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OG 410 Charities and Terrorism

Last reviewed:
14 March 2012
Last updated:
26 July 2012

Policy Statement/Overview

The threat of terrorism applies to the charity sector as much as any other sector in the UK. Although proven instances of terrorist involvement or association in the charitable sector are rare, these are completely unacceptable and corrode public confidence in charities. We should therefore always be alert to the possibility that these can happen.

This guidance gives an overview of counter terrorist legislation, including possible criminal offences and the implications for us in relation to our casework.

It sets out the three key principles that we apply when considering charities with potential links to terrorism: 

  • we would never register an organisation that had support of terrorism as an object
  • use of an existing charity's assets for support of terrorist activity is not a proper use of those assets
  • links or alleged links between a charity and terrorism are corrosive to public confidence in the integrity of charity

It also details the practical effects these principles have on our work.

The guidance summarises trustees’ duties, including those relating to due diligence and under our Serious Incident Reporting regime and also provides links to both external and internal sources of additional information.

Summary of the guidance

Section E of this guidance gives an overview of possible criminal offences under the Terrorism Acts 2000 and 2006 and sets out our position on charities and terrorism, explaining how a charity might be abused for terrorist purposes and trustees’ duties to mitigate this risk and to report any concerns or incidents to the Commission.

Section C advises on how to handle cases where there are allegations or suspicions of terrorist involvement or links and associations between a charity and terrorist activity.

Casework Guidance

B1 Case handling issues

B1.1 The role of the Investigations and Enforcement - London

The Investigations and Enforcement Team in London deals with the Commission's high risk investigations including terrorism issues. Intelligence support is attached to the team.

It is vital that caseworkers in other areas of the Commission report any cases where there are concerns of potential terrorist involvement or links or associations between a charity and terrorist activity to Investigations and Enforcement.   

The Commission's Risk Framework highlights our risk based approach to regulating charities. All concerns relating to possible terrorist issues are considered to be high risk which means we deal with them as a priority, giving them our immediate attention due to the risk that they pose to the charity, its beneficiaries, the public, and the integrity and reputation of charities in general. Before we open an inquiry a pre-investigation assessment will take place to decide whether we will examine the matter further and what the most appropriate course of action is. If we decide to open a statutory inquiry, remedial action may be taken under section 76 of the Act. We may also consider the institution of civil proceedings under section 114.  

B1.2 Registration and charitable status

Where we have concerns that a new charity, or an organisation applying for registration on the Register of Charities, has links or associations with terrorist organisations or terrorist activity, the case should be referred as a matter of high priority to Compliance Assessment and the Compliance Investigations Unit - London informed. Legal advice should also be sought.

If after investigating the concerns we come to the conclusion that the institution is not legally charitable then registration should be refused, or if the institution has already been registered, consideration should be given to its removal from the Register.

B1.3 Reporting of suspicions to external bodies

Sections 56 and 57 the Charities Act gives us a power to report our suspicions to the relevant authorities. It is subject to s.), which states that the power to disclose is subject to any express restriction imposed on disclosure of information to the Commission.

lawyer_referIf we become aware that a charity trustee, or someone else involved with a charity is being prosecuted for an offence under one or other of sections 15 – 18 of the Terrorism Act 2000 or under the provisions of the Terrorism Act 2006, we should obtain legal advice. If a person is convicted of such an offence in relation to charity property, any remaining property of that charity may be liable to forfeiture by order of the court. It may be possible for steps to be taken by us to ensure that such property is not forfeited.  

Schedule 1 of the Anti-terrorism, Crime and Security Act 2001 relates to the seizure and forfeiture of terrorist 'cash'. So far as is in practice relevant to charities, the forfeiture provisions apply to 'cash' found at any place in the UK. These powers do not depend on anyone being convicted.

lawyer_referAgain, we should obtain legal advice if we become aware that any 'cash' belonging to a charity has been seized under these powers, as it may be possible to take steps to ensure that the 'cash' is not forfeited.

