Guidance

Compliance toolkit chapter 1: Charities and Terrorism

Updated 9 November 2022

Applies to England and Wales

• Publication for Northern Ireland
• Publication for Scotland

1. What this chapter is about and how to use it

This chapter, Charities and Terrorism, is designed to help you and your co-trustees familiarise yourselves with the legal framework which aims to protect the UK from terrorist abuse and understand how this affects charities. It provides summary information on key aspects of the UK’s counter-terrorism legislation and highlights how particular provisions are likely to affect charities and their work. It explains the various ‘terrorism lists’ and provides advice on what you should do if you discover your charity may be working with or connected to people or organisations on those lists. Following the advice within this guidance will also help you show you are complying with your legal duties and responsibilities under charity law.

1.1 What the Commission means by ‘must’ and ‘should’

In this guidance:

• ‘must’ means something is a legal or regulatory requirement or duty that trustees must comply with
• ‘should’ means something is good practice that the Commission expects trustees to follow and apply to their charity

Following the guidance in this chapter will help you to run your charity effectively, avoid difficulties and comply with your legal duties. Charities vary in terms of their size and activities. Consider and decide how best to apply good practice to your charity’s circumstances. The Commission expects you to be able to explain and justify your approach, particularly if you decide not to follow good practice in this guidance.

In some cases, you will be unable to comply with your legal duties if you do not follow the good practice. For example:

Your legal duty	It is vital that you
Act in your charity’s best interests	Implement realistic and reasonable risk management strategies to identify and mitigate risks to the charity’s funds, assets and reputation
Manage your charity’s resources responsibly	Implement robust and effective financial controls, including undertaking appropriate due diligence on partner organisations which includes checking the appropriate lists to ensure that they are not designated or proscribed
Act with reasonable care and skill	Take appropriate professional advice on matters where there may be material risk to the charity (e.g. before entering into a high-risk activity such as funding a project in a country where terrorists are known to operate)

Trustees who act in breach of their legal duties can be held responsible for consequences that flow from such a breach and for any loss the charity incurs as a result. When the Commission looks into cases of potential breach of trust or duty or other misconduct or mismanagement, it may take account of evidence that trustees have exposed the charity, its assets, people or its beneficiaries to harm or undue risk by not following good practice.

1.2 Using this guidance

In answer to any anticipated questions, there are short answers and explanations in more detail. There are also links to other websites, documents, further information and useful tools for charities. Links are marked in blue.

2. Scope of this guidance

This guidance provides summary information on key aspects of the UK’s counter-terrorism legislation and highlights how particular provisions are likely to affect charities and their work. The UK’s counter terrorism framework is governed by different pieces of legislation. Additional requirements and international regulations apply if a charity operates or works with partners who are based, or work, internationally.

It is not the Commission’s role to provide trustees with legal advice on the operation and impact of counter-terrorism legislation on specific situations or individual charities. However, the Compliance Toolkit provides a general introduction and overview, and highlights areas where trustees may need further advice from the Commission, other government agencies or from the charity’s professional advisers. If you are in doubt about your legal duties and responsibilities as a charity trustee, you can approach the Commission for regulatory advice and guidance about what to do, including getting formal advice under s.110 Charities Act 2011.

3. Technical terms used

Some technical terms are used in this guidance. This list explains what they mean:

Beneficiary: a person who receives benefit, financial or otherwise, from a charity.

CONTEST: the UK Government’s strategy for Countering Terrorism.

Counter-terrorism legislation: The Terrorism Act 2000 is the primary piece of counter-terrorism legislation in the UK. Some other key relevant legislation includes:

(1) The Anti-Terrorism, Crime and Security Act 2001

(2) Terrorism Act 2006

(3) Counter-Terrorism Act 2008

(4) Counter Terrorism and Security Act 2015

(5) Criminal Finances Act 2017

(6) Sanctions and Anti-Money Laundering Act (2018)

(7) Counter Terrorism and Border Security Act 2019

(8) Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019

Designated individual or entity: an individual (or group) who is subject to financial restrictions in the UK, for example, because they are considered to be someone who commits, attempts to commit, participates in or facilitates the commission of acts of terrorism. Individuals (or groups) can also be subject to country-based sanctions.

Financial Action Task Force (FATF): the global standard setting body for anti-money laundering and counter terrorist financing.

Governing document: a legal document setting out the charity’s purposes and, usually, how it is to be administered. It may be a trust deed, constitution, memorandum and articles of association, will, conveyance, Royal Charter, scheme of the Commission, or other formal document.

Property: includes not only land and buildings, but also investments, cash and other assets.

Proscribed organisation: a proscribed organisation is an organisation which the Home Secretary believes to be concerned in terrorism as defined by the Terrorism Act 2000. It is a criminal offence for a person to be a member of, invite support for, or arrange a meeting in support of, a proscribed organisation. The offence of inviting support for a proscribed organisation includes expressions of support that are reckless as to whether they will encourage others to support the organisation. It is also a criminal offence to display an article or wear clothing in a public place in such a way as to arouse reasonable suspicion that the person is a member or supporter of a proscribed organisation. Proscription means that the financial assets of the organisation become terrorist property and can be subject to freezing and seizure.

Serious incident: an adverse event, whether actual or alleged, which results in or risks significant harm to your charity’s beneficiaries, staff, volunteers or others who come into contact with your charity through its work, loss of your charity’s money or assets, damage to your charity’s property or harm to your charity’s work or reputation.

If a charity has an income over £25,000, you must, as part of the annual return, sign a declaration that there are no serious incidents that should have brought to the Commission’s attention but have not. If you are unable to make this declaration, then the annual return will not be complete, and you will have defaulted on your legal requirements.

Read more about how to report a serious incident in your charity.

Terrorism lists: the various lists of people or organisations that are proscribed organisations or designated individuals under UK legislation, or which are banned by another government:

(1) The proscribed organisations list, which is kept updated by the Home Office

(2) The Consolidated List of Financial Sanctions Targets in the UK, which is kept updated by the Office of Financial Sanctions Implementation (OFSI) in HM Treasury (HMT)

(3) The lists of those designated or restricted by another government (which have no effect in UK law)

Terrorist financing: terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations.

Trustees: charity trustees are the people who serve on the governing body of a charity. They may be known variously as trustees, directors, board members, governors or committee members. Charity trustees are responsible for the general control, management and administration of a charity.

4. Background information on the Charity Commission’s and UK government’s counter-terrorism and counter-extremism strategies

The Commission’s counter-terrorism strategy, setting out its approach for tackling the threat of terrorist abuse in the charitable sector, was developed in line with wider international and national developments.

4.1 The international framework

The Financial Action Task Force (FATF), of which the UK is a member, has developed a series of recommendations for countries to implement to combat the financing of terrorism and money laundering. Collectively, these represent the global standard that every country is expected to meet. FATF Recommendation 8 (R8) focuses on Non-Profit Organisations (NPOs) and the implementation of risk-based measures so that they cannot be abused for the financing of terrorism. R8 tasks member countries (which includes the UK) to review domestic laws and regulations that relate to NPOs, which the country has identified as being vulnerable to terrorist financing abuse. It proposes that countries should apply focused and proportionate measures, in line with the risk-based approach, to NPOs to protect them from terrorist financing abuse.

The United Nations (UN) adopted Security Council Resolution 1373 (UNSCR 1373) which places barriers on the movement, organisation and fundraising activities of terrorist groups. It requires member countries to act against terrorist financing. The UN Security Council’s Counter-Terrorism Committee monitors to see if countries meet their obligations under the resolution.

4.2 The UK government’s approach

For several years, the UK Government has been implementing its own counter-terrorism strategy – CONTEST. The aim of CONTEST is to reduce the risk to the UK and its interests overseas from terrorism, so that people can go about their lives freely and with confidence. The strategy is periodically updated to take account of the current terrorist threats and the government’s security and counter-terrorism policies.

CONTEST is organised around 4 workstreams, each comprising a number of key objectives:

• pursue: to stop terrorist attacks
• prevent: to stop people becoming terrorists or supporting terrorism
• protect: to strengthen the UK’s protection against a terrorist attack
• prepare: to mitigate the impact of a terrorist attack

For more information about the terrorism threat to the UK, consult the Home Office website.

Building on its Prevent work, the UK government has also published a Counter-extremism strategy to confront and defeat the challenge of extremism in Britain. This focuses on 4 areas:

• Countering extremist ideology – to continue to confront and challenge extremist propaganda, ensuring no space goes uncontested, including online, promoting a better alternative, and supporting those at risk of radicalisation
• Building a partnership with all those opposed to extremism – to go further to stand with and build the capacity of mainstream individuals, community organisations and others in our society who work every day to challenge extremists and protect vulnerable individuals
• Disrupting extremists – to create new targeted powers, flexible enough to cover the full range of extremist behaviour, including where extremists sow division in our communities and seek to undermine the rule of law
• Building more cohesive communities – to review, understand and address the reasons why some people living here do not identify with our country and our values. A new Cohesive Communities Programme will help those communities most at risk of isolation

To deliver this work, the government has appointed an independent lead Commissioner for Countering Extremism. The Commission for Countering Extremism supports society to fight all forms of extremism. It advises the government on new policies to deal with extremism, including the need for any new powers.

4.3 The Charity Commission’s approach

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 counter-terrorism strategy sets out its approach for tackling the threat of terrorist abuse in the charitable sector, based upon four key strands:

1. Awareness – Raising awareness in the sector to build on charities’ existing safeguards.
2. Oversight and supervision – Proactive monitoring of the sector, analysing trends and profiling risks and vulnerabilities.
3. Co-operation – Strengthening partnerships with government regulators and law enforcement agencies.
4. Intervention – Dealing effectively and robustly when abuse, or the risk of abuse, is apparent.

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 minimise the risk of terrorist or extremist 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 it may have 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 act, it uses its powers proportionately, according to the nature and level of the risk and its potential impact.

Where a registered charity supports, or works closely with, overseas partners, the Commission will hold the registered charity and its trustees to account over the suitability and management of that relationship, including its supervision of and protection against terrorism and extremism risks.

If there are concerns, suspicions or evidence that a charity is, or has been, abused for terrorist and/or extremist purposes, three key principles underpin the Commission’s handling in these instances:

• the Commission will not register an organisation that has support of terrorism explicitly or implicitly as one of its purposes or register anything that is not exclusively charitable
• the use of a charity’s assets for support of terrorist or extremist activity is not a proper use of those assets and is illegal
• links between a charity and terrorist activity corrode public confidence in the integrity of charity. Links include, but are not limited to, fundraising, financial support or provision of facilities, formal or informal links to proscribed organisations and the promotion or support of extremist ideas that are conducive to terrorism and are also part of terrorist ideology. The conduct of, or views expressed by, an individual connected to the charity (such as a trustee) in relation to terrorist purposes, regardless of whether those views are held or expressed in a personal capacity, may be taken into account

For further guidance on the Commission’s approach, see the Commission’s counter-terrorism strategy. Guidance which explains your duty to protect your charity from being used to promote extremist views or terrorist ideology is also available as part of the Commission’s Compliance Toolkit Chapter 5 – Protecting charities from abuse for extremist purposes. This is relevant to all charities, but in particular to those that:

• host regular events involving external speakers
• use literature and publications to promote the charity’s purposes, including on the internet and social media
• allow other charities or organisations to host events or activities from their premises
• distribute educational material

5. How might a charity be abused for terrorist purposes?

Charities exist to create better societies. The charitable sector is diverse and far-reaching, spanning many different types, aims, activities, sizes and places. They are, however, united by a commitment to voluntary action; they have a desire to improve society, giving people a voice and improving quality of life. Many charities tackle causes of alienation in communities. Some concentrate on promoting and upholding human rights. Others provide aid or supply essential services.

The sector’s impact is both domestic and international. Charities often operate in areas of high-risk in the UK or internationally, where the need can be greatest. They extend to sections of communities that sometimes governments find hard to reach, working to deliver in extreme or adverse conditions.

