Understanding the

Non Profit Organisations Act

No. 7 of 2019
Presentation to the:
Trinidad and Tobago Chamber of
Industry and Commerce – May 16, 2019

This presentation is strictly for educational

purposes and not intended to be legal advice
on the issues discussed herein
 Who are the Financial Action Task Force and what are the
40 Recommendations ?

 FATF – is an inter-governmental organization whose goals are to

create standards and promote the effective enforcement of legal,
regulatory, and operational measures against money laundering,
terrorist financing and financing the proliferation of weapons of
mass destruction.

 FATF’S 40 RECOMMENDATIONS - These are internationally

endorsed global standards for implementing effective
AML/CFT/PF measures. They increase the transparency of the
financial system making it easier to detect criminal activity and
give countries the capacity to successfully take action.

 The FATF monitors a country’s progress in implementation of

the 40 Recommendations.
 Summary of CFATF ‘S Findings of Trinidad and Tobago’s
4th Round of Mutual Evaluation Report, June 2016

Evaluation conducted on Trinidad and Tobago’s Technical

Compliance – to determine whether the country’s
AML/CFT legal framework meets the international
standards established by the 40 Recommendations and
Effectiveness – the extent of which the country has
achieved eleven Immediate Outcomes (IOs).

 Non Compliant in 2 Recommendations - 7 & 8

 Partially Compliant in 13 Recommendations
 Low or Moderate Level of effectiveness in all 11
Immediate Outcomes (IOs)
 CONSEQUENCE
 By Public Notice issued in February 2019 FATF has identified
Trinidad and Tobago together with Botswana, Ethiopia, Ghana,
Pakistan, Sri Lanka, Syria, Serbia, The Bahamas, Tunisia, Yemen
and Cambodia as countries with AML/CFT deficiencies but which
have developed an action plan with the FATF and provided high-
level political commitment to address the identified deficiencies.

 The Action plan included among other measures adopting

appropriate measures for NPOs.

 Also in February 2019 the European Commission published a new

list of countries with weak anti-money laundering and terrorist
financing regimes which included Trinidad and Tobago.
 TO COMPLY OR NOT TO COMPLY
 Failure to comply has resulted in Trinidad and Tobago being grey
listed which signals to the world that we are a safe haven for Money
Laundering, Financing of Terrorism and Financing the Proliferation
of Weapons of Mass Destruction. As a result of these listing,
international banks and other entities will apply increased checks
(due diligence) on financial operations involving customers and
financial institutions from these high-risk countries to better
identify any suspicious money flows.

 Reduction in Trade

 Problems with International Loans

 Downgrade in the Country’s Ratings

 Black Listing - Economic Sanctions

 Financial Action Task Force’s Recommendation 8
FATF Recommendation 8 pertains specifically to non-profit
organisations and states:

 Countries should review the adequacy of laws and regulations that relate
to non-profit organisations which the country has identified as being
vulnerable to terrorist financing abuse. Countries should apply focused
and proportionate measures, in line with the risk-based approach, to
such non-profit organisations to protect them from terrorist financing
abuse, including:
(a) by terrorist organisations posing as legitimate entities;

(b) by exploiting legitimate entities as conduits for terrorist financing

including for the purpose of escaping asset-freezing measures; and

(c) By concealing or obscuring the clandestine diversion of funds intended

for legitimate purposes to terrorist organisations.
 IMPLEMENTATION
 Identify the NPO subset that is vulnerable to financing abuse - the
entire sector is not.

 Review adequacy of existing laws and regulations related to that

subset.

 Adequacy checks must identify the nature of terrorist financing

threats and must consider the adequacy of other risk-mitigation
measures, including policies, working more closely with the NPO
sector, sector self-regulation measures.

 Imposing new standards is not mandatory; this check may reveal

that standards in force are appropriate.

 What’s more, if standards are too extensive and onerous, then FATF
will consider them deficient.
 IMPLEMENTATION
 Recommendation 8 works in connection with other
Recommendations – such as Recommendations 24 and 25 as
they pertain to transparency and beneficial ownership of legal
persons – which require that adequate, accurate and timely
information should be maintained on the beneficial ownership of
legal persons - which would include NPOs.

 The NPO Act forms part of a package of legislative reform which

includes The Companies Amendment Act 6 of 2019, The Civil
Asset Recovery and Management and Unexplained Wealth Act 8
of 2019 and various legislative amendments to existing laws to
enable law enforcement authorities to prioritise and speed up
Money Laundering charges before the courts and introducing a
framework to counter proliferation financing.
 RED FLAG INDICATORS
AUSTRAC 2018 Non Profit Organisation and Terrorism Red Flag
Report 2018 List of indicators include :
1. Media reports the NPO is linked to known terrorist
organisations or entities that are engaged or suspected to be
involved, in terrorist activities.

