Charity Commission Doubles Down on Opposing Cash-Couriering - After Inquiry into UK Charity

The Commission instead urges the use of formal banking systems when transferring money abroad to ensure the proper documentation and a clear trail of the funds being transferred. 

The Commission reinforced its warning on cash couriering in its report on its statutory inquiry into Human Aid UK.

Human Aid UK Inquiry

Human Aid UK (the Charity) is a charity driven by Islamic values and its work involves relieving the suffering of war-torn victims by providing aid, advancing education and promoting religious harmony. On 9 July 2019, the Charity's Director of Operations and two volunteers were found to be in possession of charitable funds at London Heathrow Airport which were consequently seized by police under the Proceeds of Crime Act 2002.

The Commission report is critical of a number of factors, including that:

• the trustees did not mention the plans to travel with the funds to Gaza the following day, during an inspection at the Charity's premises
• the individuals involved were unable to account for the provenance of the funds and could not provide a clear explanation as to how the funds were intended to be transferred to Gaza, or to whom
• the Charity had previously contacted the Commission and had been verbally advised against cash couriering

Findings

After a lengthy investigation with further involvement from the police, the Commission found that there was misconduct and/or mismanagement in the Charity’s administration by the trustees at the time.  It went on to note that "the trustees took a number of positive steps to address the failures and weaknesses in the Charity's governance".  

The Charity welcomed the closure of the inquiry and the Commission's decision to take no further action against the Charity. It also expressed concerns about what it called 'bias and institutional islamophobia' in the Commission's handling of the inquiry and the actions of the police and security services. Expressing a sentiment that will be recognised by other charities that have experienced statutory inquiries, the Charity described the inquiry report as 'a bitter pill to swallow' and expressed the 'hope that this report opens dialogue into these problems' involving Human Aid UK and other Muslim charities.                                                                            

Best Practice on Sending Money Overseas

Transparency and accountability is a key driver of public trust and confidence in charities, particularly in relation to charity finances and how they are spent. Charities should in most cases use regulated banking systems when transferring charitable funds overseas.   

As the report says: 'The Commission’s position in respect of cash couriering is clear – The Commission strongly advises charities against the use of cash couriering as a method to transfer charitable funds due to the risks involved.'

Charities that need to send money to support projects outside the UK must take steps to ensure the funds are used for the intended purpose and reach the intended beneficiaries. Operating through local partners can be an effective way of delivering benefits directly to communities but the Charity's trustees remain responsible for ensuring that appropriate due diligence and monitoring arrangements are put into place.

Cash Couriering in Exceptional Circumstances

In circumstances where cash couriering is the only means of sending money overseas, the Commission expects as a minimum that trustees will put in place safeguards to protect the funds and individual(s) carrying the funds. The Commissions expectations are set out in its regulatory alert on the use of cash-couriers. They include:

• obtaining insurance
• recording the decision to use cash couriers in meeting minutes and carrying out risk assessments
• ensuring that the cash courier carries documents evidencing the source and destination of the funds and their connection to the charity
• declaring cash being transferred with a value of £10,000 or above to UK customs, this can be done online
• informing the police in advance of plans to courier cash
• carrying out due diligence when using an agent or partner to courier the cash and agreeing the steps in writing. You can do this using the Commission's Cash Courier agreement form

For legal support on cash couriering, please contact Shivaji Shiva in our Charity Law team on 07788 3133298, or complete the form below.