charitable purpose?
  • check that agreements are being followed?

Steps you can take

  • Develop ways to monitor progress of the charity’s overseas operations and partners to ensure funds are used for charitable purposes.
  • Visit partner organisations overseas to ensure projects are charitable and funds are being used for charitable purposes as intended.
  • When working with a partner, sign a formal agreement that sets out the expectations of each party.

Governance Standard 2 requires charities to take reasonable steps to be accountable to their members.

If your charity is transparent to members about its overseas operations, members will be able to understand the charity’s operations and raise questions about its governance.

Overseas aid and development organisations

Some non-government aid and international development organisations are members of the Australian Council for International Development (ACFID). 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 and increase trust through member transparency and accountability. Even if your charity is not a member of ACFID, complying with the ACFID Code is a good way of ensuring good practice and good governance.

Questions to answer:

Does your charity…

  • have an annual report which outlines its overseas activities and financial position?
  • report on the outcomes of its overseas projects?
  • hold annual general meetings which give its members an opportunity to raise concerns about its overseas operations?
  • explain changes in its overseas operations to its members?
  • submit its Annual Information Statements to the ACNC with details of its overseas activities, the countries where it operates or sends money, the beneficiaries it helps, and its financial activity?
  • have a clear and accessible procedure for handling complaints?

Steps you can take

A registered charity must comply with Australian law, and must pay particular attention to specific laws and requirements that apply to their overseas activities.

Your charity should also be aware that many countries have laws and regulations relating to partnerships between local and foreign organisations, and employing local staff in foreign organisations. You should check local laws before entering any arrangements.

International obligations and offences in Australia

As a party to the International Convention for the Suppression of the Financing of Terrorism, and through UN Security Council resolutions on terrorism (which apply in Australia through the Charter of the United Nations Act 1945 (Cth)), Australia has an international obligation to combat terrorism financing.

Significant penalties apply under the Charter of the United Nations Act 1945 (Cth) and the Autonomous Sanctions Act 2011 (Cth) for contravening a range of sanctions measures. These include targeted financial sanctions which prohibit making assets of any kind available to a listed person or entity, or using or dealing with a listed person or entity’s assets.

These offences have extra-territorial effect. This means that if your charity makes funding or other assets available to a listed person or entity, whether overseas or in Australia, this could result in prosecution under Australian law.

Australia’s terrorist act offences and terrorist organisation offences are set out in the Criminal Code Act 1995 (Cth) (the Criminal Code). The Criminal Code sets out the penalties (up to 25 years’ imprisonment) for intentionally or recklessly providing support to a terrorist organisation.

Lists of terrorist organisations, individuals and other ‘entities’ to check

List of terrorist organisations

The Australian National Security website provides an up-to-date list of the relevant names and aliases of listed terrorist organisations under the Criminal Code.

Consolidated list

The Department of Foreign Affairs and Trade (DFAT) maintains a list of all persons and entities subject to targeted financial sanctions or travel bans under Australian sanctions laws (Consolidated List). Listings for targeted financial sanctions are distinct from listings under the Criminal Code and separate legal obligations apply.
It is a serious criminal offence to make assets of any kind, including funds, available to a listed person or entity, or to use or deal with a listed person or entity’s assets.

Questions to answer:

Does your charity…

  • send money or conduct activities in a country where sanctions have been imposed?
  • have necessary permits from the DFAT?
  • have a risk register to identify and monitor risks with terrorism financing?
  • have necessary local permissions or authorisations to operate overseas? (For example, an authorisation by local authorities to operate a school or medical facility.)
  • have policies and procedures for overseas operations that include ways to help mitigate fraud or corruption?
  • use the formal banking system or an alternative service on the Australian Transaction Reports and Analysis Centre (AUSTRAC) Remittance Sector Register?
  • limit cash-handling?
  • have appropriate delegations and separations of authority for collecting, handling and depositing cash and issuing receipts?

Working with partners? Then also answer these questions:

Does your charity…

  • conduct an internet search and review local media to identify any links that the overseas partner may have to political or terrorist activity?
  • check that partners are not on the relevant lists of known terrorist individuals and organisations (the DFAT Consolidated List and terrorist organisations listed under the Criminal Code)?
  • request copies of the overseas partner organisations’ policies and procedures?

Steps you can take

Governance Standard 4 requires registered charities to take reasonable steps to be satisfied that their Responsible Persons are not disqualified from:

  • managing a corporation under the Corporations Act 2001 (Cth), or
  • being a Responsible Person by the ACNC Commissioner within the previous 12 months.

If a charity is not satisfied that a person meets these requirements, it must not appoint this person as a Responsible Person. If the person is already appointed, the charity must take reasonable steps to remove them as a Responsible Person.

Your charity should also take steps to ensure the suitability of its Responsible Persons. Consider their position in the charity, the nature of the charity’s activities (including overseas operations), and the people the charity works with when appointing them.

Questions to answer:

Does your charity…

have a good understanding of the background and affiliations of its Responsible Persons?

know the reasons its Responsible Persons want to be involved?

have a code of conduct that encourages ethical behaviour?

Steps you can take

A charity’s Responsible Persons must understand their responsibilities and charities must take reasonable steps to ensure that their Responsible Persons are meeting the duties set out in Governance Standard 5.

The duties can be summarised as follows:

  • to act with reasonable care and diligence
  • to act honestly and fairly in the best interests of the charity and for its charitable purposes
  • not to misuse their position or information they gain as a Responsible Person
  • to disclose conflicts of interest
  • to ensure that the financial affairs of the charity are managed responsibly, and
  • not to allow the charity to operate while it is insolvent.