2. An NPO sending funds to multiple entities (individuals and

companies) in a high-risk country.

3. Vague justifications and a lack of documentation when the

financial institution questions.

4. NPO transactions for which there does not appear to be a

logical economic purpose or link between the NPO’s stated
activities and the other parties in the transaction.
 RED FLAG INDICATORS
5. NPO is unable to account for the final use of all its
funds/resources.

6. NPO uses unnecessarily complex banking arrangements or

financial networks for its operations, particularly overseas.

7. Unexpected absence of contributions from donors located in

the country.

8. NPO appears to have few or no staff and limited or no

physical presence which is at odds with its stated purpose
and scale of financial activity.

9. NPO funds commingled with personal/private or business

funds.
 SOME AML/CFT OFFENCES UNDER POCA
& POCA – A & A-TA
 Money Laundering – 25 Million & 15 years imprisonment.

 Failure to disclose knowledge/suspicion of Money Laundering

250K & 3 years imprisonment.

 Failure to make a suspicious transaction report or suspicious

activity report to the FIU – 500K & 2 years imprisonment on
summary conviction & 7 years on indictment.

 Financing of Terrorism – 25 years imprisonment.

 Failure to disclose information relating to property used for

the commission of offences under the Anti Terrorism Act to
the FIU – 5 years imprisonment.
 What are Non-Profit Organisations (NPOs)?
 An NPO is an association or group of persons organized for a
purpose other than to generate income or profit.

 NPOs can be classified into two categories:

 An unincorporated association - body or group of persons not
being a legal entity separate from the persons who compose it,
who come together to advance a particular purpose.

 An incorporated association – body or group with certain

corporate attributes, in the main, a company incorporated as a
non profit company under Companies Act Chapter 82:01 and
which identifies itself as established primarily for purposes
set out in section 308(2).
 What are Non-Profit Organizations (NPOs)?

 The purposes of NPOs:

 The advancement or promotion of a patriotic, religious,
philanthropic, charitable, educational, cultural, scientific,
literary, historical, artistic, social, professional, fraternal,
sporting or athletic purpose, or some other useful object.
 Regulation of NPOs

 The Non-Profit Organisations Act No. 7 of 2019 seeks to

provide for the registration regulation and supervision of all
NPOs.

 The Act was introduced as a Bill in Parliament on 22nd

March, 2019. Passed in the House of Representatives on the
29th March, 2019; passed in the Senate on the 11th April,
2019 and assented on the 23rd April, 2019.
 Regulation of NPOs
 Prior to the NPO Act No. 7 0f 2019, statutory regulation of NPOs
was limited to:
 The Companies Act Chapter 82:01, in relation to incorporated
NPOs; and

 The Registration of Clubs Act Chapter 21:01, in relation to the

registration of clubs and the control of the supply and sale of
intoxicating liquor therein.

 Prior to the Act, only NPOs seeking to be incorporated as

separate legal entities (under the Companies Act) and those in
which intoxicating liquor is supplied (Registration of Clubs Act)
were required to be registered.
 Key Provisions of Act No. 7 of 2019
 The Act defines NPO as a body of person whether incorporated or
unincorporated which –

(a) is established primarily for the promotion of a patriotic,

religious, philanthropic, charitable, educational, cultural,
scientific, literary, historical, artistic, social, professional,
fraternal, sporting or athletic purpose, or some other useful
object and raises or disburses funds for that purpose or object;

(b) carries on its business without pecuniary gain to its members or

officers except as reasonable compensation for services
rendered; and

(c) restricts the use of any of its profits or other accretions to the
promotion of its purposes or object.
 Key Provisions of Act No. 7 of 2019

 All NPOs (save Friendly Societies) must now be registered

– No person shall operate a NPO in Trinidad and Tobago
unless the NPO is registered under the Act – section 5(1)

 A person who contravenes subsection 5(1) commits an

offence and is liable on conviction on indictment to a fine of
$50,000.00 AND imprisonment for seven years – section
5(2)
 Key Provisions of Act No. 7 of 2019
 NPOs currently registered as companies under the
Companies Act shall be deemed to be duly registered as a
NPO under the Act and the Registrar General shall enter
the name of the non profit company on the Register of
NPOs established and maintained by the Registrar General
– section 8

 There is no need for non profit companies in good standing

with the Companies Registry to re-register as a NPO under
the Act, but they must submit a completed AML/CFT/PF
risk assessment questionnaire to the Registrar General
within twelve months from the commencement of the Act –
section 27(3)
 Key Provisions of Act No. 7 of 2019

 NPOs (other than non profit companies) in operation

immediately before the date of commencement of the Act
(23rd April, 2019) may continue to carry out their activities
without registration under the Act for a period of 18 months
(or such longer time as the Attorney General may by Order
determine, provided it does not exceed 12 months) –
section 27(1).

