The Serious Organised Crime Agency has recently uncovered a series of scams that see charities and other not-for-profit organisations unwittingly used as conduits for money laundering activities.The Serious Organised Crime Agency has recently uncovered a series of scams, which see charities and other not-for-profit organisations unwittingly used as conduits for money laundering activities.
The fraudsters operate by offering charities large donations on the condition that a proportion of the donation is then sent by that charity to a separate charity in a different country. The “other charity” or second body is actually the fraudster’s own personal bank account. The Charity Commission has warned that the sum donated is paid using a fraudulently obtained credit card. When it becomes apparent the card has been compromised, the sum is claimed back from the charity. The scheme works because when the illegally acquired funds are claimed back from the charity they will be seen to have been acquired from a legitimate organisation, thereby concealing the true source.
With nearly one in ten charities with an annual income over £100,000 quoted as having been the victim of fraud in the past financial year, trustees of charities should be alert to the danger.
Charities can protect themselves by ensuring they have appropriate governance and financial control systems in place to address any donations offered that come with unusual conditions. This will help guard against the latest money laundering scams and ensure the trustees comply with their legal duties.