In addition, we should obtain legal advice if we become aware that as a result of a breach of financial sanctions by a designated person or by a charity trustee, member of staff or volunteer, the assets of a charity are frozen or at risk of being frozen.

Legal / Accountancy / Policy Framework

E1 References

Compliance Toolkit - Protecting Charities from Harm

E2 Background

The Terrorism Act 2000 came into force on 19 February 2001 and was followed by the Terrorism Act 2006 which extended the previous Act and made way for implementation of other international conventions to which the United Kingdom is party. Both Acts have implications for us in relation to all aspects of our casework. We have made a number of public statements on charities and terrorism, and our position is set out on our website.

Under Part II of the 2000 Act, the Secretary of State has the power to proscribe any organisation which he believes "is concerned in terrorism".

An organisation is "concerned in terrorism" if it commits or participates in acts of terrorism, prepares for terrorism, promotes or encourages terrorism, or is otherwise concerned in terrorism either in the UK or abroad.

'Organisation' is defined as including 'any association or combination of persons'. It is against the law to be a member of a proscribed organisation and it is also illegal to assist, raise money for, or send money to one, or anyone who is a member of such an organisation. The effect of proscribing the organisation means that those who support them or profess to be a member of them are committing a criminal offence.

The second schedule of the 2000 Act lists proscribed organisations. Subsequent orders of Secretary of State have added organisations to the original schedule published. The Home Office maintains a list of terrorist groups or organisations banned under UK law which can be found on their website.

Also, we need to be aware of United Nations (UN) and European Union (EU) legislation that affects us. Both the UN and the EU have lists of designated people or organisations and by operation of EU and UK law financial sanctions may be imposed by HM Treasury's Asset Freezing Unit against those listed.

Our international obligations require us to:

  • deny all forms of financial support to terrorists
  • deny the provision of a safe haven to terrorists
  • share information about terrorist offences and threats with other governments
  • ensure that anti-terrorist laws are of a sufficiently serious nature

Under the Terrorist Asset-Freezing etc Act 2010, persons or entities are designated because HM Treasury has reasonable grounds or believes that they are or have been involved in terrorist activity or are owned, controlled or acting on behalf of or at the direction of someone who does.  This legislation also enforces some EU regulations.  Persons and entities may also be designated in the UN and EU because they are associated with Al-Qaida, the now late Osama Bin Laden or the Taliban and this is enforceable in the UK by The Al-Qaida and Taliban (Asset Freezing) Regulations 2010.  Designation may be "interim" (a period not in excess of 30 days) or "final" (a period not in excess of 1 year, unless renewed). These enactments enable the Asset Freezing Unit at HM Treasury to freeze funds and economic resources and impose restrictions on the provision of funds, financial services and economic resources to or for the designated person which are a criminal offence to breach unless a licence has been obtained from the Asset Freezing Unit.  The Asset Freezing Unit maintains the Consolidated List of Financial Sanctions Targets in the UK. This list can be found at HM Treasury's website.

Section B of this OG offers advice on how to handle cases where we suspect a proscribed terrorist group or organisation has become involved with a charity or an organisation wishing to register as a charity. Further information on proscribed terrorist groups or organisations and on designated persons and entities can be found in the Commission’s toolkit Protecting charities from harm - Chapter 1: Charities and terrorism modules 5 and 6.

The full text of the Terrorism Acts 2000 and 2006 and the Terrorist Asset-Freezing etc Act 2010 are available on the HMSO website

The provisions of the Terrorism Act 2000 were further augmented by the Anti-terrorism, Crime and Security Act 2001, the full text of which is also available on the HMSO website. The main effect of the latter Act on charities is to replace sections 24 to 31 of the Terrorism Act 2000 (seizure of terrorist cash). See section B1.3.

Legal opinion is that the Anti-terrorism, Crime and Security Act 2001 does not impose any further duties/penalties on any Commission officers in their work. 

Under the Counter-Terrorism Act 2008, which amended a section of the Terrorism Act 2000, charity trustees, employees and volunteers are now under a positive legal duty to report their suspicions of terrorist financing offences to the police. If they do not they may commit a criminal offence. See section E4.