Responsible Persons therefore have a duty to ensure that funds sent overseas are managed responsibly. They should also feel comfortable to ask questions about the charity’s financial transactions, and should not take anything for granted.

Mitigating risk

When sending money overseas, charities may face the risk of having their funds diverted or misused, even if they are working with a local organisation with similar charitable purposes.
The ways to reduce this risk will vary according to circumstances such as the size of the charity, the sources of funding, the nature of the activities, and the needs of the public.
However, it will be necessary to make sure that the charity has clear rules that stipulate who is authorised to handle funds and approve transactions.

Your charity should assess the risks it faces and weigh these up against the benefits of working in another country. It should then work out ways to manage and reduce these risks if it conducts activities overseas.

Your charity should also carefully plan, monitor and evaluate all aspects of its overseas operations. It should have clear processes for how it sends and collects money overseas and ways to track how these funds are being used.

Financial controls

Your charity may be more exposed to financial fraud when working overseas, particularly if it uses cash instead of the banking system to make transactions.

Having clear procedures for managing bank accounts and finances sent overseas is essential to protect the charity’s funds from fraud.

Some financial risks for charities operating overseas include:

  • frequently moving money, goods and people to areas of conflict or political instability
  • having complex financial operations including multiple donors, investments and currencies
  • receiving and using cash, accounting for high volumes of small transactions and using informal money transfers
  • passing funds through various intermediary partners
  • unpredictable and unusual streams of income and expenditure
  • being subject to different and, in some cases, weaker levels of regulation in different parts of the world
  • inadvertently providing a ready-made social network and platform for criminal activity.

You should think about the policies, procedures and practices of your charity and how they can work to protect it from financial fraud and misuse.

Charities should use the formal banking system to send funds. However, when this is not possible, charities should make sure they use alternative remittance service providers registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) on the Remittance Sector Register.

When deciding how much money to hold locally, your charity should think about the risks it could encounter in each country. For example, your charity could lose money if the local banking system collapses, or if the exchange rate drops suddenly. You should aim to retain locally only the smallest amount of funds your charity needs.

Protecting staff and beneficiaries

Underdeveloped regions, politically unstable environments or conflict zones may be dangerous for your charity’s staff and beneficiaries. Particularly in areas of widespread unemployment and poverty, representatives of a charity are often in a position of power and this can present a higher risk of exploitation and abuse

Your charity and its Responsible Persons should check that anyone working with vulnerable people is suitable, and should have procedures that work to protect vulnerable people. We recommend that charities regularly monitor staff and volunteers abroad.

Children are considered a particularly vulnerable group. Charities that work with children should have a policy that clearly sets out procedures for protecting children and preventing, identifying and dealing with abuse. Your charity’s Responsible Persons should also ensure that they check the suitability of all people who might have access to children.

Charities operating overseas are also responsible for the safety of their staff and volunteers. Depending on the country, activities such as assisting refugees or persecuted minorities, helping women escape violence, promoting human rights or advancing a religion may increase the risks to your charity’s staff and volunteers. There is risk of danger to staff and volunteers through natural events such as disasters, disease and climate, as well as through other acts such as kidnapping, arrest and armed conflict. Think about the risks involved and how the charity and its Responsible Persons can protect staff, volunteers and beneficiaries.

Questions to answer:

Does your charity…

  • provide training to its Responsible Persons on their duties and obligations?
  • consider the risks involved in:
    • each country’s political, economic and social environment?
    • ensuring the health and safety of its representatives?
    • effectively monitoring the charity?
  • have strategies to mitigate risk?
  • have a risk register?
  • have policies and procedures that protect vulnerable beneficiaries and the health and safety of its staff and volunteers?

Steps you can take

  • Make sure your charity’s Responsible Persons understand all the risks associated with overseas activities.
  • Develop strategies to mitigate the risks your charity identifies.
  • Prepare a project plan with policies and procedures for evaluating and monitoring the use of funds and the outcomes of overseas projects.
  • Only send money through the formal banking system or services registered with AUSTRAC. Always check the remittance sector register to make sure your charity’s remittance service provider is listed
  • Read and share our publication Protect your charity from fraud: a guide for charities
  • Check the suitability of Responsible Persons, partner organisations, volunteers, employees and anyone connected with the charity who might have access to children or vulnerable adults.
  • Develop a child-protection policy.
  • Assess the risks to vulnerable people and develop strategies to mitigate these risks.
  • Organise basic security training for all staff and volunteers working in an unstable environment.
  • Provide staff and volunteers with a written assessment of security and health risks, emergency evacuation procedures and insurance arrangements.
Meet record-keeping obligations

The ACNC requires charities to keep two types of records: financial records and operational records. A record is an account of facts, events or transactions that shows your charity has acted in a particular way, or spent or received money or other assets.

Keeping good records of your charity’s financial and operational activities overseas will make it easier to detect if funds are being misused or diverted to a non-charitable purpose.

Steps you can take

Meet notification obligations

Charities must notify the ACNC when they believe they or one of their Responsible Persons are not meeting an ACNC obligation, including compliance with the Governance Standards.

People who work or volunteer for a charity are often the best people to identify potentially suspicious activities, or identify situations where processes are not being followed.

Make sure that your charity’s Responsible Persons, employees and volunteers are aware of their obligations and know what issues of concern are, including suspicious activity overseas, and how and when to report them.

Steps you can take

Call: 1800 1234 00
From outside Australia: (+61) 1300 1234 01
Email: hotline@nationalsecurity.gov.au
MMS: 0429 771 822
TTY: 1800 234 889.