ACNC update: National risk assessment into charities and not-for-profit organisations

The Australian Charities and Not-For-Profits Commission (ACNC) is doing its part to keep Australia safe from money laundering and terrorism. During the year the ACNC undertook a national risk assessment into Australia’s not-for-profit (NFP) sector in conjunction with Australian Transaction Reports and Analysis Centre (AUSTRAC). The findings were released in their report titled Australia’s non-profit organisation sector: money laundering and terrorism financing risk assessment.

What was the aim of the national risk assessment into charities and NFP organisations?

This risk assessment aimed to identify:

• The risk of money laundering and terrorism financing in the NFP sector
• Vulnerabilities and risk indicators of high-risk organisations
• Groups of high-risk organisations that will benefit from targeted outreach and support
• Vulnerabilities that could be exploited to support terrorism, and a strategy to counter these vulnerabilities.

A copy of the report by ACNC and AUSTRAC can be found on the ACNC website. As a result of the risk assessment, a risk rating of medium was given to the risk of terrorism financing and money laundering by the Australian NFP sector.

In addition to the local risk assessment, in November, Assistant Commissioner David Locke represented the ACNC at the third Counter Terrorism Financing Summit (CTF Summit) in Kuala Lumpur. The conference provided a valuable opportunity to share knowledge to combat money laundering and terrorism financing, particularly in NFP organisations.

The conference also marked the launch of the Regional Not-For-Profit Sector Risk Assessment 2017, which examines the level and nature of terrorism financing risks in NFP organisations from eight countries, including Australia, New Zealand, Malaysia, Indonesia and more.

Like the Australian national risk assessment launched by the ACNC and AUSTRAC in August, the regional risk assessment found that the region of Australia, New Zealand and South-East Asia has a medium risk of terrorism financing in NFP organisations.

The assessment identifies the main threats currently facing charities and NFPs and highlights key vulnerabilities that could be exploited to promote terrorism. The regional risk assessment is available on the AUSTRAC website.

Outcomes of the risk assessment

Both the national and regional NFP sector risk assessments will be used by the Government to strengthen the reporting and surveillance in the NFP sector.

In addition to the now familiar governance standards that all charities registered with the ACNC must meet, the ACNC will introduce further compliance standards in the form of “External Conduct Standards”.

The External Conduct Standards will be a set of requirements that registered organisations must meet if they send funds outside Australia or engage in activities outside Australia. The ACNC Act states that the aim of the external conduct standards will be to give the public confidence that funds sent outside Australia by registered organisations are reaching legitimate beneficiaries and being used for legitimate purposes; and that both funds sent, and activities engaged in outside Australia will not contribute to terrorist or other criminal activities.

To date there has yet to be any further details released by the ACNC as to the scope or level of the reporting required under the external conduct standards.

Contact your local PKF office if you need guidance on any ACNC requirements.