Terrorism is a serious and continuing threat to UK society, UK interests abroad and the wider international community. This threat applies to the charity sector as much as any other sector. Proven instances of terrorist involvement or association in the charitable sector are rare, but are completely unacceptable and corrode public confidence in charities. We should always be alert to the possibility that it can happen.

E3 Principles underlying our handling of allegations of charities' involvement in terrorism

The Commission's Counter-terrorism strategy was published in July 2008 in response to the Home Office and HM Treasury 'Review of the Safeguards to Protect the Charitable Sector (England and Wales) from Terrorist Abuse' and refreshed in April 2012 to take account of the government's review of Prevent.  The strategy is the Commission’s formal statement of its approach to tackling terrorist involvement or abuse in the charity sector. It has a four strand approach for identifying and minimising the risk of terrorist exploitation of charities comprising: Awareness, Oversight and Supervision, Co-operation and Intervention.

Our approach rests on 3 key principles that we apply when considering charities with potential links to terrorism. These principles were applied before the events of 11 September 2001 and have been applied since.

  • We would never register an organisation that had support of terrorism as an object
  • Use of an existing charity's assets for support of terrorist activity is not a proper use of those assets
  • Links or alleged links between a charity and terrorism are corrosive to public confidence in the integrity of charity 

These three key principles have the following practical effects on our work:

  • any links or association between a charity and terrorist activity are totally unacceptable and may be illegal. 'Links' or 'association' in this case might include fundraising or provision of facilities, but also includes formal or informal links to organisations 'proscribed' under the Terrorism Act 2000 and any subsequent secondary legislation. We will assess rigorously any allegations of terrorist involvement or links between a charity and terrorist activity. We will act proactively and swiftly when we have evidence or serious suspicions of terrorist abuse or support involving charities, and where there are grounds for a statutory inquiry it will be conducted as a matter of the highest priority
  • where allegations of links to terrorism are made, or where suspicions otherwise arise, they should be immediately brought to the attention of the Investigations and Enforcement Team. 
  • active collaboration between charities and terrorist organisations is a police matter that may lead to very serious criminal charges. Where allegations are made to us, or suspicions arise as a result of our work (eg monitoring or casework), we must inform the relevant law enforcement agencies immediately and co-operate fully with any criminal investigation. Our role and regulatory interest relate to the lawful exercise by the trustees of their duties and responsibilities and ensuring the charity and its assets are protected
  • where a charity representative or a charity's activities may give, or appear to give, support or assistance to any terrorist activity, we expect the charity's trustees to take all necessary steps immediately to disassociate the charity from the activity. What constitutes association, and disassociation will depend on the circumstances and investigators will need to seek legal advice. The Commission will engage with the trustees to facilitate disassociation and will consider what specific steps are required in each case. This may be achieved through regulatory advice and guidance or through the use of our regulatory powers

E4 Possible criminal offences under the Terrorism Acts 2000 and 2006

Protecting charities from harm - Chapter 1: Charities and terrorism - Module 11 provides further information on:

  • possible criminal offences under the Terrorism Acts 2000 and 2006 and the section of Acts where they can be found
  • a brief description of key Acts and orders under counter-terrorism legislation

E5 How might a charity be abused for terrorist purposes?

The abuse of charities for terrorist purposes may take a variety of different forms, especially given the diverse nature of the charity sector, including exploiting charity funding, abusing charity assets, misusing a charity name and status and setting up a sham charity. It may also include inappropriate expressions of support by a trustee for a proscribed organisation or designated person or entity. Terrorism risks may arise when funds are raised and donations received, where grant funding is disbursed, and in the provision of services and other charitable activity.

The reputation of charity, the international reach of many charities – including into hard to access or vulnerable communities – and their financial systems, can all provide openings for terrorists. The risks of abuse may increase if a charity works in countries identified as having significant levels of corruption, criminal activity and poor infrastructure; where there is instability, internal conflict or military action, and/or in areas where it is known that terrorist groups operate. However, the risks of abuse can be present for charities working in the UK as well as those operating overseas, although the nature of those risks will differ.

