Sanctions screening for charities and NGOs

• Working in hard places: aid is often needed most where sanctions and designated groups are present, so the people around a programme are harder to know.
• Downstream partners: a grant to a partner who sub-grants onward extends the charity's exposure past the agreement it actually signed.
• Cash and goods: cash distributions and in-kind aid can be diverted, and goods reach people a bank transfer would not.
• Donors: a significant gift can come from a designated person, a politically exposed person or a source the charity cannot explain, and returning it late costs more than checking early.
• Local staff and suppliers: procurement in a difficult context is a screening problem with a delivery deadline attached.
• Funder and public trust: institutional funders and the public expect a charity to know where its money goes, and a single designated recipient can damage both.
• Overhead budgets: compliance spending comes out of what would otherwise be programme spending, so controls have to be proportionate.

1. 1

   Assess the risk of each programme

   Decide where the risk is highest, by country, partner, activity and delivery method, and apply more scrutiny there rather than the same checks everywhere.

2. 2

   Know your partners

   Due diligence on partners and grantees: who runs them, who controls them and how they pass funds onward.

3. 3

   Screen before you pay

   Sanctions and PEP screening of partners, grantees, their key people, suppliers and significant donors, with adverse media for the higher-risk cases.

4. 4

   Monitor during the grant

   Re-screen partners and suppliers when lists change, because a partner that was clean at the start of a programme can be designated during it.

5. 5

   Use exemptions carefully and keep records

   Where a humanitarian exemption or licence applies, record why, and keep the evidence of every check and decision for trustees, funders and the regulator.

Charities are generally not obliged entities under anti-money laundering law: it does not usually require them to run customer due diligence or file suspicious activity reports the way a bank does. Sanctions law applies to them in full. Making funds, goods or economic resources available to a designated person or group is prohibited whoever does it and whatever the purpose, unless an exemption or licence covers it.

FATF Recommendation 8 deals with the abuse of non-profit organisations for terrorist financing. It is addressed to countries, and it asks them to apply focused, proportionate, risk-based measures to the non-profits most at risk, rather than treating the whole sector as high risk, and to avoid disrupting legitimate charitable work. National rules and charity regulator guidance follow from it; in England and Wales, for example, the Charity Commission expects trustees to carry out due diligence on the partners they fund and to monitor how funds are used.

Sanctions regimes, including at UN level, increasingly provide humanitarian exemptions and licences. Relying on one still means knowing who is on the other side of the transfer, and being able to show it, so these exemptions make screening records more important rather than less.

• Organisations and individuals: partners, grantees and their key people screened in the same check.
• PEP screening: donors and partner officials who are politically exposed identified, including family members and close associates as the data allows.
• Adverse media: allegations recorded as allegations, in categories, so a reviewer can weigh them rather than react to a headline.
• Fuzzy matching: names from many languages and scripts arrive in many spellings, and the matcher has to handle aliases and spelling variants.
• Batch screening: a whole partner, supplier or donor list checked in one run, without retyping names.
• Evidence: every check and decision recorded in a form a trustee, funder or regulator can follow.
• Proportionate cost: pricing and effort that fit an overhead budget.