Charities and Terrorist Financing: Charity Commission Toolkit

Charities face a particular set of counter-terrorism and sanctions duties, and the people who advise them, including accountants and independent examiners, need to understand what trustees are expected to do. This guide summarises the Charity Commission for England and Wales compliance toolkit chapter "Charities and Terrorism" (first published as a toolkit on 1 December 2012, with chapter 1 updated on 11 June 2021 and again on 9 November 2022), and the Commission's January 2025 consultation on terrorist financing risks to non-profits. It applies to charities in England and Wales; Scotland, Northern Ireland and the Republic of Ireland have their own regulators.

This is general information, not legal advice. Anyone facing a specific situation should contact the Commission, the Office of Financial Sanctions Implementation (OFSI) or a qualified adviser. If you work with charity clients, our guide to charity clients and financial crime due diligence covers the accountant's side of the relationship.

Trustees' duties and where counter-terrorism law fits

The toolkit sets out six main trustee duties: ensure the charity pursues its purposes for public benefit; comply with its governing document and the law, including counter-terrorism law; act in the charity's best interests; manage resources responsibly; act with reasonable care and skill; and ensure the charity is accountable. Within that, trustees must take risk-based steps to protect the charity and the people it serves from harm, including terrorist abuse. The Commission says that means keeping assets for the charity's purposes only, avoiding financial dealings with designated sanctions targets, and avoiding conduct that could lead the public to think the charity is linked to a proscribed organisation.

How charities can be abused

The toolkit identifies several forms of abuse: exploiting the charity's funds or assets, misusing its name or status, setting up a charity for an illegal purpose, and a trustee publicly backing a proscribed organisation or designated person. Risks can arise when raising and receiving donations, distributing grants and delivering services. The Commission says the risk is higher for charities working in unstable or high-risk overseas locations, though UK-based charities can be affected too.

On the overall picture, the toolkit notes that the UK's National Risk Assessment rated terrorist financing abuse across the non-profit sector as low overall, while stating that parts of the sector, mainly those working in high-risk areas internationally, face significantly higher risks. A low sector rating does not make any individual charity low risk. Note that this wording appears in guidance last substantively updated in 2022, so check the latest National Risk Assessment for the current position; our summary of the 2025 UK National Risk Assessment covers its findings for accountancy service providers.

The lists trustees need to know

The toolkit distinguishes three kinds of list. The proscribed organisations list is maintained by the Home Office and names groups the Home Secretary considers concerned in terrorism. The UK Sanctions List is maintained by the Foreign, Commonwealth and Development Office and includes people and entities subject to financial sanctions, including those designated for terrorist activity. Lists published by other governments have no effect in UK law, though they can still inform a risk assessment. Because these lists change, the Commission says trustees should check them regularly.

Offences that matter to trustees

The toolkit summarises the offences most relevant to trustees. They include membership of, or inviting support for, a proscribed organisation; raising funds for, or giving money to, one; receiving or providing money or property that may be used for terrorism, or helping to launder terrorist money; and making funds or economic resources available to a designated person without a licence or legal exception. The toolkit also says trustees can commit an offence by failing to report beliefs or suspicions of terrorist financing to the police, and that the Counter Terrorism Act 2008 applies this duty to trustees.

What to do if a charity is connected to a listed person

According to the toolkit, the right response depends on the type of list:

• Proscribed group concerns: report beliefs or suspicions to the police immediately and submit a serious incident report to the Commission.
• Designated persons: contact OFSI immediately, freeze any relevant funds, do not make funds available, and report to the Commission.
• A designated trustee: a designated person cannot act as a trustee, and a trustee who becomes designated should resign. If they do not, the charity should check whether it can remove them and take advice if unsure.
• Designated staff or volunteers: avoid engaging them; if already engaged, contact OFSI and the Commission and take legal advice before ending any employment contract.
• The charity itself designated: its accounts are frozen, and trustees must report this and seek legal advice immediately. Licences to use funds come from OFSI, not the Commission.

Our guide to UK financial sanctions and OFSI reporting explains the sanctions side of this in more detail.

Due diligence and monitoring expectations

The toolkit takes a risk-based approach: the higher the risk, the more checks, and checks may extend to staff, partners, donors and beneficiaries. It says to check names against the lists including aliases and spelling variants, and to use dates of birth, nationality and addresses where available. Where ownership is unclear, trustees should consider whether a partner is owned or controlled by a designated person, and take advice before proceeding if still unsure. Checks should be repeated periodically, particularly for ongoing partnerships, and decisions and reasons should be recorded in writing. Written agreements, progress reporting, accounts and site visits can help confirm that funds are used as intended.

Humanitarian and overseas work

The Commission says it supports legitimate humanitarian work, including in regions where proscribed groups operate, but trustees must assess and manage the risks. The toolkit lists examples such as renting property from a sanctioned owner, buying from companies owned by listed persons, and relying on sanctioned local infrastructure such as telephone networks. It says cash and voucher programmes count as providing funds, and that working with a partner designated in the UK is not permitted. A licence from OFSI is needed before any otherwise prohibited activity; charitable purpose alone is not a ground, although a humanitarian ground exists. The toolkit advises applying early, at least four weeks before the licence is needed, and not assuming one will be granted.

The January 2025 consultation

From 3 to 31 January 2025, the Commission, supported by other UK regulators, ran a voluntary and anonymous questionnaire for non-profits and wider civil society about terrorist financing risks, as part of a review of the UK's non-profit sector under Financial Action Task Force Recommendation 8. The consultation page was updated on 26 June 2025 to say the responses will inform future engagement and outreach with UK non-profits. It does not publish a summary of findings, so we cannot report what it found.

What this means for accountants (our suggestions)

The following points are our own suggestions for professionals who act for charities, not requirements from the Commission:

• Ask whether the trustees have a written risk assessment covering overseas partners, and whether anyone has checked partners and trustees against the UK Sanctions List.
• Keep your own client risk rating up to date when a charity starts working in a higher-risk region or with a new overseas partner.
• Know your firm's internal route for reporting suspicion, and remember the tipping-off rules covered in our guide to suspicious activity reports and tipping off.

Frequently asked questions

Do charity trustees have to report suspected terrorist financing?

The toolkit says trustees should report suspected terrorist financing offences to the police immediately and report serious incidents to the Commission, and that the Counter Terrorism Act 2008 applies a duty to report beliefs or suspicions to trustees.

Can a designated person be a trustee?

No. According to the toolkit, a designated person cannot serve as a trustee, and a trustee who becomes designated should resign.

Does the Charity Commission investigate terrorist financing?

The toolkit says the Commission regulates trustees but does not investigate or prosecute terrorist abuse; it refers concerns to the police and other agencies.