Charities, like other parts of society, condemn terrorist acts and indeed do much to alleviate conditions that may lead people to turn to extremism or terrorism. The UK’s counter-terrorism strategy, CONTEST, sets out that the threat posed by terrorism is different in nature and scale from the terrorist threats faced in the past. Terrorism is motivated by an extremist ideology and exploits modern travel and communications to spread through global networks. It is ever evolving, as terrorists continue to develop new methods and make use of new technologies. According to the UK’s most recent National Risk Assessment (NRA), the terrorist financing risk to UK non-profit organisations is largely concentrated to charities operating in high-risk areas internationally.

Whilst the charity sector is not immune to terrorist abuse, 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 the reality is that a number of people who have supported or engaged in terrorism or extremism have used and abused charities. When this happens, it damages public trust and confidence in charities.

Charities may be vulnerable to terrorist and other criminal abuse for a number of reasons as they:

• enjoy high levels of public trust and confidence, which is crucial to their success
• often rely on goodwill and voluntary support in one form or another
• are diverse in nature, providing a broad range of activities and reaching all parts of society; because of this reach, large numbers of people come into close contact with charities, including those who may abuse them, through their services, the use of their property and through their trustees and volunteers
• have a global presence, including in conflict areas and/or where there is poor infrastructure, and frequently move money, goods and people to these areas
• often have complex financial operations including multiple donors, investments and currencies, often receiving and using cash, having to account for high volumes of small-scale transactions and using informal money transfers
• may have complex programmes of operation and may pass funds to, and work with, intermediary partner organisations including NGOs based overseas to deliver their services, as well as operating directly themselves
• may have unpredictable and unusual income and expenditure streams, so suspicious transactions may be harder to identify
• may have branches and/or projects that are not under the direct supervision or regular control of trustee management
• may be subject to different and, in some cases, weaker levels of regulation in different parts of the world
• are often powerful vehicles for bringing people together for a common purpose and collective action, and may inadvertently provide a ready-made social network and platform of legitimacy for terrorists or terrorist ideology

Additionally, there may be factors that increase the vulnerability of some charities – for example, those which operate in certain international areas or engage in a particular type of work. However, it is clear from the enormous diversity of the sector that the risks will vary. Charities working solely in the UK may experience high risks as well as those operating abroad, although the nature of those risks will differ. The purpose of this guidance is to raise awareness, whilst helping charities to develop their own risk measures and procedures, so as to protect them from such abuse.

A charity’s funds, facilities and name are precious assets and vulnerable to exploitation for terrorist purposes. People who seek to abuse charities may see them as a vulnerable target because of the high level of public trust and confidence there is in the charitable sector. The UK’s most recent NRA notes that charities operating overseas through partners in high-risk jurisdictions face a greater risk of abuse by terrorists that seek to misappropriate their funds or assets than other charities. The NRA highlights that other inadvertent forms of abuse can occur though skimming, incidental theft or opportunistic looting.

5.1 Possible ways that abuse might occur

Charity funding

Funds may be raised in the name of a charity or charitable purposes, which are then used by the fundraisers for supporting terrorism, with or without the knowledge of the charity. Where a charity’s funds are being moved from one place to another, including internationally, these could be diverted before reaching their intended recipients. A charity might be used to launder money or be used as a legitimate front for transporting cash or other financial support from one place to another. This risk is increased if the charity’s financial controls are weak. The recipients themselves could misuse the funds; a risk that increases if proper due diligence checks are not carried out first on the recipient.

Use of charity assets

Charity vehicles might be used to transport people, cash, weapons or terrorist propaganda, or charity premises used to store/display them or arrange distribution. Individuals supporting terrorist activity may claim to work for a charity and trade on its good name and legitimacy in order to gain access to a region or community. They may use the charity and/or its name as a seemingly legitimate cover to travel to difficult to reach places to take part in illegal activities such as attending terrorist training camps. The communications network of a charity could be exploited to allow terrorists to contact or meet each other. Sometimes the charity may simply provide the opportunity for terrorists to meet. These activities could take place without the knowledge of the charity or its trustees.

Use of a charity’s name and status

Terrorist activities may be hidden by, or take place alongside additional, and otherwise legitimate, charitable activities. A charity may give financial or other support to an organisation or partner that provides legitimate aid and relief. However, that organisation or partner may also support or carry out terrorist activities. A school that teaches terrorist ideology or trains terrorist recruits alongside legitimate classes may be able to provide full receipts for the schoolbooks bought with charity funds. However, its terrorist activities would make it completely unacceptable for a charity to support that organisation.

Charities must not support or promote terrorist activities. If the organisation has relief purposes but chooses to provide relief only to the families of terrorists or a particular terrorist organisation, this is also not legitimate activity. While each family may be in need, the unstated purpose becomes to help the terrorist or terrorist organisation’s work.

Abuse from within a charity

Those within a charity may also abuse their position within the charity and the name of charity itself for terrorist purposes. This might include ‘skimming’ off money in charitable collections and sending or using the funds to support terrorist activities. People within a charity may arrange for or allow charity premises to be used to promote or support terrorist activity or extremist ideology. Trustees themselves may also be held accountable for engaging in behaviour or making inappropriate comments for a similar purpose. Charities may invite speakers or use volunteers they know to be likely to promote terrorism to influence the charity’s work. They may abuse the charity by allowing those involved in terrorist activity to visit or work with them. The Commission’s Compliance Toolkit Chapter 5 – Protecting charities from abuse for extremist purposes provides additional guidance for trustees.

5.2 Charities set up for illegal or improper purposes

In extreme cases, terrorists may try to set up an organisation as a sham, promoted as charitable but whose sole purpose is really to raise funds or use its facilities or name to promote or coordinate inappropriate and unlawful activities.

6. Counter-terrorism legislation – an overview

There is no international consensus on the legal definition of terrorism. In this guidance, when the Commission refers to terrorism and related terms, it is using the definition used in UK criminal law as set out in the Terrorism Act 2000. The full wording of this can be found at legislation.gov.uk ^{[footnote 1]}.

The Terrorism Act 2000 (TACT) is the primary piece of counter-terrorism legislation in the UK.

Some of the other key relevant legislation includes:

The Anti-Terrorism, Crime and Security Act 2001

Terrorism Act 2006

Counter Terrorism Act 2008

Counter Terrorism and Security Act 2015

Criminal Finances Act 2017

Sanctions and Anti Money Laundering Act 2018

Counter Terrorism and Border Security Act 2019

Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019

These create a number of offences related to terrorism, including fundraising for, and the financing and support of, terrorist activities, running terrorist training activities and encouraging terrorism. They give a number of powers to the police to help in investigating and dealing with terrorism.

TACT provides a power for the Home Secretary to ‘proscribe’ organisations. This affects charities and their trustees in a number of ways, particularly where proscribed groups, terrorist financing and duties to report suspicions are concerned. Offences under TACT include:

• being a member of a proscribed organisation
• wearing an item of clothing or displaying an article in such a way as to arouse reasonable suspicion that that the person is a member or supporter of a proscribed organisation
• arranging a meeting to encourage support for a proscribed organisation or that is addressed by a person who belongs to one
• raising funds for, or donating money to, a proscribed organisation
• receiving or providing money or property where it is intended, or there is reasonable cause to suspect that it may be used for, the purposes of terrorism
• facilitating the laundering of terrorist money

Please see the section on Proscribed organisations below for further information.

Of particular relevance in TACT are the amendments made by the Counter Terrorism Act 2008 to the reporting requirements of a ‘belief or suspicion’ of offences related to terrorist property, to make clear these apply to the trustees of charities. For an overview of all reporting requirements, please see the section below on Reporting requirements.

The Anti-Terrorism, Crime and Security Act 2001 makes provisions for the forfeiture of terrorist property. It also allows for the freezing of accounts or assets at the start of an investigation without criminal charge, where HM Treasury (HMT) reasonably believes that action to the detriment of the UK’s economy has been or is likely to be taken or there is a threat to the life or property of one or more UK nationals or residents.

The Terrorism Act 2006 includes other offences concerned with:

• preparation of terrorist acts
• providing training for terrorism or receiving the training
• attending any place, whether in the UK or elsewhere, where terrorism training is being conducted
• encouraging terrorism, including publishing statements that encourage and glorify terrorist acts

The Counter Terrorism Act 2008 aims to provide those charged with the responsibility of investigating and prosecuting terrorist offences with a greater range of powers, both before and after arrest, charge and conviction and includes new powers to gather and share information.

The Counter Terrorism and Security Act 2015 includes offences concerned with returning to the UK if under a temporary exclusion order. It also amends TACT, making it an offence for an insurer to make payments made in response to demands for terrorism purposes where the insurer knows or suspects this to be the case.

In addition, it places the Prevent duty on a statutory footing so that a ‘specified authority’ must, in the exercise of its functions, have due regard to the need to prevent people from being drawn into terrorism. Some charities, for example certain educational or health charities, are ‘specified authorities’ and therefore subject to the duty. Trustees of these charities are now under a legal duty to:

• assess the risk of radicalisation in their charity
• develop an action plan to reduce this risk
• train staff to recognise radicalisation and extremism
• work in partnership with other partners
• establish referral mechanisms and refer people to Channel (a multi-agency process designed to safeguard vulnerable people from being drawn into terrorism)
• maintain records and reports to show compliance

The Commission’s Compliance Toolkit Chapter 5 – Protecting charities from abuse for extremist purposes provides additional information on the Prevent duty and its implications for charities. Detailed information on the Prevent duty is also available within the government’s statutory Prevent guidance.

The Criminal Finances Act 2017 aims to strengthen the government’s response to money laundering and terrorist financing and improve its ability to recover the proceeds of crime. It includes the introduction of Unexplained Wealth Orders regime which means certain individuals or companies will have to explain the origin of assets that appear to be disproportionate to their known income.

The Sanctions and Anti Money Laundering Act 2018 enables the UK government to impose, update and lift economic and other sanctions, as well as money laundering and terrorist financing regulations. Its key provisions came into effect when the UK left the EU and was no longer subject to EU law in these areas.

The Counter-Terrorism and Border Security Act 2019 updates and closes gaps in existing counter-terrorism legislation to ensure that it is fit for the digital age and reflects contemporary patterns of radicalisation. It provides a new offence of entering or remaining in an area outside the UK that has been designated in regulations by the Secretary of State in order to protect the public from a risk of terrorism. It also extends the offence of inviting support for a proscribed organisation to cover expressions of support that are reckless as to whether they will encourage others to support the organisation.

Under the Sanctions and Anti Money Laundering Act 2018, the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 (the Regulations) impose financial sanctions. The prohibitions and requirements in the Regulations are aimed at furthering the prevention of terrorism in the UK or elsewhere and protecting UK national security interests and will ensure that the UK implements the relevant UN obligations. In particular, the Regulations enable HMT to consider imposing an asset freeze on those identified as being or having been involved in terrorist activity. Further information on designations and the relevant checks can be found in the section Designated individuals and entities.

7. Proscribed organisations

7.1 What is a proscribed organisation?

Short answer:

A proscribed organisation is a group concerned in terrorism and prohibited by law from operating in the UK.

In more detail:

Under the Terrorism Act 2000 (TACT), the Home Secretary may proscribe an organisation if they believe it is concerned in terrorism. For the purposes of the Act, this means that it:

• commits or participates in acts of terrorism
• prepares for terrorism
• promotes or encourages terrorism, or
• is otherwise concerned in terrorism

If the statutory test is met, there are other factors which the Home Secretary will take into account when deciding whether or not to exercise discretion to proscribe. These criteria are:

• the nature and scale of an organisation’s activities
• the specific threat that it poses to the UK
• the specific threat that it poses to British nationals overseas
• the extent of the organisation’s presence in the UK
• the need to support other members of the international community in the global fight against terrorism

If the Home Secretary decides to exercise their power to add an organisation to the list of proscribed organisations, they will lay an Order, which is subject to approval by both Houses of Parliament. If passed, the Order is then signed and comes into force on the date specified in the Order. All proscriptions are reviewed on a regular basis.

