Objectives of the 2022 Charity Law
The objectives of the new Charity law are
- that Charities should have adequate governance, in particular that they have proper accountability and integrity so that there is public confidence in their administration and management
- to meet international standards aimed at preventing charities from being used for criminal purposes, specifically including terrorist financing, money laundering, fraud and bribery, collectively referred to as "financial crime"
so as to provide assurance to donors that their funds will be used only for the purposes of the published and agreed charity mission
What is the minimum standard of Governance to meet the requirements of the Law?
Good governance is not a panacea, and will differ according to the nature, size and extent of the activities of each charity.
The Law (in particular the Ordinance) prescribes two specific things that every Registered Charity MUST have as a minimum standard.
1 What MUST be in a Governing Document
The Governing Document for EVERY charity must contain the information set out in the Schedule to Clause 4 of the Regulations. A simple checklist to help charities check whether their Governing Document contains all this information and clauses can be found HERE.
International Charities have to comply by 31st DECEMBER 2022 and all other charities by 30TH JUNE 2023.
This checklist will help charities determine whether their Governing Document meets the requirements of the Law. It is likely that every charity that existed at the time the new Law came into force will need to make some changes to their Governing Document. Some charities may choose to rewrite their Governing Document to add new clauses identified as missing when the checklist is completed. One easy way to make a Governing Document compliant is to adopt a simple Addendum which identifies all 18 requirements of the Schedule to Clause 4 of the Law. A draft which can be used as the basis for such an Addendum can be found in PDF format HERE
or in Microsoft Word format HERE
If you wish to start from scratch and rewrite your governing document completely there is a pro forma Governing document which has been copied from the UK Charity Commission website and tailored to conform to the provisions of Bailiwick charity law HERE.
2 In addition to 1 above, what MUST INTERNATIONAL CHARITIES have?
If the Charity is an International Charity, that is one whose purpose is to send funds outside the Bailiwick, or receives funds from outside the Bailiwick, other than, in either case, funds which are de minimis or incidental, the International Charity must also have an Anti-Financial Crime Policy that summarises the risks of terrorist financing, money laundering, bribery and corruption that might be applicable to the activities of the charity, and ways that the charity addresses those risks.
International Charities have to have a policy, and submit this to the Registry, by 30TH NOVEMBER 2022
We have uploaded a draft of an Anti-Financial Crime Policy and Guidance on how to complete the Policy. Charities should note that they have to personalise the policy to address the risks identified and cannot simply add their name at the top of the document!
The Registry has helpfully shared some of the issues they have identified in documents submitted so far:
"Charities have edited the pro-forma by cutting out sections but their policies are describing what AML is but not setting any standard or rules to address their own exposure. For example:
- Their policy states “The Regulations require that an annual review is undertaken of the Compliance” but it does not say that the charity will conduct annual reviews and who will conduct the review.
- Their policy explains what international partners are and this example charity has foreign representatives but does not say what checks and standards they require.
- Their policy states they will consider training! I would expect that if training is mentioned then the policy should say what training and how often.
- The record keeping section does not include who can keep records, where they can be kept and a policy about backups, cyber protection etc."