In our experience, charities are usually at greater risk from influences outside the charity, although abuse can also happen from within the charity or be carried out by someone connected to it. People who seek to abuse charities may see them as a vulnerable target because of the high level of public trust and confidence there is in the charitable sector. Abuse might occur in the following ways:

  • raising funds in the name of a charity or charitable purposes, which are then used by the fundraisers for supporting terrorist purposes, with or without the knowledge of the charity
  • using charity vehicles to transport/smuggle illegally into countries people, cash, weapons or terrorist propaganda and using charity premises to store them or arrange distribution
  • using residential schools as military recruitment and training centres
  • using charities set up for providing facilities for young people for terrorist organisation and recruitment
  • claiming to work for a charity and trade on its good name and legitimacy in order to gain access to a region or community for terrorist purposes
  • using charities for money laundering purposes or as a legitimate front for transporting cash or other financial support from one place to another
  • exploiting the communications network of a charity to allow terrorists to contact or meet each other. Sometimes a charity may simply provide the opportunity for terrorists to meet. These activities may well take place without the knowledge of the charity or the trustees
  • people within a charity arranging for or allowing charity premises to be used to promote terrorist activity or extremist ideology
  • in extreme cases, terrorists may try to set up an organisation as a sham, promoted as charitable but whose sole purpose is really to raise funds or use its facilities or name to promote or co-ordinate inappropriate and unlawful activities

This does not aim to be an exhaustive list, as terrorists will find ever-new ways to further their aims. Further information can be found in

Protecting charities from harm - Chapter 1: Charities and terrorism - Module 3 - How might a charity be abused for terrorist purposes?

E6 What is terrorist financing and how might it affect charities?

Money underpins all terrorist activity - without it there can be no training, recruitment, facilitation or support for terrorist groups. Charities and voluntary organisations play an important role in ensuring that the funds they collect are not diverted to terrorist organisations.

Over recent years, links have been discovered between money laundering and terrorist financing. Money laundering is the process of concealing the illegal origin of profits from crime. Terrorist financing is the collection or provision of funds for terrorist purposes. In the case of money laundering, the funds are always of illicit origin, whereas in the case of terrorist financing, funds can originate from both legal and illegal sources.

Sections 15-18 of the Terrorism Act 2000 make it an offence to:

  • raise, receive or provide funds for the purpose of terrorism
  • hold or use funds for the purposes of terrorism
  • become involved in an arrangement to make funds available for the purposes of terrorism
  • facilitate the laundering of terrorist money

A person is guilty of an offence if he "knows", "intends" or has "reasonable cause to suspect" that the terrorist property may be used for the purposes of terrorism. Therefore, it is an offence for a charity to provide funds to an organisation which it suspects as being a terrorist organisation, even if it does not appear on the proscribed list or the Consolidated List of Financial Sanctions targets.

This affects charities and those who raise money for registered charities and charitable causes. If the person raising money, for whatever purpose, charitable or otherwise, has reasonable cause to suspect that the money may be used for terrorist purposes, he or she will be committing an offence. This could apply to trustees, the charity’s fundraisers and volunteers. These offences would also include someone who makes a donation to charity or for charitable causes, whilst knowing or suspecting that it will be used for the purposes of terrorism.

In line with the obligations that flow from UK counter-terrorist legislation, charity trustees must discharge their duties and responsibilities, take reasonable steps and implement risk-based procedures and systems to protect the charity and charity funds from abuse. Guidance on how trustees should ensure that charitable funds are not abused by terrorists and terrorist organisations, and that they reach their intended beneficiaries, is available in the Commission’s toolkit Chapter 2: Due diligence, Monitoring and Verification of end use of funds. 

Although proven instances of charities being abused for terrorist financing purposes are rare, they do happen, as charities can be attractive vehicles to criminals. The potential risks to the reputation of a charity are significant.

