Charity regulators have warned not-for-profit organisations about the risks involved when using unregulated financial services.
In a statement issued to charities today, the charity regulators for England and Wales, Northern Ireland and Scotland said the alert applies to a charity when it receives, holds, moves or uses money, particularly those moving funds internationally.
They added that all charities need to have access to and use a bank account in the charity’s name in the regulated banking system.
The regulators say it’s important that charities are able to demonstrate audit trails for the receipt and movement of money, and that they are discharging their legal duties to keep funds safe and meet the key elements of good governance.
Banking with a regulated provider is also important for keeping money secure and for accessing compensation if a dispute arises.
In a joint statement Helen Stephenson, David Robb, Frances McCandless, the CEOs of the charity regulators, said: “The regulated financial sector plays an important role in modern society across the United Kingdom, particularly for charities, large and small, local, national and international.
“The financial services provided by banks and financial institutions provide safe, responsible, efficient and transparent way for charities to conduct their financial affairs. Every charity should have a bank account in its name to help keep its funds secure.
“This is the most prudent and responsible way to protect funds and evidence the movement of those funds in most cases. It is in the best interests of charities to hold and move funds through the regulated financial sector where it is available – if other methods to hold or move funds are used they involve higher risks and in some cases can result in slowing down charitable assistance to beneficiaries.”