29 October 2014

Charity commission compliance case: international projects and identity fraud

The Charity Commission investigates the handling of an identity fraud perpetrated against a charity’s partner organisation in Uganda that resulted in a £30,000 loss to the charity.

World Christian Ministries set up an overseas project to help vulnerable widows and their children.

However, the charity submitted a serious incident report to the Charity Commission in July 2014. It described losses of approximately £30,000 caused to the charity as a result of an identity fraud committed against it through a partner organisation in Uganda. The charity discovered that the individual responsible for the project in Uganda had been in hospital for some time meaning funds forwarded to him were not spent by him and reports received by the charity could not have come from him either.

The Commission found that the charity’s monitoring policy had been followed in relation to its overseas project. It received regular confirmation that funds had been properly applied, including pictures and receipts. Nevertheless, the charity also undertook a review of its IT policy and its monitoring policy for overseas projects.

The charity trustees were immediately informed and funds to the partner were suspended. The partner was also asked to report the matter to local police and the charity informed Action Fraud in the UK. In addition, the charity sent a small delegation to Uganda to undertake some further investigation on the ground and to establish whether the project could continue.

In light of these sensible steps, the Commission took no further action. It was satisfied with the response of the trustees to the incident reported.

Lessons for other charities in the view of the Commission are:

  • swift reporting of serious incidents can be good evidence of proper risk management;
  • international projects may bring greater exposure to risks such as financial fraud; and
  • the Commission’s guidance on Charities working internationally can assist with overseas projects.

Charities making payments abroad will also want to remain mindful of HMRC’s guidance on international payments to ensure fiscal compliance.

Category: Article