The financial abuse of charities by terrorists may take different potential forms:

  • diverting funds raised for charitable causes in public collections in the name of charity generally, or for a named charity for purposes of terrorism
  • establishing a charity for the purpose of providing cover for chaneling funds for the purposes of terrorism, directly or indirectly
  • where a charity's funds are being moved from one place to another, or in different forms, for example, through international currencies or through cash transfers, in particular internationally, that may be diverted before reaching the intended recipients
  • a charity may be used to launder money
  • cash may be transported in a way that looks legitimate under the name of charity and charitable causes so its transportation may be less likely to be questioned or challenged
  • recipients of charity funds, whether partners or individuals, may missue the money they have been given for terrorism purposes

The risks increase if the charity’s financial, due diligence and monitoring controls are weak.

Charities, like any other organisation, can be targeted as conduits for money laundering so it is important that trustees take reasonable steps to prevent the charity from being used for money laundering purposes. Trustees should assess the levels of risk to which the charity is exposed and adopt appropriate anti-money laundering procedures and document them. These include carrying out due diligence checks on donors where the charity considers them higher risk (see the Know Your Donor guidance in Protecting charities from harm - Chapter 2: Due diligence, Monitoring and Verification of end use of funds) There are number of common signs of money laundering although there is no definitive list. For example, large unexpected donations from unknown individuals, organisations or other sources, or donations subject to unusual conditions or unsolicited offers of loans may be intended to facilitate money laundering.

If trustees discover that potential money laundering offences are taking place in connection with their charity, they must report it to the police immediately. They must also report it to the Commission as a serious incident.

Further information on money laundering, including guidance for trustees on reporting requirements, warning signs which may indicate possible money laundering, and practical advice on anti-money laundering procedures, is available in Protecting charities from harm - Chapter 3: Fraud and financial crime sections C2, G and J6.

E7 Trustees' duties regarding the management and administration of the charity

The UK’s legislative framework for preventing and pursuing terrorists and those who support terrorist organisations is complex. Terrorist activity is a crime and charities need to be aware that concerns about terrorist abuse and activity are considered in the UK in that context. However, there are also charity law responsibilities that arise from trustees’ positions in managing and administrating a charity irrespective of whether a criminal offence has been committed.

Various laws impact upon charities and their trustees as they do upon all other organisations and individuals in the UK. Charity trustees’ duties under charity law are explained further in The Essential Trustee: What you need to know (CC3).

Trustees are custodians of their charities. They are publicly accountable, and have responsibilities and duties to safeguard their charity and its beneficiaries from harm of all kinds, including links to or associations with terrorist activity and organisations or terrorist abuse.

The public and those donating to charity should have confidence that money donated is used for legitimate purposes and is reaching its intended beneficiaries. Trustees are legally responsible for ensuring that charitable funds are properly used, adequately protected and not misused for financial crime, terrorist or other criminal purposes.

A significant aspect of a trustee’s legal duties to protect charitable assets, and to do so with care, means carrying out proper due diligence to give reasonable assurance about those individuals and organisations that give money to or receive money from or work closely with the charity. To undertake due diligence trustees should apply the ‘Know Your’ principles:

  • Know Your Donor
  • Know Your Beneficiaries
  • Know Your Partner

Where charities give money to partners and beneficiaries, especially large amounts of money or in high risk situations, making sure that adequate monitoring takes place is crucial. Trustees must be able to verify and demonstrate that charitable funds or property reach their proper destinations and are used as the charity intended.

The extent, form and detail of the required project and partner due diligence checks and monitoring, and how this should extend to donors and beneficiaries, will depend on the nature of the risks in the particular circumstances, the activities the charity carries out, and how and where they are undertaken. Charities can apply a risk based approach to this.

The starting point is the greater the risks, the more charity trustees need to do and the more important it is the trustees can show they have discharged their duty of care. The greater the risks and impact, the higher the duty of care is likely to be.

For example, there have been incidents where terrorism-related training has occurred within the UK, sometimes using the facilities of otherwise legitimate organisations providing outdoor training activities. If a charity hires out these kinds of outdoor facilities, its trustees must be aware of the need to carefully scrutinise their customer and beneficiary base and report any suspicions they have.

