Report

Misuse of the non-profit sector for money laundering and terrorism financing

19 Sep 2011
Description

Non-profit organisations have been identified as potentially significant contributors to terroism financing. This paper explores how terrorist groups take advantage of these organisations and the evidence available for the misuse of funds.
The manner in which terrorist organisations finance their activities became a policy focal point after the terrorist attacks of 11 September 2001. Non-profit organisations, and charities in particular, were identified as potentially significant contributors to terrorism financing. This premise was based on known links between charitable giving and prominent terrorist groups, and the vulnerabilities of the non-profit sector to misuse.
Money laundering and terrorism financing (ML/TF) risks to the Australian non-profit sector are thought to be low. However, the impact of such misuse is inevitably high. One of the underlying premises in combating non-profit misuse has been the application of a response proportionate to risk. Australia has based its response on education, sector outreach and peak body codes of conduct, alongside more conventional forms of regulatory control.
This paper examines vulnerabilities to ML/TF misuse and the publicly available evidence for actual misuse. It is suggested that the Australian response could incorporate a more uniform commitment from the sector to adopting risk-based strategies, with government providing education for the sector that is based on the identification of specific points of vulnerability.
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2011
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