Charity Commission issues updated alert on charities and cash couriers

In May 2022, the Charity Commission published its ‘strong advice’ on the risks of charities using cash couriers. Cash couriers are people who physically transport currency from one jurisdiction to another. It can be a third party acting on behalf of the charity or a charity representative.

The risks of cash couriering are high. This method of moving cash is commonly used by terrorist and criminal organisations; the police can seize and then arrange forfeiture of cash if they are suspicious about the source or use of it.

Police investigations into suspicious cash couriers can significantly delay charity activity and cause reputational damage, so cash being couriered risks the loss of cash while also being a likely target for criminals. In addition, cash couriers tend not to be regulated which makes them less reliable.

Charities which operate internationally understandably need to move funds across borders. The Commission emphasises that using a regulated banking system to do this is the most responsible way for trustees to protect charity money and to keep a trail of the movement of funds.

Trustees and banking facilities

Trustees have a duty to maintain and preserve accounting records in relation to income and expenditure. Thus, charities are warned that where formal banking facilities are available, and are not used by trustees, this may amount to misconduct or mismanagement, unless the trustees are able to demonstrate that exceptional circumstances led to the use of a cash courier.

Recent news reports have highlighted that there is a lack of banking facilities for smaller charities, leading to some small charities having to keep cash at home or in personal accounts. Day-to-day banking services may be unavailable and/or unsuitable for small voluntary organisations as they require larger deposits and more expenditure than is appropriate for a small not-for-profit voluntary organisation.

Whilst trustees of such small charities recognise that keeping cash at home until there is enough for a bank to accept a deposit, or paying into personal accounts and writing cheques to the charity’s accounts are both high-risk strategies, they continue to handle their funds this way because they feel they have no choice.

Charities have said that most banking facilities are designed for businesses and not for voluntary organisations. Therefore, smaller charities may need to continue to use cash couriers, despite the dangers.

What can be done?

If cash couriers are to be used then, the Commission’s advice is as follows:

• Consider the safety of the individual carrying the cash and the risks to the charity’s property
• Carry out due diligence on the cash courier and agree with them in writing what is expected from them before any money is handed over (specific figures, delivery details and who it is to be paid to). There is a template form on the Commission’s website.
• Obtain specialist insurance to cover the movement of funds.
• Ensure the cash courier carries documents evidencing the legitimacy of the funds
• Declare cash of £10,000 or more to HM Revenue and Customs when cash is couriered overseas
• Comply with local legal requirements when cash is couriered

Conclusion

To summarise, the Commission strongly advises against the use of cash couriers to transport charitable cash. The risks are too high, and it can lead to serious losses to the charity or worse.

On the other hand, there is a lack of suitable banking services for small charities. Therefore, there are exceptional circumstances in which cash couriers may be used, provided trustees assess the risk to their charity, take appropriate advice where necessary and abide by the above. The decision-making process and the risk assessment must be properly recorded. Should any charity cash be seized, or forfeited, this must also be recorded as a Serious Incident Report as soon as possible, reflected in the charity’s financial statements and in the charity’s annual return.