Fraud, Terrorism in Charity Regulator’s Sites

By Andrew Heaton

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Fraud and financial abuse as well as terrorism activities have been identified among critical areas of focus for Australia’s national charities regulator going forward.

Releasing its Charity Compliance Report for 2015 and 2016, the Australian Charity and Not-for-profits Commission has outlined five critical areas in which it intends to focus its primary attention for regulatory enforcement in 2017.

The five areas are fraud and financial mismanagement, terrorism, harm to beneficiaries, political activities and lodgement of accuracy of Annual Information Statements.

Top on the list is charity fraud, whereby the ACNC says it will work with other regulators and law enforcement agencies to identify and address charities which are involved in activities such as fraud, money laundering or tax avoidance.

Close on the heels of that is terrorism, whereby considerable levels of concern have been raised about the possibility that money disguised as charitable donations was secretly being used to fund the operations of terrorist organisations such as Islamic State in places such as Syria and Iraq.

In late 2015, for instance, officials in Jakarta working together with the Australian Transactions and Analysis Centre captured $500,000 which they said had been transferred in 45 separate transactions over a five-year period from one fundraiser alone.

The money was allegedly used to purchases weapons, fund paramilitary training and support the families of slain extremists.

Early this year, the ACNC in partnership with AUSTRAC and the Australian Taxation Office will release its assessment of risks about money raised through Australian charities being used to fund terrorism or extremist related activities.

Following this, the regulator says it will work with other agencies to establish a whole-of-government framework in relation to targeting future outreach to assist charities to protect themselves against terrorism and financing risks, ensuring adequate monitoring and supervision of the sector according to a risk based approach and coordinating information gathering and investigations.

The focal areas come as the regulator reported an increase in the number of concerns which it received regarding charities on an overall basis from 1,307 concerns in the two years to December 2014 to 1,807 concerns in the two years to December last year.

ACNC Commissioner, Susan Pascoe AM said the vast majority of charities were run by honest and dedicated people, but added that the ACNC will act upon serious instances of non-compliance.

Pascoe says the increase in complaints reflects growing awareness about the regulator and its activities.

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