All charities must have, as a minimum:

  • some form of appropriate internal and financial controls in place to ensure that all their funds are fully accounted for and are spent in a manner that is consistent with the purpose of the charity. What those controls and measures are and what is appropriate will depend on the risks and the charity
  • proper and adequate financial records for both the receipt and use of all funds together with audit trails of decisions made. Records of both domestic and international transactions must be sufficiently detailed to verify that funds have been spent properly as intended and in a manner consistent with the purpose and objectives of the organisation
  • given careful consideration to what due dilligence, monitoring and verification of use of funds they need to carry out to meet their legal duties. Trustees need to put effective processes in place to provide adequate assurances about the identity of donors, particularly substantial donors, and to verify this. They must carry out appropriate and proper due dilligence on individuals and organisations that the charity gives grants to or uses to carry out charitable projects and help deliver its work
  • taken reasonable and appropriate steps to know who their beneficiaries are (at least in broad terms), carry out appropriate checks where the risks are high and have clear beneficiary selection criteria which are consistently applied

Further information can be found in the toolkit Protecting charities from harm - Chapter 2: Due diligence, Monitoring and Verification of end use of funds.

The Commission expects trustees to be vigilant and to act to ensure that a charity’s premises, assets, staff, volunteers or other resources cannot be used for activities that may, or appear to, support or condone terrorist activities.

Charities should take all necessary steps to ensure that their activities cannot be misinterpreted and are transparent. This is of particular importance when assets are transferred overseas. Trustees must ensure that proper and adequate procedures are put in place and properly implemented to prevent terrorist organisations taking advantage of a charity's status, reputation, facilities or assets. They must avoid undertaking activities that may place the charity's funds, assets or reputation at undue risk.

Trustees must consider and manage risks to the charity whether operational, financial, or reputational. They can take risks, however, in order to fulfil their duties, trustees must implement realistic and reasonable risk management strategies to identify and mitigate risks to the charity's funds, operations, assets and reputation. These should be relevant and proportionate given the charity's activities and the nature of its operations.

Trustees must exercise proper control over the charity's financial affairs and keep accurate financial and administrative records.

Trustees must ensure they and their charity comply with the law, including counter-terrorism laws.

Trustees risk committing a criminal offence if they have financial dealings with someone who is a 'designated person' in the UK and subject to national and possibly international financial sanctions.

A designated person cannot be appointed as a trustee. This is because a designated person cannot disharge all of his or her duties as a trustee in the management and administration of a charity.

Where a trustee is subsequently named as a designated person, and the individual continues to act as a trustee this would be a criminal offence, which would constitute misconduct in the management of the charity. This is because as a trustee the individual holds funds on behalf of the charity, but under the terms of the individual's designation it would be a criminal offence to deal with these funds. This means the individual cannot continue as a trustee without breaching the terms of the designation. Because of the trustee's designation, the charity itself risks breaching the financial sanctions if it lets the trustee continue to hold funds on behalf of the charity, and is therefore liable to have all its assets frozen. The trustee must resign from their position as soon as they are made aware of their designation to prevent the charity from being put at risk. More information about whether a charity can work with designated persons and entities as trustees, volunteers, partners or beneficiaries can be found in Protecting charities from harm - Chapter 1: Charities and terrorism - Module 6 Designated individuals and entities.

Where a trustee is convicted for terrorist offences, whether or not this is in their role as charity trustee and whether or not the events directly involved the charity, their link to the charity means this is corrosive to public trust and confidence in charity.

Where a charity representative or a charity's activities may give, or appear to give, support to any terrorist activity, the Commission expects the charity's trustees to take immediate steps to dissociate the charity from the activity. Trustees risk committing a criminal offence if they are connected to, or support a proscribed organisation. Deciding to carry out or knowingly supporting any activities that would be criminal, illegal, or otherwise improper for a charity would amount to misconduct on the part of the trustees.

