Guidelines issued by the U.S. Treasury Department provide “voluntary best practices for U.S.-based charities” to reduce the possibility that charitable funds will finance terrorist activities.

HIGHLIGHTS OF U.S. TREASURY NEWS RELEASE (NOV. 7 2002):

  • After detailing best procedures for governance, disclosure of governance and financing, financial practices and accountability, the Treasury suggests that the following steps be taken before charitable funds are distributed to foreign organizations.

COLLECT BASIC INFORMATION ABOUT A FOREIGN RECIPIENT ORGANIZATION (FRO):

  • The FRO's name in English, in the language of origin, and any acronym or other names used to identify the group.

  • Jurisdictions in which the FRO maintains a physical presence.

  • The jurisdiction of the FRO's incorporation or formation.

  • The address and phone number of any place of the FRO's business.

  • The FRO's principal purpose, including a detailed report of its projects and goals.

  • Names and addresses of organizations to which the FRO currently provides or proposes to provide funding, services or material support.

  • Names and addresses of any of the FRO's subcontracting organizations.

  • Copies of any of the FRO's public filings or releases, including most recent official-registry documents, annual reports and annual filing with the pertinent government.

  • The FRO's existing sources of income, such as official grants, private endowments and commercial activities.

THE U.S. CHARITY'S BASIC VETTING SHOULD:

  • Demonstrate that it conducted a reasonable search of public information, including information available via the Internet, to determine if the FRO is or has been implicated in any questionable activity.

  • Demonstrate that it verified that the FRO doesn't appear on any list of the U.S. Government, the United Nations or the European Union identifying it as having links to terrorism or money laundering. The U.S. charity should consult the Department of the Treasury's Office of Foreign Assets Control Specially Designated Nationals List, which will identify entities designated by the U.S. Government as Foreign Terrorist Organizations or as supporters of terrorism. The U.S. charity also should consult the U.S. Government's Terrorist Exclusion List maintained by the Department of Justice, the list promulgated by the United Nations under U.N. Security Council Resolutions 1267 and 1390, the list promulgated by the European Union under EU Regulation 2580 and any other official list available.

  • Obtain the full name in English, in the language of origin, and any acronym or other names used, as well as nationality, citizenship, current country of residence, place and date of birth for key staff at the FRO's principal place of business, such as board members, and for senior employees at the FRO's other locations. The U.S. charity should run the names through public databases and compare them to the lists noted above.

  • Require FROs to certify that they don't employ or deal with any entities or individuals on the lists referenced above, or with any entities or individuals known to the FRO to support terrorism.

THE REVIEW CONDUCTED BY A U.S. CHARITY OF A FRO'S FINANCIAL OPERATIONS SHOULD:

  • Determine the identity of the financial institutions with which the FRO maintains accounts. It should also seek bank references and determine if the financial institution is: 1) a shell bank; 2) operating under an offshore license; 3) licensed in a jurisdiction that has been determined to be non-cooperative in the international fight against money laundering; 4) licensed in a jurisdiction that has been designated by the secretary of the Treasury to be a primary money-laundering concern; and 5) licensed in a jurisdiction that lacks adequate anti-money-laundering controls and regulatory oversight.

  • Require periodic reports from the FRO on its operational activities and use of the disbursed funds.

  • Require the FRO to undertake reasonable steps to ensure that funds provided by the charity are not ultimately distributed to terrorist organizations. Periodically, the FRO should apprise the U.S. charity of the steps it has taken to meet this goal.

  • Perform routine, on-site audits of FROs when possible, consistent with the size of the disbursement and the cost of the audit.

The Treasury warns: “Compliance with these guidelines shall not be construed to preclude any criminal or civil sanctions by the Department of the Treasury or the Department of Justice against persons who provide material, financial, or technological support or resources to, or engage in prohibited transactions with, persons designated pursuant to the Antiterrorism and Effective Death Penalty Act of 1986, as amended, or the International Emergency Economic Powers Act, as amended.”