Non-Profit Organisations – AML/CFT Red Flags

1. NPO treasurer or employee withdraws cash from the NPO account and then deposits it into a personal account, before diverting the funds to a suspected terrorist’s account.
2. Media reports the NPO is linked to known terrorist organisations or entities that are engaged, or suspected to be involved, in terrorist activities.
3. Parties to the transaction (for example: account owner, sender, beneficiary or recipient) are from countries known to support terrorist activities and organisations.
4. Funds sent from large international NPOs based in high-risk countries, to their branches in regional countries, are channelled to local NPOs based or operating in domestic conflict areas.
5. An NPO sending funds to multiple entities (individuals and companies) in a high-risk country.
6. NPO raises funds from a major public event and then authorises a third party to be a signatory to the NPO account, who uses it to send funds to high-risk countries.
7. Unusual or atypical large cash withdrawals, particularly after the financial institution refuses to wire NPO funds overseas (thus raising cross-border cash smuggling suspicions).
8. Transactions, including international and domestic transfers, with NPOs that contain terms associated with violent extremism and other terrorist ideologies;5 for example, ghanimah or fai/fay (justified stolen funds) and mujahid/mujaheed/mujahideen (the term for one engaged in Jihad).
9. Vague justifications and a lack of documentation when the financial institution questions NPO requests to transfer funds to high-risk locations or entities.
10. Use of NPO accounts to accept funds from suspected terrorists and their associates (based on law enforcement agency alerts on persons of interest).6
11. Transactions (cash and transfers) involving key personnel of foreign NPOs associated with United Nations Security Council designated terrorist entities.
12. NPO transactions for which there does not appear to be a logical economic purpose or link between the NPO’s stated activities and the other parties in the transaction.
13. NPO uses crowd funding and social media to solicit donations, then its online presence vanishes or shuts down.
14. NPO’s account shows signs of unexplained increases in deposits and transaction activity.
15. NPO is unable to account for the final use of all its funds/resources.
16. NPO uses unnecessarily complex banking arrangements or financial networks for its operations, particularly overseas.
17. NPO, or NPO representatives, use falsified or conflicting documentation.
18. Inconsistencies between the pattern or size of financial transactions and the stated purpose and activity of the organisation.
19. Unexpected absence of contributions from donors located in the country.
20. Large outgoing transactions to the country of origin of NPO directors who are foreign nationals, particularly if the country is high risk.
21. NPO appears to have few or no staff and limited or no physical presence, which is at odds with its stated purpose and scale of financial activity.
22. NPO funds commingled with personal/private or business funds.

Source: https://www.austrac.gov.au/business/how-comply-guidance-and-resources/guidance-resources/non-profit-organisations-and-terrorism-financing-red-flag-indicators-2018