Poverty relief charity under investigation for ‘high risk’ handling of funds
The Charity Commission has launched a statutory inquiry into Iraqi Welfare Association.
The charity regulator for England and Wales is investigating the Iraqi Welfare Association (IWA) about its use of ‘high-risk’ methods to transfer and spend funds. Wider serious concerns held by the regulator include possible unmanaged conflicts of interest, failing to file accounts on time, failure to adhere to the charity’s Governing Document and acting outside of the purposes the charity was registered with.
The IWA was set up to relieve poverty amongst the Iraqi community, particularly through the provision of advice and interpreting services to Iraqi refugees. Its wider purposes include providing classes and training to the Iraqi community, to relieve sickness, and protect and preserve public health and provide facilities for recreation.
The Commission started proactively engaging with the IWA to assess how the charity was managing risks associated with working in Iraq. Iraq is deemed a ‘high-risk’ country by the Foreign, Commonwealth and Development Office. Its engagement continued due to the charity’s failure to submit accounts for four consecutive years (FYE 2019, 2022, 2021 and 2022).
The engagement has been escalated to a statutory inquiry after it found the charity was transferring funds overseas using a ‘Hawala’ system. The regulator also found the charity’s director was using his personal bank account to make payments on behalf of the charity. Using a personal bank account and transfer methods outside the formal banking system poses a risk to possible loss or misuse of funds.
The inquiry will also investigate potential conflicts of interest regarding decisions around salary payments and a contract with a connected private company.
The inquiry will:
- Consider the conduct of the trustees and their compliance with their legal duties and responsibilities
- Determine whether the charity’s funds have been expended solely for charitable purposes in line with the charity’s stated objects.
- Assess the administration, governance and management of the charity by its trustees.
The Commission may extend the scope of the inquiry if additional regulatory issues emerge.
It is the Commission’s policy, after it has concluded an inquiry, to publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were.
ENDS
Notes to editors:
- The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society.
- On 17 January 2025, the Commission opened a statutory inquiry into Iraqi Welfare Association under section 46 of the Charities Act 2011.
- A statutory inquiry is a legal power enabling the Commission to formally investigate matters of regulatory concern within a charity and to use protective powers for the benefit of the charity and its beneficiaries, assets, or reputation. An inquiry will investigate and establish the facts of the case so that the Commission can determine the extent of any misconduct and/or mismanagement; the extent of the risk to the charity, its work, property, beneficiaries, employees or volunteers; and decide what action is needed to resolve the concerns.
- Hawala is a system for moving funds, or their equivalent value, to a third party (‘the Hawala agent’) in another geographic location, where there may be no formal banking facilities, or limited access to them, without necessarily involving the formal banking system.
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