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Charities, like any other sector, are at risk of breaching financial sanctions, often due to their international activities and the variety of their work. The Charity Commission shared a blog this month to remind charitable organisations of their obligation to comply with financial sanctions.
When it comes to sanctions there are a number of areas charities should keep in mind.
Financial sanctions exist
Knowledge of the UK’s sanctions regime is varied across the sector. Non-compliance with sanctions legislation can have long lasting and damaging consequences. Breaching sanctions is a criminal offence which can result in a 7-year imprisonment or a financial fine for the charity or the individual involved.
The risks are varied across the sector
Charities deal with varied populations of third parties, including donors, beneficiaries, agents and contractors carrying out work on their behalf. An assessment of the charity’s activities and third-party exposure against the varied sanctions regimes in place can go a long way to mitigating any blind spots.
Responsibility lies with the charity
Adequate and thorough due diligence checks are essential to understanding who the charity is dealing with. Consolidated lists and regular alerts published by bodies like the Office of Financial Sanctions Implementation (OFSI), the EU and the UN, can be incorporated into the charity’s due diligence processes to help them stay informed and help identify risks as they arise. The Commission states that it’s the charitable organisation’s responsibility to carry out due diligence checks to establish:
- the origin and destination of funds
- if any of the individuals or firms (including beneficial ownership and control) are subject to sanctions either directly or indirectly
- if any of the jurisdictions they are dealing with are subject to financial sanctions.
Licenses may be needed
Charities may need to apply to OFSI for a license for certain activities, with the humanitarian license the most common. While OFSI treats humanitarian related licenses as a priority, charities seeking a license cannot make any payments or provide any economic help until it is granted. In some instances, failure to wait for the issuance of a licence has led to breaches of sanctions.
Breaches must be reported
Charities have a legal obligation to report any suspected breaches to OFSI as soon as practically possible, as well as completing a serious incident report to CCEW. Unfortunately, failure to report to OFSI is one of the biggest non-compliance issues by charities and their trustees and requires improvement across the sector according to the Charity Commission.
The Charities Commission has published useful tools such as a sanctions factsheet for charities and a compliance toolkit on their website, offering tips and support as well as help navigating the complex world of financial sanctions.
Bovill can help charities with sanctions obligations
We work with a variety of organisations, advising them on their sanctions compliance programmes. If you would like to discuss how we can help, please do get in touch.
