Beruflich Dokumente
Kultur Dokumente
& issues
in crime and criminal justice
No. 424 September 2011
A 2005 mutual evaluation of Australias Assets such as vehicles and property could 2009b; FATF 2008, 2004b, 2003; FINTRAC
anti-money laundering/counter-terrorism be used to transport or house operatives, 2009; OECD 2008). This could suggest
financing regime by FATF cautioned against money and weapons, and provide relatively that the prevalence of ML/TF misuse (in the
the potential inefficiency of the current safe places where members can meet. listed countries) is itself low. Conversely, it
regulatory system and the lack of additional could indicate there are low detection rates
Misuse of name and status for this kind of illegal activity; that is,
measures Australia had introduced to further
safeguard the non-profit sector from misuse. An NPO may provide financial support to prevalence is higher than the publicly
Following the 2005 mutual evaluation, an organisation that provides humanitarian available material implies. Without access
Australia implemented the Anti-Money aid, for example, but that organisation may to material on unpublished matters, it is
Laundering and Counter-Terrorism also provide succour to terrorist activities. difficult to confirm which is the more
Financing Act 2006 (Cth) (AML/CTF Act) Alternatively, an NPO may raise funds for accurate of these two scenarios.
and while only some services provided a particular cause but have those funds The majority of cases detected (and made
by NPOs fall within the Acts definition of dispensed or support provided through publicly available) involved either the
a designated service, other services that a terrorist group. establishment of a sham NPO (in every
NPOs use (eg financial services) are obliged case, a charity) or the exploitation of a
to undertake AML/CTF risk assessments, Misuse of the notion
legitimate entity to raise, transfer, distribute
of charitable status
perform due diligence and report specified or launder funds. With the exception of
transactions to AUSTRAC. The government Criminal or terrorist entities may elect
a few cases of money laundering, most
has also introduced guidelines and other to establish a sham NPO (in this case,
published cases described incidents of
educative initiatives to assist NPOs to a charity) but one which is registered and
charity misuse to raise and divert funds
undertake risk assessments and minimise engages in requisite regulatory requirements.
to support terrorism. Again, it can only be
exposure to money laundering/terrorism The purpose of the NPO is ostensibly to
speculated whether this reflects political
financing (ML/TF)-related exploitation. collect and distribute charitable giving but
focus on terrorism financing, actual
it is in reality a front for the laundering of
In this paper, an examination is provided prevalence or better rates of detecting
money, appropriation of terrorism funds or
of the risks to the non-profit sector more terrorist financing connections with charity
for the rallying support for terrorist activities.
broadly and those that apply specifically to misuse. Many of the implicated charities
Australian NPOs. Regulatory responses are Gurul (2008) has suggested a general formed part of a complex financing network
explored in greater detail in Bricknell et al. modus operandi for non-profit exploitation, where funds were transferred between a
2011. based on sham NPOs in the United States. series of local and international accounts
Such sham agencies were found to: held by the charity, other NPOs, businesses
(legitimate and fictitious) and individuals
(APG 2009, 2008, 2005; AUSTRAC 2008;
FATF 2008, 2004b, 2003; FINTRAC 2009; non-compliant charities. Between 30 June offences under the Charter of the United
OECD 2008). The charity often served as 2008 and 30 June 2010, the Charity Nations Act 1945 (Cth) for making assets
the origin for funds collection and dispersal, Commission completed 18 inquiries into available (directly or indirectly) to the LTTE,
which were transferred using a combination charities suspected of forming links with an entity proscribed for the purposes of that
of cash deposits, wire transfers and terrorist organisations (Charity Commission Act. It was alleged that the defendants had
remittance schemes. Table 1 describes 2010, 2009b). In most cases, there was played a role in the collection and transfer
selected typologies of misuse. no evidence for such a link but trustees for of $1,030,259 in donations to the LTTE
whom there were concerns were removed between 13 December 2002 and 12 October
Many of the higher profile incidents of
in some instances and the implicated charity 2004. Mr Vinayagamoorthy had also been
charity exploitation come from the United
was instructed to improve governance and indicted for making an estimated $97,000
States. Charities such as the Benevolence
financial reporting arrangements (Charity
International Foundation, Global Relief worth of electronic components available to
Commission 2010, 2009b). Significant
Foundation and Holy Land Foundation for the LTTE over a period of two years. Justice
action, such as freezing a charitys assets
Relief and Development were implicated in Coghlan noted at sentencing that it was
or de-registering/shutting down the charity
providing financial and other assistance to more than probable the defendants knew
has been comparatively uncommon (eg Tamil
Islamic terrorist organisations (predominantly the LTTE was a proscribed entity in other
Rehabilitation Organisation).
Al Qaeda or Hamas) in the guise of charitable countries and the complex structuring...
relief (Roth, Greenberg & Wille 2004). used to transmit funds suggested as much
Australian cases
Between November 2001 and March 2008, (Transcript of proceedings, R v
Financial contributions through formal
there were 26 cases in the United States, Vinayagamoorthy & Ors, Supreme Court
charitable donations was listed by
which involved charges against charities or of Victoria, Coghlan J, 31 Mar 2010: 13).
AUSTRAC (2010: 8) as one of three principal
individuals associated with charities in relation Nonetheless, the court accepted that
methods by which terrorism funds are raised
to one or more of four terrorism statutes the funds were collected to provide
relating to the provision of financial or material in Australia. Nonetheless, there are few
humanitarian assistance and not purposely
support to terrorist organisations (CLS 2008). publicly available, documented examples
to assist terrorist activity (Transcript of
of this kind of exploitation, or of NPOs being
The United Kingdom has also experienced proceedings, R v Vinayagamoorthy & Ors,
used in money laundering schemes.
incidents of predominantly terrorist Supreme Court of Victoria, Coghlan J, 31
financing-related charity misuse but its Mar 2010: 31).
Aruran Vinayagamoorthy, Sivarajah
model of dealing with this misuse has Yathavan and Armugan Rajeevan Yathavan and Rajeevan were sentenced
produced different outcomes. The Charity In December 2009, Aruran to a term of imprisonment of one year,
Commission in England and Wales (the
Vinayagamoorthy, Sivarajah Yathavan but released on three year good behaviour
national charity regulator) plays a prominent
and Armugan Rajeevan pleaded guilty to bonds. Vinayagamoorthy was sentenced
role in the discovery and sanctioning of
not see the merit in doing so. Roundtable standards of overseas partners, particularly
participants conceded that less could be in situations of disaster relief and other
Abuse of the non-profit sector is evidently The current Australian regulatory regime for Acknowledgements
occurring. Most documented incidents of the non-profit sector does not have an overt
The author would like to acknowledge the
misuse for ML/TF involved the establishment emphasis on ML/TF issues, although the
additional research undertaken by Rob
of a sham organisation, invariably a charity. encapsulation of designated services used
McCusker, Hannah Chadwick and Dave
Charity Commission 2009b. Charities back on Ly P-E 2007. The charitable activities of terrorist
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