In addition, if the Home Secretary believes that a proscribed organisation is operating wholly or partly under a different name than the name listed, they may, by order, state that this alternative name is for all practical purposes the same as the proscribed organisation.

If an organisation is proscribed, it is illegal for it to operate in the UK. It is a criminal offence for a person to belong to, or invite support for, a proscribed organisation. It is also a criminal offence to arrange a meeting in support of a proscribed organisation or to wear clothing or carry articles in public which lead people to suspect that an individual is a member or supporter of the proscribed organisation. Proscription means that the financial assets of the organisation become terrorist property and can be subject to freezing and seizure.

7.2 How can you find out which organisations are proscribed?

Short answer:

The Home Office produces a list on its website of all the proscribed organisations. Please consult the list for the latest information on proscribed organisations.

In more detail:

A full list of proscribed organisations, with a brief explanation of each, is available on the Home Office’s website.

Covering both international terrorist organisations and terrorist organisations in Northern Ireland, the list of proscribed organisations is kept under constant review and may be amended. Other organisations may be added to the list from time to time through the process described above. As organisations are added, they may also be removed if the Home Secretary considers that they are no longer concerned in terrorism. It is therefore strongly recommended to check the list at regular intervals.

7.3 Why do you need to know about proscribed organisations?

Short answer:

Proscribed organisations or their members may operate in places where charities work or fundraise and may seek to abuse and take advantage of charities and their work.

You may commit a criminal offence if the charity is connected to, or supports, a proscribed organisation.

In more detail:

The presence of proscribed organisations or their members could affect any charity working in any community or region in the UK or internationally. Under UK law, proscribed organisations are terrorist organisations. Any links between a charity and terrorism are totally unacceptable and corrosive of public confidence in charities.

You must make sure the charity’s assets are used only to support, or carry out, its purposes and should be vigilant to ensure that its premises, assets, staff, volunteers and other resources cannot be used for activities that may, or may appear to, support proscribed organisations. Proscribed organisations may operate in places where the charity works or fundraises. Membership of a proscribed organisation is a criminal offence. Other offences connected to support for a proscribed organisation are set out in the legislation.

7.4 Why are links to proscribed organisations not allowed?

Short answer:

TACT sets out what kind of support to a proscribed organisation is a criminal offence.

However, even indirect or informal links with a terrorist organisation pose unacceptable risks to the property of a charity and its proper and effective administration. Even if a link or association does not amount to a criminal offence, it is difficult to see how you could adequately manage the risks to the charity and find a way in which you could properly discharge your charity law duties and responsibilities. What constitutes a link will depend on the circumstances of each case.

In more detail:

The UK’s counter terrorism legislation creates a number of offences connected to supporting proscribed organisations including:

• being a member of a proscribed organisation
• claiming to belong to, or encouraging support for, a proscribed organisation – including expressions of support that are reckless as to whether they will encourage others to support the organisation
• arranging a meeting to encourage support for a proscribed organisation or which is addressed by a person who belongs to a proscribed organisation
• wearing clothing or carrying articles in public in such a way or in circumstances which lead people to suspect that the person is a member or supporter of a proscribed organisation
• raising funds for, or donating money to, a proscribed organisation
• receiving or using money or other property for the purposes of terrorism
• failing to report your suspicions or beliefs of terrorist finance offences to the police

However, even indirect or informal links with a terrorist organisation could result in a charity’s reputation and public trust and confidence in charity generally being harmed.

Such links may be an association with someone who is a known supporter of a proscribed organisation or allowing a member of a proscribed organisation to influence the behaviour or activities of the charity. Examples of indirect and informal links to proscribed organisations include:

• using language or terminology associated with a particular proscribed organisation in a way which could inadvertently promote its cause or activities
• funding, supporting or working alongside a proscribed organisation, even if the charity’s own funds are not used for terrorist purposes
• working with local partners in a community or region whose members or staff openly support proscribed organisations but who cannot be prosecuted in the UK because of jurisdictional reasons
• allowing charity premises to be used to promote the views of an individual or organisation which supports the views of a proscribed organisation

If you encourage these types of links to terrorist organisations, allow them to happen, fail to report them, or do not take reasonable steps to prevent them, then you risk committing an offence under terrorism legislation. You will also be in breach of your trustee duties and responsibilities.

You must therefore not, for example:

• send charity money to, or receive funds from, a proscribed organisation
• appoint a member of a proscribed organisation as a trustee or to any other position within a charity
• allow or use charity premises, events, websites or literature to support a proscribed organisation
• provide charity services or distribute aid specifically targeted at members of a proscribed organisation or their families
• arrange for or fund a member of a proscribed organisation to move around the UK or overseas

In reality, the Commission appreciates it may be difficult to identify members of a proscribed organisation. Members are unlikely to openly admit their support. A partner organisation is unlikely to admit openly to supporting terrorism. A charity is unlikely to know for certain whether the partner organisation indirectly or covertly supports a proscribed organisation. However, you and your co-trustees cannot ignore the risks and need to be able to demonstrate that you have taken all reasonable steps to ensure that the charity, its representatives and partners are not linked to terrorism.

For further guidance on due diligence procedures, see the Commission’s Compliance Toolkit Chapter 2 – Due diligence, monitoring and verifying the end use of charitable funds.

Case study: Charity premises and facilities used by proscribed organisations

A charity organises and runs educational programmes and training projects internationally. The trustees encourage use of their international premises for an educational programme. External teachers, trainers and speakers are vetted through a process which includes checking names against terrorism lists. As part of their monitoring processes, the trustees check a selection of material that is to be distributed during training workshops. One leaflet promotes a previously unheard-of organisation in a country where terrorist groups are known to operate. The trustees check the proscribed organisation list and see that the name matches a proscribed organisation. They immediately prevent the speaker who is handling the leaflets from presenting and notify the police. The leaflet is withdrawn.

The trustees are aware of potential offences under TACT of arranging an event which they know has the potential to encourage support for a proscribed organisation. They have not committed an offence, but they may have taken steps to prevent one from occurring.

The charity trustees ensure processes are in place to monitor classes, speakers and trainers during future workshops, whilst recognising the need to balance their duties under TACT with wider laws protecting freedom of speech (please see the Commission’s Compliance Toolkit Chapter 5 – Protecting charities from abuse for extremist purposes). They also review their monitoring procedures regularly to ensure they do not commit any offence under TACT.

7.5 Are trustees under a legal obligation to check the list of proscribed organisations?

Short answer:

Where the risks are high, in order to fully discharge your duties, you should check partners and individuals against the lists so as to ensure that a criminal offence is not committed by providing resources or support to a proscribed organisation. Whatever the level of risk, it is good practice to do so.

In more detail:

You and your co-trustees must comply with the law and so should take adequate steps to ensure that you do not, even inadvertently, commit a criminal offence in the UK or overseas by working with proscribed organisations. Where the risks are high, in order to fully discharge your duties, you should carry out full prudent due diligence on prospective partners, including checking them against the terrorist lists. Whatever the level of risk, it is good practice to do so.

If you do not take these basic steps to check your partners against the lists, you may be in breach of your duty to safeguard your charity. The Commission may also use this as evidence of misconduct or mismanagement in the administration of the charity.

The Crown Prosecution Service (CPS), the public authority responsible for prosecuting people in England and Wales who have been charged by the police with a criminal offence, provides further information on proscription offences and terrorist financing offences. According to the CPS, consideration of what due diligence measures were put in place to actively comply with UK law may be relevant when applying the evidential stage of the Full Code Test in cases relating to humanitarian, development and peacebuilding organisations. For more information, please see the CPS guidance Humanitarian, Development and Peacebuilding Work Overseas.

The list of proscribed organisations is kept under constant review by the Home Office and may be amended so it is important that trustees of charities operating in high-risk areas check the list at appropriate intervals.

7.6 What do charity trustees need to do?

Short answer:

You must comply with the law and act responsibly and reasonably. To carry out this duty, you should ensure you adequately assess the nature and extent of the risk of your charity coming into close contact with proscribed organisations. The greater the risk, the more you need to do.

In high-risk situations in order to discharge your duties, you should check prospective partners against the terrorist lists.

You should also remain vigilant to signs that may suggest support for a proscribed organisation and act responsibly in dealing with concerns which arise.

If you have beliefs or suspicions that the charity, your co-trustees, members, staff or volunteers are members of, or are encouraging support for, a proscribed organisation, you must report this to the police immediately. This should also be reported to the Commission as a serious incident.

In more detail:

In order to discharge your legal duties and responsibilities under charity law, you must ensure that you do not commit an offence under terrorism legislation. You must also avoid exposing your charity’s assets, people, beneficiaries or reputation to undue risk and take appropriate steps to prevent their abuse. As a minimum, you should ensure you:

• adequately inform yourself about the nature and extent of the risk of your charity coming into close contact with proscribed organisations
• have up to date information on the security situation and the risks this poses
• have introduced and recorded appropriate risk assessment procedures

The Commission will always support charities to deliver legitimate humanitarian aid and other services. It appreciates the challenges that charities may face when working in regions where proscribed organisations are known to operate and where they have some degree of control over access to people in need. This is why a risk-based approach is more appropriate than a ‘one-size-fits-all’ approach. The detail of the checks and due diligence required, possibly extending to staff or partners, donors or beneficiaries, will depend on the extent of the risks evident in the circumstances. The level of checks and necessary procedures will be affected by the nature of the activities the charity carries out and area in which it operates.

Where the risks are great – such as in areas where it is well known or likely that proscribed and other terrorist organisations are known to operate – trustees should ensure those steps are sufficiently robust. The greater the risk, the more you need to do.

You should also remain vigilant to signs that may suggest support for a proscribed organisation and act responsibly in dealing with concerns which arise. You should ensure you take seriously concerns that you or others may have about their partners. If there is belief or suspicion to suggest a charity is supporting a proscribed organisation or charitable funds are supporting a proscribed organisation, not only are you and your co-trustees at risk of committing a criminal offence, but there is a risk that the charity itself may be subject to proscription or designation.

If you have a belief or suspicion that your charity, its trustees, members, staff or volunteers are providing funds or economic resources to a proscribed organisation, you must report it to the police immediately.

You should also report this to the Commission as a Serious Incident. Read more detailed information on reporting serious incidents.

Case study: Cross-checking partner organisations with proscribed lists

A charity works in a region where proscribed organisations are known to operate. The trustees are considering forming a new partnership with an organisation that works closely with the local community. They undertake a risk assessment as part of their usual routine for identifying organisations they might work through.

The trustees undertake some online research and find that one prospective partner has carried out a number of successful projects with funding from other charities and UK businesses. The trustees contact one of these charities to find out their experience of working with the prospective partner organisation. They also contact the organisation itself, asking for more information on the work it undertakes, how it goes about it, and its management and administration capacity.

The trustees check the name of the organisation against the proscribed lists on the Home Office website and find no positive identifications. The trustees also meet with the organisation’s leaders to discuss in detail the project proposal and partnership agreement.

They satisfy themselves that their prospective partner has the capability to manage and deliver a worthwhile project using the charity’s funds. A written agreement is put in place which requires regular progress reports and accounts from the partner. It also involves the trustees visiting the region themselves twice a year to meet with the partner to review the work that has been undertaken and discuss project progress and future plans.

The trustees are confident they have undertaken adequate due diligence checks of the partner and have put in place appropriate monitoring and reporting procedures for ensuring that funds are being correctly disbursed in line with the terms of the funding agreement.

8. Designated individuals and entities

Separate from proscription under the Terrorism Act 2000, individuals, organisations or groups (referred to as entities) can be designated as being, or having been, “involved in terrorist activities” under the Sanctions and Anti-Money Laundering Act 2018 (the Sanctions Act) in relation to the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019 (the Regulations).

