Guidance

Compliance toolkit chapter 1: Summary

Updated 9 November 2022

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

Summary

This chapter, ‘Charities and Terrorism’, forms part of the Compliance Toolkit and provides charities with information on key aspects of the UK’s counter-terrorism legislation, highlighting how particular provisions are likely to affect charities and their work. The Charity Commission (‘the Commission’) aims to ensure that trustees are aware of the legal requirements placed on them in relation to UK legislation, including charity law, so that they can properly discharge their duties in the interest of their charity. The Commission wants to increase awareness of how charities might be at risk of abuse for terrorist purposes as well as help them to develop their own risk measures and procedures. It aims to do this by setting out their legal duties and providing examples of good practice and risk management that will safeguard charities from potential harm.

Why is this guidance relevant to the charitable sector?

Terrorism is a serious and continuing threat to UK society, UK interests abroad and the wider international community. The charity sector is not immune to terrorist abuse, however the Commission has led the way in making clear that this risk of abuse is not shared equally across the charity sector. Nonetheless, it is of serious concern where it does arise and there is evidence to prove that a number of people who have supported or engaged in terrorism have used and abused charities. When this happens, it damages public trust and confidence in charities. It is an essential duty for trustees to manage their charity’s resources responsibly, including any risk to its assets, people, or reputation from being used or abused to support or otherwise be involved in terrorism.

Who should read this guidance?

All charity trustees need to be vigilant about the potential risks from terrorism. While this guidance applies to any charity, the Commission does not expect trustees of all charities to have detailed knowledge and understanding of every aspect of this chapter. However, all trustees should familiarise themselves with the broad principles.

It is clear from the diversity of the sector that the risks will vary from charity to charity, and for large numbers of charities there may be few risks. If you are a trustee of such a charity, it may be enough for you to consider the information provided in this summary and to look further, in particular, at the sections that highlight Charity law duties and responsibilities and Reporting requirements in relation to reporting suspicions of terrorist activity. If a matter of concern arises in your charity, these provide a useful reference of your legal duties and responsibilities.

Other charities may experience much higher risks of abuse. The UK government’s National Risk Assessment (NRA) has assessed the risk of abuse of the non-profit sector altogether for terrorist financing as low, however there are certain parts of the sector facing significantly higher risks – mainly those operating in high-risks areas internationally.

Although the risks may increase if a charity works in unstable or high-risk countries overseas, they can also be present for charities working in the UK. The risks may vary depending on whether the charity carries out its activities itself or if it does so in partnership with others as well as its particular type of work. The nature of those risks is also likely to differ. For these charities, this chapter provides comprehensive information to help them in assessing and managing the risks of links to, or associations with, terrorist activity and organisations, or of terrorist abuse.

How might charities be vulnerable?

The abuse of charities for terrorist purposes may take a variety of different forms, including exploiting charity funding, abusing charity assets, misusing a charity name and status and setting up a charity for an illegal or improper purpose. 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. Case studies and examples in the guidance highlight how this might happen.

Whatever the charity and regardless of its size, activities and areas of operation, if it has effective governance arrangements, financial controls and risk management policies and procedures, it will be better safeguarded against a range of potential abuse, including terrorist abuse.

The Commission’s role

The Commission’s counter-terrorism strategy sets out its four-strand approach for tackling the threat of terrorist abuse in the charitable sector, comprising: Awareness; Oversight and Supervision; Co-operation; and, Intervention.

The Commission has an important regulatory role in ensuring that trustees comply with their legal duties and responsibilities in managing their charity. In the context of terrorism, the Commission supplements the existing counter-terrorism regime through regulatory oversight and the charity law framework. The Commission’s aim is to make sure that trustees comply with their legal duties, taking reasonable steps to protect their charities from wrongdoing and harm and minimising the risk of terrorist abuse.

The Commission is not responsible for dealing with incidents of actual terrorist abuse. Where such incidents occur or are alleged, it is the role of the police to investigate whether a criminal offence may have been committed. The Commission cannot prosecute or bring criminal proceedings, although it can and does refer any concerns to the police, local authorities or other relevant agencies.

If something goes wrong in a charity, the Commission expects the trustees to take responsibility for putting things right. As a risk-based regulator, the Commission will intervene in serious cases where it is concerned that trustees are not fulfilling their legal duties towards their charity. That may be because the trustees do not understand these duties, or because they are not willing or able to carry them out. Where the Commission does take regulatory action to prevent, disrupt and investigate abuse, it uses its powers proportionately, according to the nature and level of the risk and its potential impact.

What the Commission expects of charity trustees

You and your co-trustees must comply with charity law requirements and other laws that apply to your charity. The UK’s counter-terrorism framework is governed by different pieces of legislation. Terrorist activity is a crime and you need to be aware that concerns about the terrorist abuse of charities are dealt with in that context.

Under charity law, you have 6 main duties. These are explained in The essential trustee: what you need to know, what you need to do (CC3) and are summarised below:

• ensure your charity is carrying out its purposes for the public benefit
• comply with your charity’s governing document and the law, including counter-terrorism laws
• act in your charity’s best interests
• manage your charity’s resources responsibly
• act with reasonable care and skill
• ensure your charity is accountable

These trustee duties apply in a number of ways. You and your co-trustees:

• must act responsibly and take reasonable steps, based on the risks, to safeguard your charity and people who come into contact with it from harm of all kinds, including links to or associations with terrorist activity and organisations or terrorist abuse
• must make sure that your charity’s assets are used only to support its purposes. You should be vigilant to ensure that its premises, assets, staff, volunteers or other resources cannot be used for activities that may, or may appear to, support or condone terrorist activities
• must not take inappropriate risks with your charity’s assets, reputation, status and facilities and should ensure that proper and adequate procedures are put in place and properly implemented to prevent terrorist organisations taking advantage of these
• must consider and manage risks to your charity, whether operational, financial, or reputational and exercise proper control over its financial affairs and keep accurate records
• risk committing a criminal offence if you have financial dealings with someone who is a designated financial sanction target in the UK
• risk committing a criminal offence if you are connected to, or support, a proscribed organisation or designated person or entity
• must report a belief or suspicion of offences connected to terrorist financing immediately to the police
• should report serious incidents to the Commission, if your charity (including any individual trustees, staff, or volunteers) has any known or alleged link to a proscribed organisation or to terrorist or other unlawful activity as soon as you become aware of it
• must not engage in conduct or activities which would lead a reasonable member of the public to conclude that the charity or its trustees are associated with a proscribed organisation or terrorism generally
• should take immediate steps to dissociate the charity from any individuals or activities that give, or appear to give, support to terrorism or terrorist activity. This is because even if indirect or informal links with a terrorist organisation do not amount to a criminal offence, these pose unacceptable risks to the property of a charity and its proper and effective administration. Therefore, it is difficult to see how you could adequately manage the risks of such links to your charity and find a way in which you could properly discharge your charity law duties and responsibilities
• should, where the risks are high, check partners and individuals against the list of proscribed and designated organisations. Whatever the level of risk, it is good practice to do so
• must not appoint a designated person as a trustee. This is because a designated person cannot discharge all of their duties as a trustee in the management and administration of a charity. If a trustee is subsequently designated, they must resign from their position or they will be in breach of charity law. Those subject to designation under specific anti-terrorist legislation are disqualified from acting as a charity trustee under charity law

For more detailed advice and guidance, see the full publication on Charities and Terrorism.