Aussie Charities at Medium Risk of Terrorism Financing

By Andrew Heaton

(image source: The Independent)

Charities in Australia have been given a medium risk rating for being used as a vehicle for terrorism financing.

In a joint report, the Australian Transactions and Reports Analysis Centre and the Australian Charities and Not-for-Profits Commission (ACNC) have given Australia’s charity sector a ‘medium’ ranking for risks of both money laundering and terrorism financing.

According to the report, AUSTRAC received 28 cases of ‘suspicious matter reports’ in respect of potential terrorism financing which have been linked or related to the NPO sector between 2012 and 2016.

These transactions had a total value of around $5.6 million, or an average value of around $200,000 per transaction.

Whilst the report acknowledges that it is unlikely that the non-profit sector is being used as a means for domestic terrorism funding, it warns that the sector remains an attractive option by which to support activities relating to terrorism or armed conflict overseas.

“While NPOs are not the main source of terrorism financing in Australia, they will continue to be attractive to financiers of terrorism because they have the capacity to raise and camouflage the movement of large amounts of funds,” it said.

“In known and suspected cases, NPOs have primarily been used to raise funds in Australia and transfer money offshore to support individuals or groups engaged in foreign conflict. In some instances, individuals have demonstrated a moderate level of sophistication and ability to evade detection.”

“It is assessed as unlikely that NPOs are currently being used to raise funds for domestic terrorist activity. However, this could change as Australia’s threat environment continues to evolve.”

The latest report comes amid ongoing concern about charities being used to finance armed conflict and money being used for foreign aid ending up in the hands of terrorist organisations.

This can either come via ‘pop-up’ groups or essentially sham charities which emerge in places such as Iraq or Syria or it can come from funding which is raised for legitimate humanitarian efforts ending up in the wrong hands.

Last year, for example, the Department of Foreign Affairs was forced to suspend the funding of World Vision programs in Palestinian Territories amid claims from Israel that the head of World Vison in Gaza was financing Hamas.

Aside from terrorism financing, the report says the level of reported NPO use to launder money or evade taxes is relatively low.

Bigger threats, it said, were fraud and theft of resources against the NPO itself.

In the report, AUSTRAC and ACNC encourage NPOs to assess their vulnerability to terrorism financing and implement appropriate safeguards.

It says factors which increase vulnerability include a lack of awareness of the risks associated with money laundering and counter-terrorism financing, inadequate diligence practices, staff inexperience, a lack of formalised training and professional development, a lack of suitable practices in respect of record keeping and internal control and poor transparency and accountability in respect of the end-to-end funding cycle.

Those with beneficiaries or operations in countries with either conflict or poor anti-money laundering/counter terrorism financing regimes were particularly at risk, it said.

Also at risk were organisations with beneficiaries or operations in dispersed ethnic communities within Australia – particularly those with links to countries where the risk of terrorism is high.


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