Since the destruction of the World Trade Centre in 2001, western security agencies have been more concerned than ever that charities could be used to funnel resources to terrorist groups. The concern intensified in the UK after the 2005 London bombings, which were linked to the activities of eight charities. Six other charities have been associated with helping to plan further terrorist attacks in Britain.
In response to this growing threat, the Government gave the Charity Commission £1m to set up a special unit to guard against charities being exploited for terrorist purposes (Third Sector, 7 March 2007 ). In December, a joint HM Treasury and Home Office report recommended that the commission strengthen its links with counter-terrorist agencies, including Scotland Yard's National Terrorist Finance Investigation Unit (Third Sector Online, 20 December 2007).
Detective Inspector Paul Newham, a terrorist expert who leads the unit, is now working with the commission to develop guidelines to help charities manage the risk of terrorist abuse. He and his team typically find that individual terrorist sympathisers are responsible for abuse of charity funds: not once have they found a charity explicitly set up as a front for terrorist activity. Here we give Newham's replies to seven key questions.
Why are charities at risk?
Terrorist finance is a very difficult target in as much as it's fast-moving and there's a strong international dynamic, so that a lot of the money raised in the UK flows outward from the UK. It's a constantly evolving target; people are always thinking of new ways of raising money and of moving money.
All financial products and instruments are vulnerable to both money laundering and terrorist financing. The charitable sector is at risk because it is actually providing a financial service. It is a mechanism for raising money and for transferring money. So it's at no greater risk than any other financial sector within the UK, but it is at risk. On average, we probably launch 12 investigations a year in relation to the involvement of charities in fundraising and moving money.
I don't think we should be widely surprised by this because charities often operate in countries where there are hostile environments, whether it's because of civil war or because terrorists actually operate on the ground. I don't want to talk specifically because I don't want to prejudice investigations that are ongoing.
How do people exploit charities for terrorist purposes?
A tactic is used in one area, then it's either transferred to another area or someone comes up with something else. We see individuals who have misappropriated funds from UK charities and then diverted those towards terrorist activities. We have seen people join charities to use charitable cover to enter other countries in order to operate. And the information that we receive strongly suggests that there's a degree of end-user abuse.
We've never seen a charity set up as a front or a cover for terrorist finance activity. What we have seen are individuals operating within a charity to undermine that charity - isolated examples of individuals abusing that charitable status, whether in the UK or operating in other countries.
If you legitimately raise funds for humanitarian relief abroad and deliver the relief with that expressed intention, and then it is abused by an individhe details, but to all intents and purposes it's not the charity we would prosecute but the individual. The Government takes a risk-based approach to money laundering, and we take a risk-based approach to counter-terrorism. That means we know that terrorists have to raise, move, store and use finance in the UK. We need to identify areas at risk of abuse and prioritise awareness in these areas.
What about faith-based charities?
I don't think this is about targeting faith-based charities or cultural groupings. It's not our approach - it's not the police view. This is about working in partnership with the whole sector because all of it is vulnerable. Some of our investigations have nothing to do with Muslim charities - they should not think they are being highlighted and they are certainly not being prioritised by my unit or by the policing community as a whole.
How are the police working with the sector on terrorism?
Instances of abuses are rare, and the sector does have very good practices in place. It is aware of the issues, including money-laundering. We need to work with the Charity Commission to promote better sector awareness. The regulator, as part of the government review, has undertaken to provide best practice and guidance to promote more effective governance, and we also have a role, although the commission maintains its independence and has the lead in this. Our role is to provide advice.
In a month or so, we've been invited to sit down with the commission and members of the sector to discuss the guidance and the practical aspects, so we can take soundings from the sector on what the burning issues are and what it is actually interested in.
We're not looking for a top-down approach here - we want to work with the sector and with the regulator so that we're not pressing the terrorist finance agenda in people's faces. We are seeking cooperation and better understanding of the issues, leading to better self-regulation in many ways.
The problem of international regulation has to be addressed at an international level. I don't see that one country on its own can affect the way charities throughout the world operate, including giving money to their end-users in-country. Of course, it's a potential weakness that people receive aid for one reason and then the purpose for which it was received cannot be adequately audited later.
The commission's remit is not to investigate crime - that is our remit. If there are areas that we come across where we are in doubt about regulatory issues, we would refer that to the commission. There are fairly strict protocols around what we will share and when we share it.
The commission has vetted some of its staff so they can receive sensitive intelligence and protect the sector better. There are intelligence-sharing arrangements that do not undercut the independence of the sector in any way. This is not about the police going into the commission and going through their files. Where we open an active investigation into charities, we will inform selected members of the commission, because we wouldn't want to disrupt regulatory action that they may or may not be taking at the time. We will then coordinate and have meetings. They may be able to provide information that is exculpatory.
What do the police want charities to do?
We work with foreign partners. It's clear that there aren't so many controls abroad and it is potentially difficult to influence other countries. For UK charities, we would like to see greater insights into who the end-users are - this idea of 'know your beneficiary'. If you're operating in an area where there is a civil war or where terrorists are operating on the ground, it makes more sense to have greater risk controls. This does not mean you shouldn't operate in those areas, but that you should take greater steps around the governance of the relief you're providing. There needs to be a clear and transparent audit trail. What we're asking for is not too onerous - it's an extension of an existing duty.
It may be about charities not taking large sums of money into a country but transferring it in terms of goods, which could not have a dual purpose for terrorists. It may be about working with larger charities that already have effective relationships on the ground - but I don't know how appetising that is to the charitable sector because there's a degree of competition between them in terms of, say, fundraising. You'll never completely mitigate the risk that, in some countries, the aid might be diverted unwittingly.
Is public confidence in charities under threat?
There is a public confidence issue here. A serious breach by any UK charity that's seen to have either colluded or not taken effective steps to protect its assets from diversion by terrorists or to terrorists is likely to have a negative effect on the confidence of the public, not only in that charity but in a ripple effect across the wider charity sector. Nobody wants to see that occur, which is why we're sensitive to the issues of the sector and want to work with the regulator to promote best practice. What that looks like, the sector itself has a huge say in.
How can charities protect themselves?
There are numerous open-source websites that contain information on terrorist finance and terrorist organisations. There is the consolidated list held by the Treasury. I would have thought that charitable organisations would want to actually model their own risk and know their own beneficiaries. The consolidated list shows all individuals who have been designated by the British government to have their assets frozen, including those who have been involved in terrorist financing. So before employing anybody or giving money to them, it would always be a fairly straightforward exercise to search the website list.
Wrongdoing in the sector is rare. We are pro-charity, not anti-charity. We clearly support anybody who's providing humanitarian relief, whether in this country or abroad.
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