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Charities are less likely to be misused for terrorism financing if they:

  • have strong governance arrangements (including financial controls, risk management policies and procedures and appropriate due diligence)
  • keep appropriate records and reports annually to the ACNC, and
  • have an ongoing practice of reviewing and strengthening their internal controls (for example, policies, procedures, delegations of decision-making powers, record management systems, financial management systems and tools).

Compliance with our Governance Standards and External Conduct Standards will help charities reduce their risk of being misused for terrorism financing.

This checklist can help you identify if your charity meets the ACNC’s Governance Standards and other ACNC obligations that reduce its risk of being misused for terrorism financing.

And if your charity operates overseas – including sending funds overseas – it must also comply with the ACNC's External Conduct Standards.

Basic Religious Charities must comply with the External Conduct Standards if they operate outside Australia, even though they don't have to comply with the ACNC Governance Standards. Despite this, these charities should consider implementing the governance measures outlined here to help protect themselves from the risk of being misused for terrorism financing.

Governance Standards

Does your charity take steps to make sure that its activities overseas agree with its purpose and its character as a not-for-profit?

Does your charity conduct due diligence to ensure it is familiar with those partners who carry out its activities or who support it with transfers of assets or funds?

Governance Standard 1 requires a charity’s funds to be used to pursue its purposes, and for the charity to maintain its character as a not-for-profit. Charities must meet this standard to remain entitled to be registered as a charity.

Where funds are being transferred overseas or through other agents in Australia, it can be easy for charities to lose sight of exactly how these funds are being used. Monitoring and evaluating the projects and activities that your charity is sending its funds to is essential. This allows you to check that those funds are being used for the right purposes.

Charities often work with agents, partners, contractors and other employees. There is no substitute for knowing these other people thoroughly, satisfying yourself that they do not support terrorism, and knowing the funds sent out are going to further your charity’s charitable purpose.

Ask for and confirm the details of everyone your charity works with. Where necessary, cross-check the information you have in order to ensure it is accurate and up to date. These actions are part of the due diligence you and your charity must undertake.

Questions to ask your charity

  • Does your charity maintain reasonable internal control procedures – including processes for recording transactions and delegations of decision making – that reduce risk?
  • Does your charity monitor and evaluate its activities to ensure they were carried out as intended?
  • Does your charity know who has ultimate control over the project that its money and resources are going towards? And does it know what the money and resources are used for – both as the project is being undertaken and after it is finished?
  • Does your charity know who uses its facilities and for what purpose – for example, your office or meeting space, name, bank account (including account details and electronic funds transfer permissions), credit cards, website, computer system, telephone or other communication devices? Does your charity have clear written agreements with agents, contractors or other partners, both in Australia and abroad, covering the activities to be undertaken and how they will be monitored and accounted for? How does your charity check that the agreements are being followed?
  • Does your charity review the capacity and capability of partners to manage, deliver and track funds and resources?
  • Does your charity know who else might be supporting the person or cause that it is endorsing in public statements, or is using the charity’s name?

Steps you can take

Does your charity keep its members informed of its activities, and give them the opportunity to raise concerns?

Governance Standard 2 requires charities to be accountable to members. If your charity is transparent to members about its activities, they will be in a position to better understand your charity’s operations and ask questions relating to governance.

Questions to ask your charity

  • Does your charity produce an annual report outlining its activities and financial circumstances?
  • Does your charity report on program outcomes?
  • Does your charity hold annual general meetings to allow its members to ask questions or raise concerns?
  • Has your charity made any changes – or been affected by changes – that have not been explained to its members?
  • Does your charity submit its Annual Information Statement to the ACNC, including details of its overseas activities, the countries in which it operates or sends money, the beneficiaries it helps and its financial activities?
  • Does your charity have a clear and accessible complaints-handling mechanism?

Steps you can take

Does your charity check that it does not provide support to individuals and organisations associated with terrorism, or contravene Australian sanctions laws?

Registered charities must comply with Australian law. When an organisation is registered as a charity, it agrees to meet all of its obligations to the ACNC. This includes meeting Governance Standard 3, which requires compliance with Australian laws.

