“Australian aid charities have zero tolerance for money laundering or terrorism financing and have robust regimes in place to respond to those risks.”
These are the words of Marc Purcell, CEO of Australian Council for International Development (ACFID), responding to the release of the Austrac report ‘Terrorism Financing South East Asia and Australia: Regional Risk Assessment 2016’.
“ACFID members fully support efforts to reduce the vulnerability of aid and development groups to abuse by terrorist organisations and have actively worked with the Australian Government to develop the counter-terrorism and financial controls they must comply with,” Purcell said.
“The Australian public has always been generous in supporting humanitarian causes. The Australian Government’s requirements and the ACFID Code support the public to continue that generosity. The best way to ensure the safety of their donation is prudence, not avoidance,” he said.
The Austrac report proposed that peak bodies for charities have counter-terrorism and financing requirements for their members.
“ACFID has had such a regime in place for many years,” Purcell said.
“All 128 members are required to sign our ACFID Code of Conduct that commits them to high standards of good practice, transparency and accountability. Members must have in place policies and processes to manage financial wrongdoing.
“Before ACFID Members enter into any partnerships or employ staff, they’re expected to check all relevant lists of known terrorist individuals and organisations. That includes the Attorney-General’s Department’s ‘List of Terrorist Organisations’.”
Purcell said, “We recognise the risks and our members have long experience in effectively managing them. It’s important that those risks are managed to enable those in greatest need to continue to receive assistance.”
1 Comment
While a laudable sentiment, having a zero tolerance from a policy perspective, versus having a robust anti-corruption and AML/CTF system in place (which has effectively operationalised the policy), are two different issues. Without appearing overly critical, ACFID’s current standards around fraud, corruption, and AML/CTF are woefully inadequate.
A good example of this are the allegations that World Vision funds destined for its Palestinian programmes were channeled to a terrorist organisation. The comments by World Vision’s then CEO (Tim Costello) was that he was “shocked and mystified”, and could not believe it as “I’ve been there, the Department of Foreign Affairs has been there, PwC audit our books.”
As any seasoned development practitioner will tell you, what you see on a field visit, and what the actual reality is once the visit is over can be two very different things. As for PWC’s audit, statistics from The Association of Certified Fraud Examiners have shown that external financial audits only uncover around 3% of frauds (let alone ML/TF), with 6.8% of them being uncovered by accident. This makes ‘by accident’ twice as effective in uncovering frauds as an organisation’s external financial audit! Despite this, many NGOs still rely on their outside audits as the litmus test that all is well.
Having worked in International Development for the past 15 years (mostly in developing countries), and specialising in corruption and AML/CTF, I continue to be perplexed at the complacency of most Australian NGOs around the topic of corruption and money laundering/terrorism financing, with many – despite the risks – only having basic controls in place. While I am sure this will change over time it will only start to happen once the sector takes off its rose-tinted glasses and accepts that all is not as rosy as many like to portray!