How to keep your charity safe from financial crime

8th February 2018
How to keep your charity safe from financial crime

A recent report by Reuters revealed that 300,000 charities were directly affected by the crackdown on illegal funds over the last couple of years. It is therefore in your charity’s best interests to remain vigilant, prepared and guarded against financial crime.

Financial crime covers a number of risks, such as bribery, corruption, terrorist financing, money laundering and sanctions/export controls. Unfortunately, a charity doesn’t have to actively or intentionally engage in these activities to be taken advantage of by fraudsters, and can lead to potential legal ramifications, fines, and loss of reputation if caught.

Charities must learn how to recognise the tell-tale signs of financial crime, as well as put in place procedures to prevent it. Charity trustees should ensure that all management understands the procedures, and should put in place up a financial crime policy that all staff are trained to implement.

Perform due diligence

It’s important for your charity to have a well understood and implemented diligence policy in place, to ensure that you find out enough about your donors, partners and beneficiaries to avoid one of them potentially using your charity for financial crime. A charity should know the reason for every donation, exactly where it has come from and should be able to notice unusual behaviour in associated organisations or circumstances.

Prevent bribery and corruption

The Bribery Act 2010 made it a criminal offence to offer any kind of bribe to public officials or those working in the private sector. Potential bribes encompass things like money, gifts, training, travel, sponsorships, contributions, experience or entertainment, and pretty much anything else offered to persuade someone to act in your favour. Even if you believe your charity doesn’t practice illegal bribes, it’s your responsibility to ensure that third parties working on your behalf also abstain from the practice.

Avoid breaking sanctions

Multi-national charities need to ensure that they are not breaching any sanctions when working abroad, as they are beholden to the laws and regulations of any country that they work in or provide service for.


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