Everyday banking

FOUR BANKING QUESTIONS INTERNATIONAL CHARITIES NEED TO ANSWER

CAF Bank's Peter Ostacchini explains how NGOs operating in regions of conflict can avoid unnecessary hold-ups when accessing their funds.

When working in areas of conflict, regulation can make it difficult for charities to access funds. Here’s how to make it easier. The refugee crisis, the continuing devastation in Syria and the Nepalese earthquake earlier this year have all shown what a crucial job international charities do.

CAF Bank supports a number of international charities based in the UK and it is clear that the need for collaboration between banks and humanitarian agencies has never been greater.

The relationship between charities and their banking providers is an essential part of the process when getting aid to where it is most needed. The thorough, and often complex, regulation that surrounds the financing of organisations operating in areas of conflict can mean that access to banking can be difficult for charities.

Banks which work with any type of international organisation have to consider anti-money laundering regulations and the increasing enforcement action taken by international and UK authorities. When it comes to sanctions, the banking sector has the biggest responsibility for implementing and monitoring them.

So, with this in mind, how can charities smooth the process and avoid any unnecessary holdups? There are a number of basic things a charity can prepare before speaking to a new or existing banking provider. Here are four questions any bank will be looking for a charity to answer:

1. IS ALL OF YOUR KEY INFORMATION UP-TO-DATE AND CONSISTENT?

Make sure the information a charity provides about its cause or the location of its work is consistent with what has been registered elsewhere – for instance with the Charity Commission. Make sure you have a clear record of the countries in which your charity is working, and that this is consistent with information registered with the Charity Commission. Given the global nature of banking, banks will look beyond national borders when carrying out due diligence checks. You should also be ready to provide details of overseas donors, affiliated or partner organisations.

2. DO YOU HAVE AN ESTABLISHED POLICY AND PROCESS FOR SENDING PAYMENTS ABROAD?

If not, I suggest that you get one. This should include details of who in the organisation is responsible for coordinating and overseeing activities, operations and payments to other countries. Banks will also want to see that this includes provision for independent reviews of how these policies and procedures are implemented.

Banks will need assurance that you have a robust system in place for ascertaining the true identify and nature of your beneficiaries. The Bribery Act and Terrorism Act both established regulations designed to prevent aid diversion. Your policy will need to spell out how you will comply with these. This should include training senior staff, trustees, management and volunteers. If you have cash programmes, the policy should take special account of how you will ensure these will be targeted at the right people and not get diverted.

3. CAN YOU PROVIDE INFORMATION ON WHERE YOUR MONEY IS COMING FROM, AND WHERE IT'S GOING?

A bank will want to know the purpose, frequency and value of payments made overseas, along with details of who they are being sent to.

Expect to be asked to provide details of your sources of funding and patterns of receipts, incoming payments and donations. If this includes payments from foreign countries you will need to provide details on this too.

If you are looking to move bank, it is standard practice to be asked to provide your last six months worth of bank statements. And, if you have accounts with two or more banks, you will need to be able to give a full picture of your activities to any one of them, if asked.

4. WHO IS WORKING ON YOUR BANK ACCOUNT?

Are there any non-UK nationals who will be associated with the account? This could include trustees, the chair or a signatory. Make sure you are able to confirm their name, nationality, where they live and pay tax, and if they are of dual nationality.

At CAF Bank we see first-hand some of the common problems that hold up applications for banking services. Having this information prepared in advance may not be a guarantee of success, but it can make the crucial difference that will avoid unnecessary and unhelpful delays.

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