Review of safeguards to protect the charitable sector from terrorist abuse1

The BBA is the voice of the banking industry for all banks that operate in the UK.

More than 60 nationalities are represented amongst our 200 members, they collectively operate 130 million personal accounts, have over £6 trillion of assets, are the fastest growing sector in the UK, have created jobs either directly or indirectly for 4 million people, contribute £50 billion to the UK economy and last year processed 7 billion transactions.

The BBA welcomes the opportunity to comment on the Home Office and HM Treasury's Consultation Document on the "Review of Safeguards to Protect the Charitable Sector from Terrorist Abuse".

The BBA recognizes that many of the recommendations in the Consultation Document are addressed to the Charity Commission itself. BBA Members firmly endorse the overall objective of identifying and minimizing the risk of terrorist exploitation of charities. They are also very cognizant of the central role of the Commission in providing information and a degree of reassurance about the bona fides of the charities registered with it.

In this connection we suggest that the Charity Commission might wish to reconsider how it presents the outcome of its investigations. Whilst the Charity Commission will act when their investigations find something of concern, they simply state that other investigations have been "closed". Such a formulation does not indicate whether they found anything untoward or indicate clearly that there was no case to answer.

In the "Nat West V Weiss" case, the mere fact that an investigation had been carried out by the Charity Commission appears to have been viewed by the presiding judge as a sign which should have put the bank "on notice". It is possible that had the closure of the investigation been accompanied by some explanation of the reasons for that closure, in other words that nothing had been found, the inference might not have been drawn. It would surely be fairer on the charities investigated and more use to the reporting sector, if more information or at least a categorization could be provided in each case. If all cases could be accompanied by a reason for their conclusion, it would increase the likelihood detecting suspicious behaviour in a timely manner.

Some banks will rely on the fact that an entity is registered with the Charity Commission for identification purposes. They will however screen the names of the charity and its trustees using a commercial data base and carry out the usual monitoring checks on payments flows with particular emphasis on payments to high risk jurisdictions. It would be helpful to these efforts if charities themselves had a greater responsibility to carry out due diligence on any major beneficiaries.

Members also consider that investigations by the Commission should be thorough and, if necessary hard-hitting. In this connection it may be necessary to reduce the emphasis on desk-based investigative work based heavily on correspondence and increase the time spent on interviews, visits or surveillance as suggested on page 24 of the Consultation Document.

The BBA fully supports the recommendation that the Charity Commission should seek to build closer links with the counter-terrorist agencies to help target its efforts.

The BBA has suggested to the Charity Commission that both bodies might examine whether closer cooperation between them, while paying due attention to banking confidentiality and the requirements of the Data Protection Act, could contribute towards more effective measures to prevent terrorists from using charities for the purposes of terrorist financing.

David Coates