 Before the expiration of the 18 month period (or any

extension) the NPO shall apply to be registered as a NPO
under the Act – section 27(2).
 Key Provisions of Act No. 7 of 2019

 The Financial Intelligence Unit (FIU) is the Regulator of all

NPOs

 The Proceeds of Crime Act Chapter 11:27 has therefore been

amended to include NPOs under the First Schedule as ‘listed
business’ requiring compliance with AML/CFT
requirements.
 Key Provisions of Act No. 7 of 2019
 What does being a ‘listed business’ entail – the Listed Business
must comply with the Financial Obligations Regulations 2010, this
includes inter alia:
➢ Prepare a Compliance Programme, which is to be submitted to the FIU for
approval;
➢ Designate a manager or official employed at a managerial level as the
Compliance Officer;
➢ Ensure that the Compliance Officer receives annually training on
AML/CFT/PF;
➢ Make arrangements for the ongoing training of the directors and all
members of staff;
➢ Establish internal reporting rules in support of its Compliance Programme
➢ Have its Compliance Programme reviewed annually by internal and
external auditors;
➢ Implement proper KYC and Source of Funds measures for persons wishing
to become members and contributors;
➢ Maintain a suspicious activity and suspicious transaction logs and submit
STRs and SARs to the FIU
 Key Provisions of Act No. 7 of 2019
 NPOs with a gross annual income exceeding $500,000.00 shall be
supervised by the FIU– section 4(1).

 Gross annual income includes:

1. Income from provision of goods and services;
2. Rental income;
3. Interest or other income received from investments;
4. Donations, grants or subventions;
5. Loans; and
6. Other income, cash or monetary worth of property and assets
acquired.
received by the NPO in a financial year.

 The FIU shall use a risk based approach to determine the level
supervision required for NPOs under the Financial Intelligence Unit of
Trinidad and Tobago Act Chapter – section 4(3)
 Key Provisions of Act No. 7 of 2019

A controller of a NPO shall ensure that proper financial accounts and

records of following are kept:

(a) all sums of cash received and expended and the matters in respect of
which the receipt and expenditure relate;

(b) all gifts, sales and purchases of property;

(c) all sums of cash raised through fundraising;

(d) non-monetary transactions of property as may be prescribed by

Regulations;

(e) all assets and liabilities; and

(f) any other matter that may be prescribed by Regulations.

 Key Provisions of Act No. 7 of 2019

Who is a controller of a NPO? – A person who has the control or

management of a NPO and includes:

(a) Directors – where NPO is a non profit company;

(a) Trustees – where the NPO is a Trust;

(b) A person responsible for the management or administration of an

unincorporated NPO;

(c) A senior officer of the NPO; or

(d) A person not specified in (a) to (d) where the NPO is controlled or
managed by that person
 Key Provisions of Act No. 7 of 2019

(a) NPOs with a gross annual income exceeding $10 million shall
have its financial accounts and records audited and reported
on, in accordance with IFRS, annually by a qualified auditor
and shall submit the audit report to the Registrar General
when so requested – sub-section 14(2) & (3).

(b) A controller of a NPO shall ensure that the records of the

purpose and activities of the NPO, the identity of its directors,
senior officers and trustees and the source of its gross annual
income are kept for a period of six years – sub-section 18(1) (2)

(c) A controller of a NPO who knowingly and without reasonable

cause fails contravenes section 18(1) & (2) commits an office
and is liable on summary conviction to a fine of $50,000.00
AND imprisonment for seven years – section 18(3)
 Key Provisions of Act No. 7 of 2019

(a) A NPO that solicits or causes to be solicited contributions from

the public or the State, whether locally or internationally,
whilst not registered under the Act commits and offence and is
liable on summary conviction to a fine of $50,000.00 – section
22(1)

(a) A controller of a NPO who without reasonable cause

contravenes subsection 22(1) commits an offence and is liable
on summary conviction to a fine of $50,000.00 AND
imprisonment for seven years – section 22(2)

(b) Persons or groups of persons who carry out a single event to

raise funds for charitable purposes are exempted from section
22.
Key Provisions of Act No. 7 of 2019

Q&A