The Regulations enable HMT to impose financial sanctions on those designated as being, or having been, involved in terrorist activity. The financial sanctions imposed by these Regulations apply within the UK and in relation to the conduct of all UK persons wherever they are in the world. UK persons includes British nationals, as well as all bodies incorporated or constituted under the law of any part of the UK.

Financial sanctions are generally imposed to:

• coerce a regime, or individuals within a regime, into changing their behaviour (or aspects of it) by increasing the cost on them to such an extent that they decide to cease the offending behaviour
• constrain a target by denying them access to key resources needed to continue their offending behaviour, including the financing of terrorism or nuclear proliferation
• signal disapproval, stigmatising and potentially isolating a regime or individual, or as a way of sending broader political messages nationally or internationally; and/or
• protect the value of assets that have been misappropriated from a country until these assets can be repatriated

Whilst the Foreign, Commonwealth and Development Office (FCDO) is responsible for the UK’s international sanctions policy, HMT’s Office for Financial Sanctions Implementation (OFSI) is the authority responsible for implementing financial sanctions. OFSI helps to ensure that financial sanctions are properly understood, implemented and enforced in the UK. They have produced a factsheet for charities which provides answers to frequently asked questions on financial sanctions.

This section focuses specifically on designations of individuals and entities under the domestic Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019. There are two other counter-terrorism sanctions regimes, the ISIL (Da’esh) and Al-Qaida sanctions regime and the Counter-Terrorism (International) sanctions regime, as well as country regimes. What is prohibited under each regime depends on the regulation and OFSI publishes a complete list of financial sanctions regimes. Whilst this guidance focuses on the domestic Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019, the implications will be the same for an individual or entity listed under the other financial sanctions regimes.

Beyond financial sanctions, the UK also implements a wider range of sanctions regimes through regulations made under the Sanctions Act. This includes trade sanctions, immigration sanctions and shipping sanctions. The FCDO provides further guidance on the complete UK sanctions framework and signposts to relevant advice.

This section of the guidance concentrates specifically on UK designations. For further information on the considerations regarding designations by other countries, please see The international dimension below.

8.1 What are UK designated individuals and entities?

Short answer:

Under the Regulations, a designated individual or entity is an individual, organisation or group which faces financial sanctions in the UK. This is because they are, or have been, involved in terrorist activity.

In more detail:

Following the terrorist attacks of 11 September 2001, the UN Security Council adopted Resolution 1373 (2001). This denounces terrorism and requires member states: to prohibit all forms of financial support for those who participate in terrorist acts; not to provide safe haven to terrorists or any kind of support to terrorists; and, to share with other governments information about any groups practising or planning terrorist acts.

The Regulations are aimed at furthering the prevention of terrorism in the UK or elsewhere and protecting UK national security interests and will ensure that the UK implements its UN obligations under Resolution 1373.

Under the Regulations, an individual or entity is designated because they are, or have been, involved in terrorist activity which includes, but is not limited to, the following:

• being responsible for, engaging in or providing support for, the commission, preparation or instigation of acts of terrorism
• providing financial services, or making available funds or economic resources, for the purposes of terrorism
• facilitating, promoting or encouraging terrorism
• providing or receiving training for the purposes of terrorism
• travelling or attempting to travel from or into the relevant territory for the purposes of terrorism
• carrying out recruitment activities for a person involved in terrorism

8.2 What are the implications of this?

Short answer:

The main implication of being designated is that the individual or entity is subject to financial restrictions. Financial sanctions come in many forms but one of the most common types of financial sanctions is a targeted asset freeze. Under an asset freeze, it is prohibited to:

• deal with the frozen funds or economic resources, belonging to or owned, held or controlled by a designated person
• make funds or economic resources available, directly or indirectly, to, or for the benefit of, a designated person
• engage in actions that, directly or indirectly, circumvent the financial sanctions prohibitions

In more detail:

The Regulations make it a criminal offence for a person (including the designated person) to deal with funds or economic resources belonging to, or owned, held or controlled by a designated person. It is also a criminal offence to make funds or economic resources available, directly or indirectly, to or for the benefit of, a designated individual or entity.

The funds and economic resources are to be frozen immediately by the person in possession or control of them. An asset freeze does not involve a change in ownership of the frozen funds or economic resources, nor are they confiscated or transferred to OFSI for safekeeping.

OFSI may grant a licence to allow otherwise prohibited transactions and prohibited activity to take place in some circumstances. A licence may be specific or general but OFSI can only issue licences where there are specific and relevant licensing grounds enabling them to do so, and where the conditions in those grounds have been met.

The Regulations also set out exceptions to some of the financial sanctions prohibitions which apply within certain defined circumstances. An exception applies automatically and does not require you to obtain a licence from OFSI.

For more information, please see the guidance below on ‘What should you do if you need to deal with someone who is subject to financial sanctions?’

8.3 How can you find out which organisations and individuals are designated?

Short answer:

OFSI publishes a consolidated list of financial sanctions targets. The individuals and entities listed are known as designated persons.

In more detail:

OFSI publishes a consolidated list of financial sanctions targets which it keeps updated. This is a list of all asset freeze targets listed under UK autonomous financial sanctions legislation and UN sanctions.

In some cases, it can be more difficult to establish if an entity is subject to financial sanctions due to its ownership structures. Some sanctioned entities deliberately use shell companies to try and obscure their ownership structure. They may be owned by a designated person and checks beyond the scope of OFSI’s consolidated list are required to establish who owns them. If you are finding it difficult to establish who the owner of a company is, further consideration should be given as to whether or not to partner with the organisation. OFSI’s Financial Sanctions: General guidance provides more information on ownership and control. However, if you are still unsure, contact OFSI.

Practical advice:

You can sign up to free e-alerts from OFSI to get regular updates on any additions to, amendments of or removals from the consolidated list of financial sanctions targets.

The consolidated list of financial sanctions targets is available in a number of formats (HTML, Excel, PDF, Plaintext etc.), as well as having a search function.

When using and navigating the list, check as many different identifiers as possible: for example, aliases, date of birth and nationality. Where the risks are higher, you may need to consider the ownership or control of partner organisations or companies.

8.4 Why do you need to know about designated individuals and entities?

Short answer:

You may commit a criminal offence if you make funds or economic resources either directly or indirectly available to designated entities, groups or individuals without a licence from OFSI.

In more detail

You must avoid exposing your charity to undue risk and be vigilant to ensure that you do not knowingly or inadvertently make funds or economic resources available, either directly or indirectly, to a designated entity unless you have a licence from OFSI or can rely on an exception in the legislation.

Trustees must ensure that they do not commit a criminal offence if they deal with designated individuals and entities. Given the financial restrictions on the affairs of designated individuals and entities, they may seek to take advantage of charities and their work. You must therefore put in place proper procedures for managing the risks of breaching the Regulations, taking appropriate steps if the situation arises.

Entities, groups or persons may be designated in the UK even though they are not based here or have never operated here – this reflects the international nature of terrorism and helps to prevent the abuse of the UK financial sector for terrorist purposes. However, some of the individuals and entities designated in the UK are living or operating here. It is therefore possible that charities working in any community or region in the UK, as well as internationally, may come across a designated entity, in their work. Charities that operate in regions where there are a large number of designated entities will clearly be at greater risk of breaching the Regulations than those working in areas where designated entities do not have a significant presence. Nationalities and addresses of designated entities are included in the consolidated list of financial sanctions targets, and this may help charities to assess and manage the risks.

For charities operating internationally in higher risk areas, some of the common scenarios that could risk direct or indirect benefit to a designated entity include:

• renting a building for charitable activities where the owner is either directly or indirectly sanctioned
• purchasing equipment required for charitable activities from a non-listed company which is ultimately owned by an individual or entity on the consolidated list of financial sanctions targets
• needing to have access to local sanctioned infrastructure such as telephone networks

Guidance is given below on circumstances where individuals directly involved in the charity are designated, whether as trustees, volunteers, employees or beneficiaries. Advice is also given about what to do if you discover a co-trustee is a designated individual.

Generally, when assessing your charity’s risk management procedures, you should consider:

• incorporating regular checks of the consolidated list of financial sanctions targets when considering whether to work with new people or organisations, especially in high-risk areas
• ensuring aliases or common variants in spelling are incorporated into checks, using the address or citizenship listed to help identify matches
• establishing specific processes in the case of positive matches from searches of the list, including any necessary applications to OFSI for a licence

You should also consider the risks to the charity’s reputation if you or your co-trustees deliberately or unwittingly come into contact with designated entities, groups or persons, as well as the risks to the reputation of the charity sector in general.

If you know or have ‘reasonable cause to suspect’ that you are in possession or control of, or are otherwise dealing with, the funds or economic resources of a designated person, take these three steps:

1. Contact OFSI immediately.
2. Freeze their funds and economic resources in your possession.
3. Do not make funds or economic resources available to them.

Reasonable cause to suspect refers to an objective test that asks whether there were factual circumstances from which an honest and reasonable person should have inferred knowledge or formed the suspicion.

Case study: Checking consolidated list of financial sanctions targets

A charity receives an application from an organisation for the supply of vehicles for use in another country where terrorists are understood to operate. The trustees have not heard of the organisation before. As part of their vetting procedures, they search for the organisation’s name on the consolidated list of financial sanctions targets.

No organisation is listed with exactly the same name. The trustees conduct a ‘key word’ search and an organisation appears with a very similar name, but with the words in a different order. The address of the entry is exactly the same as that of the applicant.

Although they cannot be certain that it is the same organisation, the trustees decide that the risk is too great for the charity and reject the application. The factors they take into consideration include:

• the results of their search on an online search engine
• whether they have not heard of or worked with the organisation before

As they are in doubt about whether it is the same organisation, the trustees could have contacted the OFSI for advice and confirmation about the identity of this organisation. The trustees should also record how they made decisions in case they need to review or explain them in the future.

8.5 What should you do if you need to deal with someone who is subject to financial sanctions?

Short answer:

If a transaction is required that involves someone who is subject to financial sanctions (whether directly or indirectly), you must obtain a licence from OFSI to allow the activity to take place without breaching financial sanctions or be able to rely on an exception in the legislation.

In more detail:

You should not assume that a licence from OFSI will be granted or engage in any activities prohibited by financial sanctions until you have a signed licence.

Licences can only be granted where there are specific and relevant licensing grounds. Activity is not necessarily permitted just because it is for a charitable purpose but there is a licensing ground that specifically relates to humanitarian activities.

Licence applications can be legally and commercially complex. You should apply as early as possible and at least four weeks before a licence is needed. In certain circumstances, the UN may need to approve them or be made aware of them. This can lead to a longer turnaround time. You should also consider taking independent legal advice before applying for a licence. For further information on how to apply for an OFSI licence, please see their guidance Licences that allow activity prohibited by financial sanctions.

Whilst charities are not exempt from financial sanctions, the Regulations set out exceptions to some of the financial sanctions prohibitions which apply within certain defined circumstances. An exception to a prohibition applies automatically in these certain defined circumstances and does not require you to obtain a licence from OFSI. If you are unsure whether an exception applies in your circumstances, you are advised to seek independent legal advice.

8.6 Can a designated person be a trustee?

Short answer:

No. Those subject to designation are automatically disqualified from acting as a charity trustee. A designated person cannot discharge all of their legal duties as trustee in the management and administration of a charity and therefore must not be appointed as a trustee. If a trustee is subsequently designated, they must resign from their position or they will be in breach of charity law.

In more detail:

Some people are disqualified by law from acting as trustees, unless authorised to do so by a waiver from the Commission. A person is disqualified from acting as a charity trustee or holding a senior management position within a charity if they are subject to an asset freeze under the Counter-Terrorism (Sanctions) (EU Exit) Regulations 2019, the Counter-Terrorism (International Sanctions) (EU Exit) Regulations 2019 or the ISIL (Da’esh) & Al-Qaida (United Nations Sanctions) (EU Exit) Regulations 2019 in relation to the Sanctions Act.

The legal consequences of being designated make it impossible for a designated person to be a trustee. This is because it is a criminal offence for funds or economic resources to be made available to a designated person.