International obligations

Australia has an international obligation to combat terrorism financing as a party to the International Convention for the Suppression of the Financing of Terrorism and pursuant to UN Security Council resolutions on terrorism which are given effect in Australia through the Charter of the United Nations Act 1945 (Cth). Australia is also a member of the Financial Action Task Force (FATF). The FATF is an inter-governmental body which develops and promotes global standards for combating money laundering and terrorism financing.

Australian offences

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 sanctions measures 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 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 providing support intentionally or recklessly to a terrorist organisation.

Lists of terrorist organisations and individuals to check

List of terrorist organisations

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

Consolidated list

The Department of Foreign Affairs and Trade 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 impose separate legal obligations.

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 ask

  • Does your charity send money or have operations in a country upon which sanctions have been imposed, or in which listed persons or entities are known to operate?
  • Does your charity take reasonable precautions and exercise due diligence to avoid contravening Australian sanctions laws?
  • Are your charity’s Responsible People, staff and volunteers aware of the list of terrorist organisations and the Consolidated List? Do they understand the legal impact of listings?
  • Does your charity have appropriate controls in place to manage the risk that beneficiaries, partners, stakeholders, staff or other people associated with your charity are either listed as a terrorist organisation, or listed for targeted financial sanctions?
  • Do you have an understanding of the background and affiliations of your board members, employees, fundraisers, volunteers and partners?

Steps you can take

Has your charity taken steps to make sure its Responsible People are suitable?

Responsible People (known as 'responsible entities' under the ACNC Act) are the people – or organisations, in some limited cases – responsible for directing a charity, and who are members of the charity’s governing body.

These might be directors or committee members, or trustees (including insolvency trustees or administrators).

Governance Standard 4 requires registered charities to take reasonable steps to be satisfied that their Responsible People 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 of these things, it must not appoint this person. If the person is already appointed, the charity must take reasonable steps to remove them as a Responsible Person.

Questions to ask

  • Does your charity have a good understanding of your Responsible People's backgrounds and affiliations?
  • Does your charity know if any of its Responsible People have other reasons for wanting to be involved with your charity?

Steps you can take

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

Charities will all face risks that they need to manage. However 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.

Does your charity ensure its Responsible People understand your charity’s unique risks, including the terrorism financing risks in the locations where it operates?

To make sure that the charity’s Responsible People 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 People.

Questions to ask

  • Does your charity review its 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 People consider the risks it faces and take steps to manage them?

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

Your charity must have appropriate controls in place to address the unique risks it may face.

Ensuring 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 can reduce this risk will vary according to its particular circumstances, such as its size, funding sources, the nature of its activities, and 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 ensuring that when your charity is not using the formal banking system, any alternative remittance service providers it uses 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

Many 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 outcomes and increase stakeholder trust by enhancing members' transparency and accountability.

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 its funds, and to 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

Obligations

Does your charity keep up to date financial and operational records, including records of its activities and the details of any third parties involved?

Under the ACNC Act, your charity must keep two types of records – financial records and operational records.

A record is an account in permanent form – such as in writing – of the facts, events or transactions that show your charity has operated or acted in a particular way, or spent or received money or other assets.

Keeping good records of both your financial and operational activities will make sure that it is easier to detect if charitable funds are being misused or diverted to another purpose.

Questions to ask about record-keeping

  • Does your charity monitor and keep records of the performance of its projects?
  • Does your charity keep financial records of income, expenses and financial transactions?
  • Does your charity have detailed budgets for each project, and generate regular reports on the progress of each project?

Steps you can take

Does your charity have a policy on what to do if it notices any suspicious activity?

Charities must notify the ACNC if they believe they are not meeting an obligation under the ACNC Act. This includes not meeting ACNC Governance Standards and External Conduct Standards.

Those who work for a charity are often best placed to identify where activities appear suspicious or where processes are not being followed.

Ensure your charity’s Responsible People, employees and volunteers are aware of their obligations, know what an issue of concern is – including suspicious activity – and know how and when to report.

Steps to take

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