Overcoming Financial & Compliance Challenges Event
On Thursday 21st November 2019, MCF held an ‘Overcoming Financial and Compliance Challenges’ event. The seminar was hosted by Islamic Relief UK and designed specifically for Muslim INGOs and those working internationally on how to overcome financial compliance challenges such as: de-rsiking, working in high risk areas abroad, and sanctions lists.
Tailored to staff working in legal, compliance and finance positions, the seminar was a sucess and was fully booked prior to the registration deadline. It was clear that there is a desire for continued discussions regarding finding solutions to the issues raised, particularly the challenges faced by charities in relation to bank de-risking practices.
The seminar included a number of different speakers with input and expertise in a variety of areas. including Robert Price from Latham and Watkins LLP; Eleanor Morgan from the Charity Commission and Dr Teresa Dumasy from Conciliation Resources.
The event discussed good practice around banking, risk management and sanction listings, international monetary transfer, and complying with reporting requirements.
The discussion points included:
- The impact of misapplication of the law, which is creating challenges for the humanitarian sector- the FCA has a policy stating that charities should not be de-risked;
- MCF research found that 50% of respondents had de-risking problems with banks often citing that charities do not meet their ‘risk appetite;
- Charities are encouraged to report issues to the Financial Ombudsman if they have a problem with their banks as this will help to provide a clear picture of how many charities are being affected; and
- It was suggested that charities could come together to open their own bank through the Bank of England, removing the issue of clearing banks altogether.
We hope to hold more events relating to this topic in the future. In the mean time, there are some useful tips to consider within your charities to manage some of the issues discussed:
1- Document bank closure notices and any other form of financial difficulty, such as the refusal to transfer money, or refusal to open an account. Record the communication received from the bank, when it happened, the reasons given and the processes you went through to document and understand the justification given for your charity account closure (if any).
2- Report your difficulties to the Financial Ombudsman. If your charity income is below £6.5m, you can report it to the ombudsman (it is assumed larger charities can afford legal representation, however there is a lot of pro-bono work happening, Latham & Watkins are one example).
3- Gather data. Inform MCF of your experience – we will collate data on how charities are being impacted to provide a clearer picture, so we can report our collective experiences and evidence this when communicating with the Government, Banks and Charity sector. This will also help us to come together and take action to protect charities from unfair application of law, as well as addressing the gaps where charities do not have the right policies and procedures in place to raise the standards to ensure due diligence is in place. Keep MCF informed of any de-risking issues that you might face. You can do this through email on: firstname.lastname@example.org
4- Improve internal process. Make your internal processes watertight, so there is no possibility of falling foul of recommended guidelines. Ensure you have all the right policies in place. Know in which exceptional circumstances cash can be carried. Know the sanctioned locations- do not try and work around it in any circumstances. See Charity commission guidance on moving money internationally.
5- Trustees are the legal guardians for your charity and are legally liable for any fraudulent activity and mismanagement of charitable funds and transfers – it is imperative that trustees know their responsibilities and provide the final checks and balances for such matters, see Charity Commission website for more information.
6- Working Groups. MCF members can join our Finance Working Group. Colleagues from our membership come together throughout the year to discuss issues affecting their organisation, work together to find solutions and share skills and knowledge to take back and apply to their organisations. To join one of our working groups, email Dr Atif Imtiaz, our Senior Research and Policy Lead on: email@example.com
7- Join us! Become a member of the Muslim Charities Forum. Learn more about how to apply and the benefits of joining this forum. Learn how we can Support, Connect and Represent you and the sector. Become part of the MCF family and shape the way Muslim Charities work in the UK and internationally, learn more from our membership pages, click here