Trustees must not engage in conduct or activities which would lead a reasonable member of the public to conclude that the charity or its trustees were associated with a proscribed organisation or terrorism in general.

A charity must not provide funding or support to a partner organisation that exposes beneficiaries to activities which directly, or indirectly, promote terrorism. This is so, even if the charity's funding or support were used for legitimate humanitarian aid or other charitable activities. Aside from the risks of committing criminal offences under UK legislation, this is also likely to amount to misconduct on the part of the trustees in managing and administering the work of the charity. 

Indirect or informal links with a terrorist organisation pose unacceptable risks to the property of a charity and its proper and effective administration. Even if the link or association does not amount to a criminal offence, it is difficult to see how the trustees could adequately manage the risks to the charity and find a way in which they could properly discharge their charity law duties and responsibilities.

Where the risks are high, in order to fully discharge their duties, trustees must check partners and individuals against the list of proscribed organisations and the Consolidated List of Financial Sanctions Targets. Whatever the level of risk, it is good practice to do so.

In terms of trustees' own conduct, expressing strongly controversial or partisan views on a particular issue may compromise the charity's integrity, purpose or activities and may make it unsuitable for an individual to act as a trustee of that charity. This is regardless of whether those views are held or expressed in a personal capacity. Such views may conflict with the individual exercising their objective judgement in the interests of the charity and may interfere with the individual's ability to properly manage the potential harm to public confidence in their charity, and create risks to the charity's reputation and operations. In particular it may undermine the charity's ability to deliver services to its beneficiaries. 

Trustees should consider getting external professional advice on matters where there may be material risk to the charity, or where the trustees may be in breach of their duties. In higher risk situations, it will be difficult to see how they could show they have discharged their duties without doing so.

The information in this section on charity law duties and responsibilities can also be found in Protecting charities from harm - Chapter 1: Charities and terrorism - Module 8

E8 Duties of trustees to report

If trustees, charity employees or volunteers have information about possible terrorist activity they should telephone the Anti-Terrorist Hotline on 0800 789 321.

If a charity is concerned about an immediate threat to life and property they should contact the police immediately.

An important recent change in the law places new emphasis on reporting suspicions of criminal activity for those who work in charities, including trustees and volunteers.

The Counter-Terrorism Act 2008 amended a section of the Terrorism Act 2000 which creates a positive legal duty under s.19 of the Terrorism Act 2000 to disclose information about certain possible terrorist offences to the police. The duty is to disclose to the police a suspicion or belief that someone has committed an offence under sections 15 to 18 of the Terrorism Act 2000 (which are offences connected with terrorist financing - see Protecting charities from harm - Chapter 1: Charities and terrorism - Module 7 Terrorist Financing.) The duty applies if the suspicion comes to his/her attention in the course of a trade, profession, business or employment. The recent changes in the legislation widened the definition of trade, profession, business and employment, the result of which clarifies that this duty applies to office-holders (such as trustees of a charity), individuals on a formal work experience programme or training (for example an intern) as well as volunteers. It is therefore important that charity trustees know about this.

Where a "belief or suspicion" arises in "the course of a trade, profession, business or employment", a person will commit a criminal offence if he/she does not disclose this to the police as soon as possible.

Section 39 of the Terrorism Act 2000 provides that a person who knows, or has reasonable cause to suspect that the police are conducting , or propose to conduct a terrorist investigation, commits an offence if s/he:

  • discloses to another anything which is likely to prejudice the investigation
  • interferes with material which is likely to be relevant to the investigation

There are also other wider money-laundering reporting and disclosure requirements which may impact on charities. These are dealt with in Protecting charities from harm - Chapter 3: Fraud and financial crime.

When should a report be made to the Commission?

Charity law requires trustees to submit, as part of the Annual Return, information specified by the Charity Commission in its regulations. Under the Commission’s Reporting Serious Incidents regime if a charity has an income over £25,000 the trustees must, as part of the Annual Return, sign a declaration that there are no serious incidents or other matters relating to their charity over the previous financial year that should have been brought to our attention but have not. If the declaration is not made then the Annual Return will not be complete and the trustees will have defaulted on the statutory requirement under section 169 of the Charities Act. It is also an offence under s.60 of the Charities Act to provide false or misleading information to the Commission.