Trustees have a legal responsibility for the administration of their charity. They are custodians of charitable funds and hold them on trust for their charity. They have control over the management and administration of the charity and therefore, its assets. This applies irrespective of whether they are a signatory to the charity’s bank account or physically have access to the charity’s funds.

It is an offence for a designated person to deal with funds owned or controlled by them or for any person to do so at the direction of a designated person. Therefore, a designated trustee would be unable to act in the administration of the charity without committing an offence unless licensed to do so by OFSI. Conversely, if the trustee in question did not deal with charity funds, then they would be failing to discharge their legal duties as a trustee in the management and administration of a charity. Either way, this amounts to misconduct in the administration of a charity.

You should therefore take appropriate steps to ensure that a designated person is not appointed as a trustee. You should ensure appropriate eligibility checks are in place, which may include checking against the consolidated list of financial sanctions targets. More general information on trustee eligibility checks can be found in Finding new trustees (CC30).

8.7 What should you do if you discover a co-trustee is designated?

Short answer:

In order to ensure that the designated trustee does not commit a criminal offence and is not in breach of their legal duties, they must resign as trustee. If they do not, you and your co-trustees should see if you have power to remove them from office.

If you discover that your charity has appointed a designated person as a trustee, or a person who is a trustee subsequently becomes designated, you should contact OFSI and report this to the Commission immediately as a serious incident.

In more detail:

In addition to the criminal offences outlined above, having a designated person as a trustee opens the charity up to potential civil offences and other serious risks. Depending on the degree of control the designated person has over the charity, the charity could be at risk of being designated itself and its assets at risk of being frozen.

If your charity’s governing document does not automatically prohibit the individual from being a trustee, you should consider whether you have the power to remove them or seek their resignation with immediate effect. If you do not have this power, ask the Commission for advice. If the individual does not resign and you cannot or do not remove them, the Commission will consider using its legal powers to do so.

If you discover that the charity has appointed a designated person as a trustee, or a trustee is subsequently designated, you should report this to the Commission. Read more detailed information on reporting serious incidents. You should also contact OFSI immediately.

The Commission has produced a quick guide for cross-checking trustees with the consolidated list of financial sanctions targets.

8.8 Can a designated person work or volunteer for a charity?

Short answer:

You must avoid exposing the charity to undue risks and so should not allow a designated person to work or volunteer with the charity.

It is against the law to make funds or economic resources available to a designated person, unless a licence is obtained from OFSI or there is an exception in the legislation that can be relied on. Even then, the risks to the charity are high. You will need to be able to show that this is in the interests of the charity and that you have properly discharged your legal trustee duties, assessing and managing the risks appropriately including potential criminal offences and reputational damage to your charity.

In more detail:

It is a criminal offence to make funds, financial services or economic resources available to, or for the benefit of, designated persons unless a licence is obtained from OFSI or there is an exception in the legislation that can be relied on. This would include paying wages to an employee, refunding expenses to a volunteer, or the charity providing economic resources such as computers or mobile phones, if these provide a financial benefit. You should seek advice from OFSI in individual cases.

This also affects a charity taking on volunteers. Individuals can volunteer their services in many ways. Providing health programmes, offering social facilities, running advice centres and fundraising are just some of the ways people give their time to charity. Not every volunteer will have direct access to a charity’s funds. However, there is a possibility that they may have access to, or benefit from, other forms of economic resource provided by the charity.

In addition to the risk of committing a criminal offence, to comply with your duties as a trustee, you must avoid exposing the charity’s assets, people, beneficiaries or reputation to undue risk. There are risks to the charity given that a person is designated because they are suspected of being someone who is involved in terrorist activity.

If you discover that the charity has employed a designated person or taken them on as a volunteer, you should contact OFSI and report this to the Commission immediately. If you and your co-trustees decide to terminate the employment contract of the designated person, given their contractual rights, you should first seek legal advice on how to do this properly.

If, despite the risks explained here, you want to take on volunteers who are designated persons, you should carry out a full individual risk analysis. The Commission strongly recommends that you seek advice from OFSI before doing so. If you ignore or fail to properly deal with the risks, the Commission may use this as evidence of misconduct or mismanagement in the administration of the charity.

The Commission has produced a quick guide for checking the consolidated list of financial sanctions targets to help you.

8.9 Can a beneficiary who is designated receive services from a charity?

Short answer:

This is possible but carries significant risks. Great care needs to be taken to ensure you do not commit a criminal offence or put your charity, its assets (including its reputation), people or beneficiaries at undue risk.

Before any aid, goods or services are given to a designated person, even if this is clearly in support of the charity’s purposes, you must obtain any necessary licence from OFSI unless you can rely on an exception in the legislation and should consider seeking legal advice to ensure you are acting lawfully.

In more detail:

Charities can work with, and give support to, beneficiaries who have criminal backgrounds, including those associated with terrorist activities, as long as this work is lawful, furthers the charity’s purposes, and you and your co-trustees comply with your charity law duties.

When judging if the support to the beneficiary is lawful, you should understand and must take account of the legislation. You must ensure that in providing goods, services or other support to a beneficiary who is a designated person, that you do not commit any offences under counter terrorism legislation including the offence of making funds or economic resources available to a designated person without the necessary licence or exception.

The range of aid and services charities offer to beneficiaries is wide ranging. It is important that you recognise that the law forbids the provision of both funds and economic resources to a designated person without the necessary licence or exception. Economic resources generally mean assets of every kind – tangible or intangible, movable or immovable – which are not funds, but may be used to obtain funds, goods or services. For example, cash and voucher assistance programmes would be considered as the provision of funds and economic resources.

The risks will depend upon what activities and services a charity provides. For example, the risks will be higher for a charity that provides grants to people in poverty to help them with their utility and food bills or to help pay for school uniforms for their children. There may be fewer risks for a charity which runs a museum that is open to the public to view works of art by local artists (where admitting the designated person to the museum would not be an offence in itself). Other activities where the risks are higher may include, for example, a charity that:

• pays for the cost of training courses and apprenticeships (particularly if the funds are passed to the designated person for onward payment for training)
• pays for furniture or basic provisions for people in poverty
• arranges and pays for private medical treatment

If a charity’s activities may involve dealing with designated beneficiaries, you should conduct a thorough risk assessment. You should contact OFSI in advance and must obtain any necessary licence from OFSI prior to commencing the activity. You must also consider local law and should seek legal advice on any local licence requirements for dealing with designated beneficiaries.

If a charity chooses to provide charitable relief, services or support solely to beneficiaries because they are designated persons, this would not be acceptable. While the designated persons may be in individual need, one of the purposes of the charity then becomes, or risks becoming, support for terrorist purposes, which is not permitted under UK law.

See the Commission’s quick guide for checking the consolidated list of financial sanctions targets to help you.

You must not take inappropriate risks with the charity’s reputation. You should also therefore consider the wider risks to the charity, including the appearance of support for terrorist causes and reputational damage, that arise if a beneficiary is designated.

Case study: Working with beneficiaries who are designated

A charity is distributing widespread aid to a region in the form of a range of goods and services. They are aware of the provisions of the Regulations, which prohibit the provision of funds or economic resources to designated persons.

The trustees conduct a risk assessment of this programme which takes in a range of beneficiaries, purely on the basis of need. It is considered inappropriate and disproportionate to cross-check each beneficiary with the consolidated list of financial sanctions targets.

The trustees carry out this assessment to reduce the risk of being in breach of criminal and charitable law. They are also aware that it is a not a criminal offence if a person does not know and has no reasonable cause to suspect that they are making funds, economic resources or financial services available, directly or indirectly, to or for the benefit of a designated individual.

However, as part of the risk assessment, it is decided to cross-check the designated list with a smaller number of beneficiaries who receive specific financial grants from the charity.

Case Study: Working with groups and individuals who are designated

A charity is in contact with designated individuals as part of efforts designed to end violent conflict. The purpose of engagement is to encourage the group to engage in a broader peace process. The work involves organising meetings and research in different locations outside the UK which help understand and challenge violent behaviour and which help find political, economic and social solutions.

The charity is aware of the provisions of the Regulations which prohibit the provision of funds or economic resources to designated individuals and entities. They are also aware that the UK government’s guidance on operating within counter-terrorism legislation allows for meetings with designated individuals where this is designed to further a peace process.

The trustees conduct their own risk assessment of the activity and assess that:

1) The purpose of the meetings is ‘genuinely benign’, in that they are not designed to promote or encourage the terrorist activities of the group and are designed to further a peace process. They are therefore in line with guidance in the Terrorism Act 2000.

2) Incidental and necessary expenses to facilitate the genuinely benign meetings do not make funds or economic resources available either directly or indirectly (via a third party) to any entity subject to designation, which can facilitate terrorist activity. The activity is therefore in line with the Regulations and the expenditure therefore does not require a licence for the provision of funds or economic resources to designated entities.

3) Considering the scale of activities and expenditure of a limited nature, the controls the charity has in place are sufficient to manage risk of aid diversion and reputational damage.

On the basis of this risk assessment, the trustees decide that the activity can proceed but they document their decision making for future reference.

8.10 Can charities work with partners who are designated?

Short answer:

You, your co-trustees and/or the charity risk committing a criminal offence if the charity has unauthorised financial dealings with partners that are designated.

It is difficult to see how a close working relationship with a designated entity is possible either under criminal or charity law. Even if a charity could do so without committing a criminal offence, you must assess the risks and ensure that you do not damage the charity’s reputation, nor appear to support terrorism by working with the partner. A charity must never work with a partner designated in the UK.

In more detail:

The Commission encourages charities to look regularly at what can be achieved for beneficiaries through working in partnership. The ability to work with other organisations is particularly important for charities that work internationally. Non-Governmental Organisations (NGOs) provide crucial, innovative services and play important roles in building democracy and inclusion in their respective countries.

When working internationally, charities often work with local partners rather than establishing their own delivery infrastructure in their country or region of operation. Working through or with a local partner can be an effective way of delivering significant benefits direct to a local community and enhancing local ownership of development support. It does not, however, alleviate or shift responsibility for ensuring the proper application of the charity’s funds by the local partner. That responsibility always remains with you and your co-trustees, forming part of your duties and responsibilities under charity law. The need to implement risk management strategies therefore remains critical.

Trustees are under a continuing duty to act with reasonable care and skill and so you should satisfy yourself about the integrity of the charity’s partners. Due diligence checks should be undertaken by trustees prior to working with partners and checks made periodically where a charity has an ongoing relationship with a partner. Due diligence checks should include checking the consolidated list of financial sanctions targets in respect of individuals and entities who are (potential) partners. If you have concerns that a partner is designated or is subject to the control of designated entities, groups or individuals, you must take adequate steps to assess and manage these risks accordingly.

8.11 Trustees’ responsibilities

You have a legal duty to act responsibly. You must make sure that your charity’s assets are used only to support or carry out its purposes and avoid exposing these assets and the charity’s people, beneficiaries, reputation or other resources to undue risk or abuse. You must be vigilant to ensure that the charity’s resources cannot be used for activities that may, or may appear to, support terrorist activities or breach the Regulations.

If you believe that the circumstances of your charity may lead to a breach of the Regulations, you should assess and take reasonable steps to mitigate the risks of such a breach occurring. You must report any suspicions of a breach to OFSI. Any such reports should also be sent as a Serious Incident Report to the Commission. Trustees should also be vigilant to ensure that their own conduct and views would not cause a reasonable member of the public to conclude that the charity supported terrorism or was influenced or controlled by a designated entity. People and groups are designated because they are suspected of being involved with acts of terrorism. Even indirect or informal links with terrorists or people suspected of being terrorists could result in a charity’s reputation and public trust and confidence in charity in general being harmed.

You have a legal duty to act in your charity’s best interests. You must be satisfied that the potential serious harm to public confidence and other risks caused by associating with partners are properly assessed and managed. You should put in place robust procedures to ensure that you do not inadvertently commit a criminal offence. This should also include a rigorous assessment of whether it is in the interests of the charity to have any dealings with them at all.

