CASE STUDIES

ABUSE OF CHARITIES AND NPOS

NPOS OFTEN HAVE A GLOBAL PRESENCE AND MANY OPERATE IN CONFLICT ZONES AND OTHER REGIONS WHERE PEOPLE
ARE IN NEED AND CAN BE VULNERABLE TO EXPLOITATION AND ABUSE IN ORDER TO PROVIDE FINANCIAL SUPPORT
FOR TERRORISM.

OVERVIEW
Non-profit organisations (‘NPOs’) that raise funds and conduct charitable activities provide vital support and services to communities around
the world. The legitimate operational model for many NPOs will involve cash-intensive fundraising, with numerous small cash donations
consolidated together before being deposited into a bank account, and financial transfers to high risk countries where funds can be deployed for
humanitarian work. Unfortunately this provides ideal cover for the financing of terrorism.

In order to fund terrorists or terrorist activities a legitimate NPO can be exploited, either wittingly or unwittingly, or a sham NPO can be used. This
exploitation can occur at three distinct points in the NPO operational model: the collection phase, the transfer phase, or at the point of delivery.

SCENARIO
Let us consider a fictitious example where exploitation occurs at all three points of the process. Suppose “Help the Homeland” is an NPO that
raises funds primarily from the Somalian diaspora in the US and the UK for the stated purpose of providing humanitarian relief and poverty
reduction in Somalia. Funds are raised using a variety of methods including cash donations collected by volunteers on the streets.

1 2
Two members of the Somali community in
the US who have friends and relatives who
are members of terrorist groups in Europe
and Africa volunteer to collect funds on
behalf of “Help the Homeland”. Instead of
passing on all of the cash that they collect to
the NPO, they use some of it to send money
to their terrorist associates abroad using a
local hawala broker.
Unbeknownst to the majority of the
board and senior management of the NPO
a significant minority actively support a
terrorist group, the “African Caliphate”.
This minority includes an individual who
has access to the bank accounts of the NPO.
Funds collected by “Help the Homeland”
in the US and the UK are consolidated in an
account in Switzerland, where the NPO has
an office, before being sent on to Somalia.
When these various transfers are made,
funds are diverted using international
wire transfers to the accounts of sham
businesses, supposedly for logistical services,
and are ultimately used to support the
“African Caliphate”.
3
Finally, on the ground in Somalia, one
of the people responsible for distributing
funds is also a supporter of the “African
Caliphate”. Some of the money this individual
distributes is used to purchase food and
other provisions, half of which is diverted
and sent to a local sub-group of the
“African Caliphate”. Other funds distributed
by “Help the Homeland” are passed on to
local charitable organizations, one of
which is in fact a front operation for the
terrorist group.

MORE CASE STUDIES

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 CASE STUDIES ABUSE OF CHARITIES AND NPOS

Cash Donations

Volunteer Terrorist
Fund Raisers Associate of
Volunteer

HA
WA L A B R O K E R

NPO in US

Terrorist
Group

Logistic Support
Company A

NPO in
Switzerland

ICS
GIST
LO

Logistic Support
Company B
NPO in Somalia

TIY
AR
CH
HQ

Local Charitable
Organisation
Food

Local
Terrorist
Cell

MORE CASE STUDIES

THE ESSENTIAL ALLIANCE OF GLOBAL AML AND CFT INTELLIGENCE
AVAILABLE ON KYC36O.COM

This KYC360 infographic is licensed for your personal use only. It may not be used for any commercial purpose without the prior written permission of KYC360. © KYC360 2016. All rights reserved.