Given the serious and significant risk to the charity that concerns about links to terrorism raise, trustees who act responsibly and properly discharge their duties will report these concerns immediately. Our Serious Incident Reporting guidance for trustees helps to explain what sort of incidents should be reported. With respect to terrorism related issues these include:

  • connections to proscribed organisations and designated individuals
  • charity links to or support for terrorism, financial or otherwise
  • misuse of a charity to foster criminal extremism
  • fraud and money laundering

This will include the following situations:

  • where a charity, its trustees or individuals connected to it are proscribed or designated on the terrorist lists in the UK or in other countries
  • where a charity's banking facilities are at risk of being withdrawn, perhaps because of its presence on overseas terrorist lists
  • where a charity may have come into close contact with a proscribed organisation and is at risk of having committed a criminal offence
  • where a charity is made aware of an allegation about links with terrorist or criminal activities, even if the charity considers these are unfounded

As a matter of good practice, any serious incident that has resulted or could result in a significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation should be reported by all charities, regardless of income, to us immediately.

Auditors and independent examiners in both England and Wales and Scotland have a common statutory duty to report matters of material significance to charity regulators. This includes “matters leading to the belief or suspicion that the charity, its trustees, employees or assets, have been involved in or used to support terrorism or proscribed organisations in the UK or outside of the UK”. The Commission’s Guidance for auditors and independent examiners clearly sets out their legal whistle blowing duty.

E9 Holding, moving and receiving funds safely in the UK and internationally

All charities need money or financial assistance of some kind to carry out their work. They may receive money from donors and sponsors, from fundraising activities, from membership subscriptions or from charging for their charitable services. They spend money in a variety of ways, for example on running the organisation, on charitable projects to help beneficiaries and by giving grants to other charities and organisations. Charities which work internationally often move money across international borders and spend it in other countries, encountering different financial systems and needing to use different currencies.

Whatever the charity's activities, all charity trustees are under legal duties to safeguard the charity's money and assets and to act prudently. This means that when receiving, holding and moving funds, trustees need to ensure they take proper care to ensure the charity's money is held safely, not placed at undue risk and reaches the intended destination for the purposes intended.

In order to operate effectively and transparently when delivering aid or undertaking charitable work, every charity must have access to formal banking facilities. It is difficult to see, where regulated banking services are available, how trustees could show they discharged their duties if they did not use them in order to ensure the charity's funds were secure.

As part of their duty of care, trustees must also ensure that they use reasonable care and skill when making decisions about financial procedures including the movement and use of money. The greater the risks, the more important it is that trustees can show that they have discharged their duty of care.

Most countries in the world have formal banking systems in place. Using such systems is a prudent and responsible way to ensure that charity funds are safeguarded, and that there are appropriate audit trails of the sort which trustees must keep for the receipt and use of money. However, charities may need to use and work in cash to some degree, some charities more than others. Charities may need to use alternative financial systems to hold or move the charity's money, or when spending it in furtherance of the charity's purposes, although these are more inherently risky than using formal banking systems. These include Money Service Businesses, agents using alternative remittance systems (for example Hawala banking), Payment Services, cash couriers, or even other charities and NGOs.

Our guidance for trustees in Protecting charities from harm - Chapter 4: Holding, moving and receiving funds safely in the UK and internationally  explains the need for charities to have and use bank accounts; what trustees' duties are when using the banking system; and the particular issues which arise in connection with exchanging sterling for other currencies. This guidance provides advice to trustees about what things they need to consider if they have to use alternative methods, and considers the various ways in which funds can be transferred in circumstances where the use of banking facilities may not be possible. This chapter also gives advice on the risk management factors trustees need to consider when these methods are used and guidance on the sort of financial controls which may be appropriate.

Trustees of charities which operate overseas will also benefit from our guidance Charities working internationally.  Top of page