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Can a charity safely transfer cash overseas?

Arguably the most important duty of a charity trustee is to ensure that the Charity’s funds  are used for their intended charitable purpose. Working internationally and in cash expose a charity to extra levels of risk. Transferring money through a bank is part of good financial control system and is preferable if available.   But what about international cash transfers by charities?

Beware of the risks

As with any risk Charity Trustees need to show that they have weighed up the benefits of working internationally and in cash against the potential harm. For example, Charity Trustees should identify and document the potential risks the Charity might face transferring cash internationally and work out and document ways to manage them. Risks include the risk of theft, fraud, money laundering, exchange rate losses or the risk funds are used for an unintended purpose or for a non-charitable purpose.

The Charity Commission provide Guidance to charities on how to manage risks when working internationally see: Charities: how to manage risks when working internationally.

In particular the Commission states “it is important to be able to reassure the public that funds are going where they’re meant to. For example you should have clear audit trails stating how much money has been moved and where it has been moved to.” 

Moving cash funds safely

As part of their duty of care, Charity Trustees must ensure they use reasonable care and skill when making decisions about financial procedures including movement and use of cash. The greater the risks, the more important it is that trustees can show that they have discharged their duty of care.

The Charity Commission provide Guidance on protecting Charities from harm. Chapter 4 of their Compliance Toolkit provides guidance on holding, moving and receiving funds safely in the UK and internationally here. 

I have identified the following tools which should be used when considering safe international cash transfers.

Tool 3 - Key risk management checklist provides a checklist of some key risk management questions for using intermediaries including informal money and value transfer systems (IVTS). 

Tool 4- Key financial control checklist provides a checklist of some key financial controls when using intermediaries including IVTS.

Tool 5 – Physical cash transfer checklist provides a checklist of some key controls when making physical cash transfers take place rather than using an intermediary.

Tool 6 – Example cash courier agreement form provides an example cash courier agreement form. 

Tool 7 – Example cash payments record form provides an example cash payments record form.

The next steps

For more information, please contact Michael Fitch or your usual UHY adviser. 

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