The risk of committing a criminal offence will be increased where any partnership arrangement entered into involves joint or consortium funding for a project. Similarly, there is a risk if services or funds are provided to another organisation by both a charity and a designated partner or where the charity pays for goods or services on behalf of, or for the benefit of, a designated partner.

Ultimately the onus is on you, to determine whether or not you are dealing with a designated person or a company that is owned or controlled by a designated person. You should therefore check the appropriate lists and try to determine the legitimacy of the charity’s partners. Consistent criteria should be applied for selecting local partners, ensuring there is sufficient knowledge of each prospective partner to make an informed choice. For example, you may consider a partner’s track record for delivering projects, consult with other charities that have worked with them, and ensure that they will comply with regulatory requirements in their own country.

More detailed information on ‘Know your partner’ principles can be found in the Commission’s Compliance Toolkit Chapter 2 – Due diligence, monitoring and verifying the end use of charitable funds.

8.12 What happens if a charity is designated in the UK?

Short answer:

The charity will have its accounts frozen and will not be able to operate. In addition, the charity’s partners and others may commit a criminal offence if they have financial dealings with the charity.

If a charity becomes designated, you should report this immediately to the Commission as a serious incident (although the Commission may have been contacted by OFSI or the bank already). You should also seek independent legal advice immediately.

In more detail:

It is uncommon for charities to be designated under the UK legislation. However, if this were to happen, OFSI would contact the charity concerned, setting out all the information it needs to know about the effect of designation, what the charity has to do to get permission to use its funds and what its rights are to appeal the decision. A charity could be at risk of being designated because an individual involved with the charity has become designated.

The charity’s bank will be notified and its bank accounts will be frozen. This will clearly have an immediate impact on any activities the charity is carrying out and its ability to operate.

The Commission cannot lobby on behalf of the charity about the decision. Nor can it give the charity permission to use its money. Once designated, trustees must apply to OFSI for a licence to continue using charitable funds. The Commission’s role is to ensure that the disruption caused to legitimate charitable work is minimised, and to address any regulatory concerns which arise from the reasons for the charity’s designation.

For information on designation by other countries, see the quick guide for checking another country’s list.

9. Terrorist financing

Money underpins all terrorist activity – without it there can be no training, recruitment, facilitation or support for terrorist groups. The disruption of terrorist financing activity is a key element of the UK Government’s overall fight against terrorism, involving close working across government between the intelligence and law enforcement agencies and the financial sector. Charities and voluntary organisations play an important role in ensuring that the funds they collect are not diverted to terrorist organisations.

9.1 What is terrorist financing?

Short answer:

Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations.

In more detail:

There is a marked overlap between money laundering and terrorist financing: both criminals and terrorists use similar methods to raise, store and move funds. Money laundering is the process of concealing the illegal origin of profits from crime. Terrorist financing is the financing of terrorist acts, and of terrorists and terrorist organisations. In the case of money laundering, the funds are always of illicit origin, whereas in the case of terrorist financing, funds can originate from both legal and illegal sources. The primary goal of those involved in terrorist financing is therefore usually not to conceal the sources of the money, but to conceal both the funding activity and the financial channels.

Terrorist organisations may engage in generating income from legitimate businesses which could be in a different geographic location altogether, making detection more difficult. Also, terrorist attacks can be carried out by small groups, with a relatively small amount of money, and sometimes with only limited involvement in the financial system. These small financial amounts may be the very ones that are frequently considered to be of minimal risk but are in fact open to terrorist financing and money laundering.

For more information on money laundering see the Commission’s Compliance Toolkit Chapter 2 – Charities: due diligence, monitoring and verifying the end use of charitable funds..

The UK’s most recent National Risk Assessment also provides more detailed information about the risks faced by the UK from terrorist financing and money laundering. This includes a summary of the risks to non-profit organisations.

9.2 What are the terrorist financing criminal offences?

Short answer:

Sections 15-18 of the Terrorism Act 2000 (TACT) make it an offence to:

• raise, receive or provide funds for the purpose of terrorism
• hold or use funds for the purposes of terrorism
• become involved in an arrangement to make funds available for the purposes of terrorism
• facilitate the laundering of terrorist money

Section 19 of TACT creates an obligation for a person who, during the course of their employment ‘believes’ or ‘suspects’ another person has committed an offence under section 15-18 of TACT, to report it as soon as is reasonably practicable, along with the relevant information to a ‘constable’. Please see the Commission’s regulatory alert for more information.

In more detail:

You must comply with UK counter-terrorist legislation. You must also carry out your trustee duties and responsibilities. You must take care to ensure that your charity’s premises, assets, staff, volunteers or other resources cannot be used for activities that may, or may appear to, support terrorism.

A person is guilty of an offence if they ‘know’, ‘intend’ or have ‘reasonable cause to suspect’ that the funds may be used for the purposes of terrorism. Therefore, it is an offence for you or your co-trustees to provide funds to an organisation or individual that you suspect is a terrorist organisation, even if it does not appear on either of the lists mentioned in the previous sections on Proscribed organisations or Designated individuals and entities.

This affects charities and those who raise money for registered charities and charitable causes. If the person raising money, for whatever purpose, charitable or otherwise, has reasonable cause to suspect that the money may be used for terrorist purposes, they will be committing an offence. This could apply to trustees, the charity’s fundraisers and volunteers. These offences would also include someone who makes a donation purportedly to charity or for charitable causes, whilst knowing or suspecting that it will be used for the purposes of terrorism. Risks to the charity still arise if the activity takes place internationally. Under section 63 of TACT, if a UK national or resident does anything outside the UK that would be a terrorist finance offence under sections 15-18 of TACT if it had occurred in the UK, then they will commit an offence in the UK.

There are, however, defences to terrorist financing offences – essentially if consent is sought and obtained from the National Crime Agency. The mechanism for obtaining such consent is to request it through submitting a Suspicious Activity Report.

Section 19 of the TACT creates an obligation for a person who, during the course of their employment ‘believes’ or ‘suspects’ another person has committed an offence under section 15-18 of TACT. Such persons must report it as soon as is reasonably practicable, along with the relevant information to a ‘constable’. Further information about reporting requirement is in the section on Reporting requirements.

Although charities can obtain insurance against special risks such as kidnap and ransom, you should take professional advice if considering buying this type of insurance. The paying of ransoms is not in itself illegal in UK law, but it may be elsewhere and cannot be paid out if doing so is a crime. However, paying a ransom if you know or have reasonable cause to suspect that it may be used for the purposes of terrorism is an offence under sections 15-18 of TACT.

The Counter Terrorism and Security Act 2015 amended section 17a of TACT so that an insurer commits an offence if they make a payment under an insurance contract for money or property handed over in response to a demand made wholly or partly for the purposes of terrorism, when the insurer knows or has reasonable cause to suspect that the money has been handed over for that purpose. The offence relates to any reimbursement made in respect of ransoms paid for the purposes of terrorism and it would be a wholly inappropriate use of charitable funds and/or resources to make such ransom payments. If you were to accept donations, money and/or goods, where you know or have reasonable cause to suspect that it will be used for terrorism, separate from any criminal offences that may be committed, the Commission would consider this to be evidence of misconduct and/or mismanagement within the administration of the charity.

The Crown Prosecution Service (CPS) is the public authority responsible for prosecuting people in England and Wales who have been charged by the police with a criminal offence – it is independent and makes its decisions independently of the police and government. The CPS provides further information on proscription offences and terrorist financing offences, explaining how the public interest stage of the Full Code Test may be applied in cases involving humanitarian, development or peacebuilding work overseas. For more information, please see the CPS guidance Humanitarian, Development and Peacebuilding Work Overseas.

9.3 How might terrorist financing affect charities?

Short answer:

The charity sector is not immune to terrorist or extremist 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 the reality is that a number of people who have supported or engaged in terrorism or extremism have used and abused 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 or extremism.

In order to comply with the law and discharge your trustee duties and responsibilities, you must implement appropriate risk-based procedures and systems to protect your charity from abuse.

In more detail:

The financial abuse of charities by terrorists may take different potential forms:

• raising funds in public collections in the name of charity generally, for a named charity or for charitable causes such as a humanitarian relief campaign or following a natural disaster. These funds are then diverted away from the charity and used for criminal and terrorism purposes. This may happen without the knowledge of the trustees
• where a charity’s funds are being moved from one place to another, or in different forms, for example, through international currencies or through cash transfers, in particular internationally, these may be diverted before reaching the intended recipients
• cash may be transported in a way that looks legitimate under the name of charity and charitable causes so its transportation may be less likely to be questioned or challenged
• recipients of charity funds, whether partners or individuals, may misuse the money they have been given for terrorism purposes
• establishing a charity for the purpose of providing cover for channelling funds for the purposes of terrorism, directly or indirectly

These risks increase if the charity’s financial, due diligence and monitoring controls are weak. As a trustee, you must make sure that your charity’s assets are used only to support or carry out its purposes. It is your responsibility to assess and manage risks and to protect the charity from abuse. You should take all reasonable steps to minimise the risk that your charity’s activities could be misinterpreted as promoting or supporting terrorism. Being transparent about the charity’s work and the rationale behind decisions will help achieve this.

There are no universally recognised criteria for assessing and determining risk, particularly in relation to countries or geographic regions. However, regions that may pose a higher risk to charities may include:

• countries that are subject to sanctions or embargoes, for example issued by the UN
• countries identified by credible sources, such as the Financial Action Task Force or the World Bank, as lacking appropriate anti-money laundering or counter-terrorism laws and regulations
• regions where it is known that terrorist organisations operate
• regions identified as having significant levels of corruption, criminal activity or poor infrastructures, possibly due to internal conflict or military action

The Foreign, Commonwealth and Development Office website is a useful source of information about events in particular countries that may give rise to specific risks.

Practical advice:

Factors that may affect the risk a charity is exposed to could include the following:

• political environment
• legal protection and local laws
• economic structure
• cultural factors
• location/concentration of suspected criminal activity
• amount of illicit money generally known to be generated in a particular region or country
• size and nature of the financial service industry and infrastructures
• the nature and reliability of financial institutions
• wider government and state control of a country
• main channels used for finance, including methods of transfer and banking facilities
• geographical spread of the charity’s operations
• types of products and services offered by the charity
• underground economic activity and informal money transfers

These factors, and other considerations, may differ dramatically when working in different countries. Further information on how to ensure that charitable funds are not abused by terrorists and terrorist organisations, and that these reach their intended beneficiaries, is explored in the ‘Know your’ principles section of the Commission’s Compliance Toolkit Chapter 2 – Due diligence, monitoring and verifying the end use of charitable funds.

10. Charity law duties and responsibilities

The UK’s counter-terrorism framework is governed by different pieces of legislation. Terrorist activity is a crime and charities need to be aware that concerns about terrorist abuse and activity are considered in the UK in that context. Some terrorist-related activities are dealt with under existing criminal legislation, for example, fraud, theft, public order, drugs, forgery and counterfeiting laws. These laws impact upon charities and their trustees as they do upon all other organisations and individuals in the UK.

10.1 What does the Commission expect of trustees?

Short answer:

Under charity law, all trustees of charities in England and Wales have six main duties which are explained in The essential trustee: what you need to know, what you need to do (CC3).

The Commission expects trustees to take their responsibilities seriously. In summary, to manage the risks from terrorism:

• you must comply with the law, including counter-terrorism legislation

• you must act in your charity’s best interests, avoid exposing it to undue risk and make sure that its assets are used only to support its charitable purposes. You should:

  • take reasonable steps to ensure that your charity’s premises, assets, staff, volunteers or other resources cannot be used for activities that may, or may appear to, support or condone terrorism or terrorist activities
  • ensure that effective procedures are put in place and properly implemented to prevent terrorist organisations taking advantage of your charity’s status, reputation, facilities or assets
  • take immediate steps to dissociate the charity from any activity that may give, or may appear to give, support to terrorism or terrorist activity
  • take all reasonable steps to ensure the charity’s activities are open and transparent so that these cannot be misinterpreted
  • exercise proper control over your charity’s financial affairs and safeguard its assets

Furthermore, any person connected with a charity, whether a trustee, employee, volunteer, or beneficiary, should deal with the concerns of a charity’s possible links with terrorism responsibly. These must be reported immediately to the police and should also be reported simultaneously to the Commission. More information on reporting is in available in the next section entitled Reporting requirements.

In more detail:

As a trustee, you must ensure that you and your charity comply with UK counter-terrorism legislation and that you discharge your trustee charity law legal duties. This means you must not promote or support activity that promotes terrorism or terrorist ideology through your charity’s work.

You must also ensure that you fulfil any obligations under UK or international law regarding the reporting of suspicions of terrorist or criminal activity. You must report suspicions or beliefs regarding terrorist financing offences as soon as is reasonably practicable to the police so as to comply with legal obligations under section 19 of the Terrorism Act 2000. You should also report such matters simultaneously to the Commission. The section below on Reporting requirements provides more detailed information.

The police and law enforcement agencies assess allegations of criminality within a charity. The Commission’s role is to ensure that trustees comply with their legal duties and responsibilities and to ensure that charities are protected.

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
• 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.

As a trustee, you must manage your charity’s resources responsibly. This means that you should:

• exercise overall control over your charity’s financial affairs
• ensure that its systems of control and monitoring are appropriate and effective, properly implemented and regularly reviewed
• ensure that proper financial records are kept and that the charity is transparent and accountable

These steps will reduce the risk of your charity being open to abuse by unscrupulous associates, employees or partners. When choosing partners or other delivery agents, you should conduct proper due diligence checks to ensure that they are appropriate for your charity to work with and capable of carrying out the intended activities or services. You should take reasonable steps to ensure that the charity’s funds will be properly used and monitor and verify this. If you are considering funding non-charitable bodies, you must ensure that funds are used only for charitable activities which further the purposes of your charity and that do not expose it to undue reputational or other risks.

Deciding to carry out, or knowingly supporting any activities that would be criminal, illegal, or otherwise improper for a charity would amount to misconduct on the part of the trustees. If you allowed a breach of counter-terrorism laws to occur during the course of carrying out your role, then aside from any possible criminal investigation, this is likely to amount to misconduct in the administration of the charity. The Commission would have concerns about whether you had properly discharged your charity law duties and responsibilities and might need to take protective action to ensure that the charity is properly safeguarded.

Charities must not carry out activities that are criminal – this includes any offences under counter-terrorism legislation – or that are in the sphere of criminality at risk of prosecution. Neither must charities be used as a platform to promote inappropriate radical or extremist views. Such a use of charity money or property is in breach of charity law. Further information is provided in the Commission’s Compliance Toolkit Chapter 5 – Protecting charities from abuse for extremist purposes.

Where a trustee is convicted for terrorist offences, their link to the charity means this is corrosive to public trust and confidence both in their charity and charity generally. This is irrespective of whether the conviction is connected to their role in the charity or whether the events directly involved it.

You must make sure your charity’s assets are used only to support or carry out its purposes. You must avoid exposing its funds, assets, beneficiaries, people or reputation to undue risk. You should therefore implement realistic and reasonable risk management strategies which identify and mitigate such risks. These should be relevant and proportionate to the charity’s activities and the nature of its operations. Risks may take a number of forms, including operational, financial, reputational and external.

Any exploitation of a charity by terrorists and criminals is serious, whether this concerns the abuse of assets, such as its funds, or premises, or the misuse and exploitation of its name, including its online and social media presence. If you know this is happening, (or ought to have done had you been vigilant), but do not take any action, you would fail in your duties as a trustee. A charity must not provide funding or support to a partner organisation that exposes beneficiaries to activities which directly, or indirectly, promote terrorism. This is so, even if the charity’s funding or support were used for legitimate humanitarian aid or other charitable activities. Aside from the risks of committing criminal offences under UK legislation, this is also likely to amount to misconduct on the part of the trustees in managing and administering the work of the charity.

As a trustee, you must act with reasonable care and skill. This applies to both your own conduct and how you deal with concerns. Expressing strongly controversial or partisan views on a particular issue may compromise the charity’s integrity, purposes or activities. As such, it may be unsuitable for you to act as a trustee of that charity. This is regardless of whether you hold or express those views in a personal capacity. Such views may conflict with your ability to exercise your objective judgement in the interests of the charity and so may interfere with your ability to properly manage the potential harm to public trust and confidence in the charity. This may also create risks to the charity’s operations and, in particular, may undermine its ability to deliver services to its beneficiaries.

You must not engage in conduct or activities that would lead a reasonable member of the public to conclude that the charity or its trustees were associated with a proscribed organisation or terrorism in general.

When dealing with concerns that are raised, the greater the risks, the more important it is that you and your co-trustees can show you have discharged your duty of care. The greater the risks and impact, the higher the duty of care is likely to be.

The risks will vary depending on what activities the charity carries out. For example, there have been incidents where terrorism-related training has occurred within the UK, sometimes using the facilities of otherwise legitimate organisations providing outdoor training activities. If a charity hires out these kinds of outdoor facilities, its trustees must be aware of the need to carefully scrutinise their customer and beneficiary base and report any suspicions they have.

You should consider getting external professional advice on matters where there may be material risk to the charity, or where you or your co-trustees may be in breach of your duties. In higher risk situations, you will be unable to comply with your legal duties if you do not do so.

Further information on trustees’ duties can be found in:

The essential trustee: what you need to know (CC3)

The Trustee Act 2000

The Charities Act 2011

11. Reporting requirements

11.1 When should trustees make a report to the Police?

Short answer:

Trustees, charity employees or volunteers must report suspicions or beliefs about terrorist financing offences as soon as is reasonably practicable to the National Crime Agency or a police officer. This is in order to comply with section 19 of the Terrorism Act 2000 (TACT).

If you are concerned about an imminent threat to life and property, you must contact the police immediately. Charity trustees, employees and volunteers are under a positive legal duty to report any belief or suspicion of terrorist financing offences to the police. If they do not, they may commit a criminal offence.

In more detail:

Charities must follow the same advice that the government provides to every member of the public, that they should always remain vigilant.

Section 19 of TACT creates an obligation for a person who, during the course of their employment, ‘believes’ or ‘suspects’ another person has committed an offence under section 15-18 of TACT. These are terrorist financing offences and include, but are not limited to, terrorist fundraising, entering into a funding arrangement and the use of money or other property for the purposes of terrorism (for more information see the section on Terrorist Financing). The report must be made as soon as is reasonably practicable to a ‘constable’.

Employment includes unpaid employment and/or volunteering, and therefore applies to charity trustees and other volunteers as well as paid employees. It is a criminal offence under section 19 of TACT not to disclose a belief or suspicion of terrorist financing offences to the police as soon as reasonably practicable. If found guilty, a person may be liable on conviction to imprisonment, up to a maximum of five years, or to a fine, or both. Not knowing that an offence should have been reported is not a defence. It is therefore important that everyone working in a charity knows about this duty.

There are a number of ways in which charities can report their suspicions or beliefs so as to comply with their legal obligations under section 19 of TACT, such as:

• calling the Metropolitan Police Anti-Terrorist Hotline on 0800 789 321 (set up to receive confidential information)
• a text phone service is available for people with speech or hearing difficulties on 0800 032 45 39
• via the NCA website
• calling 101 or reporting at a local Police Station
• emailing [email protected]

If you are concerned about an imminent threat to life you must contact the police immediately.

Sections 15-18 apply whether or not the incident giving rise to the offence occurred in the UK or overseas. Therefore, an action committed overseas can result in prosecution in the UK.

The Crown Prosecution Service (CPS) is the public authority responsible for prosecuting people in England and Wales who have been charged by the police with a criminal offence – it is independent and makes its decisions independently of the police and government. The CPS provides further information on proscription offences and terrorist financing offences, explaining how the public interest stage of the Full Code Test may be applied in cases involving humanitarian, development or peacebuilding work overseas. For more information, please see the CPS guidance Humanitarian, Development and Peacebuilding Work Overseas.

There are also other wider money-laundering reporting and disclosure requirements which may impact on charities. These are dealt with in Chapter 2 – Charities: due diligence, monitoring and verifying the end use of charitable funds.

11.2 When should trustees report to the Charity Commission?

Short answer:

The Commission requires charities to report serious incidents. As a trustee, if you make any report under section 19 of TACT, you should also report this to the Commission under its Serious Incident Reporting framework. You should also report to the Commission as soon as you become aware of any instances where the charity (including any individual staff, trustees or volunteers) has any known or alleged link to a proscribed organisation or to terrorist or other unlawful activity.

In more detail:

A serious incident is an adverse event, whether actual or alleged, which results in or risks significant:

• harm to your charity’s beneficiaries, staff, volunteers or others who come into contact with your charity through its work
• loss of your charity’s money or assets
• damage to your charity’s property
• harm to your charity’s work or reputation

This includes discovering that someone within or connected to the charity does business with, or has links to, terrorist groups, or is subject to an asset freeze; also, where property has been stolen by terrorist groups, or charity money, personnel or other assets used to support terrorist activities. As a matter of good practice, all charities, regardless of size or income, should report serious incidents to the Commission promptly.

If your charity’s income is over £25,000, you must, as part of the Annual Return, sign a declaration confirming there were no serious incidents during the previous financial year that should have been reported to the Commission but were not. If incidents did occur, but were not reported at the time, you should submit these before you file your charity’s Annual Return, so you can make the declaration.

Until all serious incidents have been reported, you will not be able to make this declaration, or complete the Annual Return, which is a statutory requirement under section 169 of the Charities Act 2011. Be aware also that it is an offence under section 60 of the Charities Act 2011 to provide false or misleading information to the Commission.

If you fail to report a serious incident that subsequently comes to light, the Commission may consider this to be mismanagement, for example, where the trustees have failed to manage the risks properly and breached their legal duties. This could prompt regulatory action, particularly if further abuse or damage has arisen following the initial incident.

For more information, please see the Commission’s guidance How to report a serious incident in your charity.

12. The international dimension

12.1 Global view of the terrorism lists

Charities must operate within UK law. Charities that operate abroad also have to take into consideration the law in the country in which they are working. You and your co-trustees should ensure you are aware of the risk of, and are properly informed about, breaching local laws, including criminal offences.

Different countries will have their own legislation dealing with terrorism. They are also likely to hold their own lists of terrorists and banned terrorist organisations. Different countries refer to these by different names, for example terrorist persons, banned organisations, proscribed groups, designated organisations, illegal entities and asset-controlled entities. The consequences of being named on these lists will vary from country to country and list to list.

12.2 Why are these terrorism lists relevant to charities in the UK?

Short answer:

Other countries’ lists of terrorists and banned terrorist organisations have no direct legal effect in the UK. However, you should take their existence into account and assess the risks which arise to your charity and its activities, particularly where the charity works internationally.

In more detail:

Whilst these country lists of terrorists and banned terrorist organisations have no direct legal effect in the UK, many of the people or organisations named on them may also appear on the UK’s terrorism lists. Nevertheless, you and your co-trustees must take their existence into account and assess the risks to your charity and its activities. This is particularly important where the charity has a physical presence, works in, or supports projects in the particular country.

Some countries display these lists publicly. As a minimum, you should check individual country lists where public to inform your decisions, for example when working with a new partner organisation in a particular region. In some circumstances, you will be unable to comply with your legal duties if you do not do so. You should decide how many international lists to consult and how regularly to monitor these according to the level of risk the charity is exposed to.

The purpose of including information on the lists of other governments and inter-governmental organisations within this guidance is to provide you with an understanding of different laws under which your charity may operate. These lists have no direct legal effect in the UK; however, by increasing your awareness of them, you may make more informed decisions and reduce risks. There may also be potential impacts on a charity’s banking or other financial services which arise because of a proscription or designation in another country.

12.3 Where can you find out about these terrorism lists?

Short answer:

A number of individual country lists of terrorists and banned terrorist organisations are available on the internet.

In more detail:

In the US, there are two main authorities for terrorism designations of groups and individuals. Groups can be designated as Foreign Terrorist Organizations under the Immigration and Nationality Act. Under Executive Order 13224, a wider range of entities, including terrorist groups, individuals acting as part of a terrorist organisation, and other entities such as financiers and front companies, can be designated as Specially Designated Global Terrorists (SDGTs). The US Treasury’s Office of Foreign Assets Control (OFAC) also maintains a list of Specially Designated Nationals (SDNs).

In addition, OFAC enforces economic sanctions targeted against international countries. OFAC imposes controls on transactions and freezes assets under US jurisdiction. A list of OFAC Country Sanction Programmes can be found on the US Department of the Treasury website. More general information on US designation can be found on the US Department of State website.

Below are links to some of the lists that are publicly available on the internet in English:

• Australia
• Canada

12.4 Practical advice:

If you plan to transact in US dollars or work with US persons or companies, check that you comply with US sanctions.

The US’s OFAC list contains many countries, regimes and individuals who are considered to pose a threat to US National Security.

To differentiate between types of entity, square brackets after the names contain an acronym. This is what each one stands for:

• [FTO] – Foreign Terrorist Organization
• [SDT] – Specially Designated Terrorist
• [SDGT] – Specially Designated Global Terrorist
• [SDNTK] – Specially Designated Narcotics Trafficker
• [NPWMD] – Non-Proliferation of Weapons of Mass Destruction

12.5 Can a UK charity work with an organisation or individual that is on another country’s terrorism list but not on the UK list?

Short answer:

It is not against the law in the UK to do so. However, you must carefully consider the risks that arise from this.

In more detail:

Sometimes organisations with similar names to a UK charity or international branches, which are separate legal entities, are designated, but the UK charity is not. In such cases, firstly you should check carefully whether the organisation is the same as on the list of banned terrorist organisations.

If the organisation is on the list, you must carefully consider whether proceeding to work with them is in the interest of the charity. You must also ensure you can discharge your legal duties and responsibilities as a trustee in doing so. If you want the charity to work with a partner that is on a list, in order to discharge your legal duties, you should first assess the risks and carry out proper due diligence.

The risks that should be considered include the risk of legal action against the charity, or the risk to its trustees or employees (and their safety). If they visit or are a citizen of the country concerned there may be significant legal implications. The charity might be associated with, or be perceived as supporting, terrorism and there may be reputational damage to it. If the charity is to provide funding to that partner organisation, it may risk banks declining to proceed with the transaction, or even, in extreme cases, the funding being frozen by the bank or the charity’s own banking services being put at risk.

The same risks apply if you are considering working with an individual who is on another country’s list.

12.6 What if a charity is named on another country’s terrorism list but not on a UK terrorism list?

Short answer:

It is not illegal under UK law for a charity to operate here or overseas if it appears on another country’s list of terrorists and banned terrorist organisations.

However, it is likely that it will be illegal to operate in the country in which it has been designated under the local law. This is likely to give rise to significant practical consequences for the charity and will severely limit the activities it can carry out in that country and, in some situations, other countries.

In more detail:

If another country has introduced laws enabling them to ban organisations or individuals they consider to be involved in terrorism, these laws will have their own parameters. Each particular government will have decided what legal consequences or sanctions result from being designated or banned for regarded involvement in terrorism in that country. These decisions do not automatically have legal effect in the UK or for all UK charities.

Whilst it will be of concern that a UK charity is regarded as being connected to terrorism by another country, it is possible for the charity to be designated or banned by another country but to continue operating legitimately in the UK. The charity continues to exist and is properly registered as a charity with the Commission. It is entitled to operate, which includes raising funds, in the UK. It is not illegal under UK law for the charity to operate here or overseas.

However, being designated or banned overseas for regarded involvement in terrorism can have a significant impact on a charity’s ability to operate, particularly if it works in the country of designation. It is likely that it will be illegal to operate in that country and it will severely limit the activities it can carry out there. It is possible that you, your co-trustees or staff risk being arrested if you go to that county. If this happens, you should consider seeking professional advice, as the legal implications will differ from country to country.

12.7 Consequences of operating in that country

In cases where there is a risk that activity in another country will be subject to local legal challenge, you must assess the extent of the risk that you would be running to your charity, your people and beneficiaries and the extent to which that risk could be removed or reduced.

In these situations, you must consider extremely carefully what course of action will be in the best interests of the charity, using both your knowledge of local conditions and the needs of your beneficiaries. You should take appropriate legal and other advice. You should balance the benefits of carrying out that activity against the risks and disadvantages, including the potential human, financial and reputational cost, of doing so.

If you discover that a co-trustee, employee or volunteer is designated on another country’s list of terrorists and banned terrorist organisations, you should seek legal advice and assess the risks of operating in that particular country – you may be contravening local laws if you allow them to handle finances, for instance.

Being on another country’s list can impact negatively on a charity’s reputation, both in the country concerned and in the UK. It may make donors, partners, beneficiaries or financial institutions less willing to work with the charity.

This makes it all the more important that you ensure you are open and transparent about the charity’s activities and make its annual accounts available. It also emphasises the importance of having robust procedures and systems in place, including financial controls, in order to reassure the public and relevant authorities that its activities are legitimate.

In rare instances, when UK charities may appear on other countries’ lists, the difficulties experienced by charities may include:

Banking – banks may not want to provide financial services to the charity, particularly if the bank has branches or offices in the country of designation and so risk committing an offence in that country or being subject to legal action. This has led to some charities needing to transfer their accounts to different banks. It is the Commission’s view that all charities need to have access to, and use, a bank account in the charity’s name in the regulated banking system. You should maintain a good relationship with your bank, providing details of your programmes and transactions.

Transferring funds abroad – charities may face difficulties when transferring funds abroad, particularly if they operate in US dollars and the designation is in the US. It may be that a particular bank, money service bureau or banking clearing house will prevent international transfers. Charities use a range of methods to transfer funds internationally. Various systems of money transfer are explored further in the Commission’s Compliance Toolkit Chapter 4 – Holding, moving and receiving funds safely.

Donations – donors might be put off donating to the charity even if there is only a suspicion of links to terrorism. Even if they want to continue funding, they may not be able to make payments to the charity, particularly if those donors are based in the country which has banned the charity for regarded involvement in terrorism, or are trying to use financial institutions with a presence in that country. In this situation, you may need to adjust your fundraising strategy or plan for a reduced donor income.

Funding and grants – potential sources of income may be denied to the charity, either because of concerns about its activities or because the grant-maker is based in the country that has banned the charity for regarded involvement in terrorism. If this affects current activities, you may need to consider contingency plans or alter the charity’s reserves strategy. In the long term, you may need to look for alternative sources of funding.

12.8 Role of the Commission

Regardless of whether any activity is in breach of criminal law, in line with trustees’ legal duties, the Commission will be concerned that a UK charity is regarded as supporting terrorism by another country through its list of terrorists and banned terrorist organisations. The Commission will assess the reasons for the ban including any supporting material and whether it should take regulatory action. It will conduct this assessment in accordance with its Risk framework. As detailed in the framework, the nature and level of the risk can be affected by a number of factors including evidence to support the issue and the impact on beneficiaries, charitable assets or public trust and confidence in the charity or the wider sector.

If your charity is banned by another country and the Commission does engage, it will expect you to explain your response to the ban. This will include whether you intend to legally challenge the decision, your assessment of its practical implications for the charity and its operations and how you propose to address this. Similarly, for charities that decide to work with an organisation that is banned by another country, the Commission expects you to be able to explain and justify your decision and identify how the risks are being managed. If a charity is notified that it has become designated or banned by another country, you should report this to the Commission immediately.

13. External sources of further information and guidance

13.1 Further information

13.2 References to other useful publications

UK National Risk Assessment 2020

Home Office – Counter-terrorism Strategy (CONTEST)

Home Office – Prevent duty guidance

Home Office – Information Note for International Non-Governmental Organisations operating within Counter-Terrorism Legislation

Office of Financial Sanctions Implementation (OFSI) – FAQ guidance for the charity sector

Crown Prosecution Service (CPS) – Humanitarian, Development and Peacebuilding Work Overseas

Financial Action Task Force (FATF) Typologies report – Risk of terrorist abuse in non-profit organisations

FATF Best Practices paper – Combating the abuse of non-profit organisations

13.3 Other government departments and agencies

Home Office is the lead government department for immigration and passports, drugs policy, crime policy, counter-terrorism and police.

The Home Office has responsibility for the UK’s Counter Terrorism strategy known as CONTEST.

Foreign, Commonwealth and Development Office (FCDO) promotes the interests of British citizens, safeguards the UK’s security, defend the UK’s values, reduces poverty and tackles global challenges with international partners.

HM Treasury (HMT) is the UK government’s economic and finance ministry, maintaining control over public spending, setting the direction of the UK’s economic policy and working to achieve strong and sustainable economic growth.

The Office of Financial Sanctions Implementation (OFSI), part of HMT, is the competent authority for the implementation of financial sanctions in the UK. OFSI maintains the consolidated list of financial sanctions targets, detailing all those subject to financial sanctions imposed by the UK which it keeps updated. OFSI has produced a factsheet on financial sanctions specifically for charities and other non-governmental organisations.

Export Control Joint Unit (ECJU) is part of the Department for Business and Trade, administers the UK’s system of export controls and licensing for military and dual-use items.

Metropolitan Police has specialist units that deal with protecting the UK from the threat of terrorism, bringing together intelligence gathering, analysis and development with investigation and operational support activity. There is also a specialist intelligence unit that deals with the threat of terrorist financing nationally and other regions have counter-terrorism units.

The Metropolitan Police has set up a confidential Anti-Terrorist Hotline which is staffed around the clock by specialist counter-terrorism police officers. If you are suspicious of something that could identify a terrorist threat anywhere in the UK, call the Anti-Terrorism Hotline on 0800 789 321 or report it using the quick and confidential online tool to report possible terrorist activity. A textphone service is available for people with speech or hearing difficulties on 0800 032 45 39 (text messages from mobiles are not accepted).

National Crime Agency (NCA) leads the UK’s fight to cut serious and organised crime, protecting the public by targeting and pursuing those criminals who pose the greatest risk to the UK.

Crown Prosecution Service (CPS) is the public authority responsible for prosecuting people in England and Wales who have been charged by the police with a criminal offence. It is independent and makes its decisions independently of the police and government.

The Department for Levelling Up, Housing and Communities (formerly the Ministry of Housing, Communities and Local Government) supports communities across the UK to thrive, making them great places to live and work.

Office of the Scottish Charity Regulator (OSCR) is a non-ministerial office and part of the Scottish Administration following commencement of the Charities and Trustee Investment (Scotland) Act 2005. It is the independent regulator and registrar for Scotland’s charities, including community groups, religious charities, schools, universities, grant-giving charities, and major care providers.

Charity Commission for Northern Ireland (CCNI) is the independent regulator of charities in Northern Ireland, responsible for ensuring Northern Ireland has a dynamic and well governed charities sector in which the public can have confidence.

13.4 Charity Commission information and guidance

Charity Commission – Regulatory and risk framework

Charity Commission – Dealing with wrongdoing and harm

The essential trustee: what you need to know, what you need to do (CC3)

Compliance Toolkit: Protecting charities from harm

Charities: how to manage risks when working internationally

Internal financial controls for charities (CC8)

Charities and insurance (CC49)

How to report a serious incident in your charity

Charity Commission regulatory alerts

• Terrorism Act alert
• Regulator warns charities against the use of cash couriers
• Alert for charities – use the regulated financial sector
• Alert for charities operating in Syria or Turkey about aid passing through the Bab Al-Hawa crossing

1. It should be noted that the legislation on the website appears as first published and does not necessarily show any amendments or if it has been repealed. ↩