Funds can be diverted from their intended use
A non-profit organisation can be misused to raise or move funds or provide support for terrorism. Funds collected for a lawful purpose can later be diverted.
AUSTRAC’s 2026 terrorism financing update identifies diversion from humanitarian or charitable causes. It does not suggest that charitable activity is itself suspicious.
FATF uses a defined group of organisations
FATF Recommendation 8 concerns organisations within its functional NPO definition. That definition focuses on raising or distributing funds for charitable and similar purposes.
It does not cover every organisation that operates without a profit. Risks vary with the organisation’s activities and circumstances.
FATF calls for focused and proportionate measures. Measures should protect legitimate activity and access to financial services. These standards do not directly replace Australian law.
Source: FATF: Introduction paragraphs 8 to 11; Identifying organisations within the FATF definition.
A delivery partner changes the recipient
A fictional charity funds a food programme through a local partner. The partner asks for the next payment to go to a different organisation.
The charity identifies the new recipient and asks why the arrangement changed. It compares the answer with the programme agreement and delivery evidence.
The change may have a sound operational reason. If the evidence conflicts, the charity records the concern and applies its risk and legal procedures.
Source: FATF: Good governance; Partner relationships; Programme planning and monitoring.
- Purpose
Identify the agreed programme and recipients.
- Partner
Record who receives and distributes the funds.
- Delivery
Compare actual delivery with the agreed purpose.
Follow the intended assistance
Fictional aid-programme review. A changed partner requires assessment, not an automatic accusation or account closure.
Connected concepts. Lines do not show ownership or a reporting hierarchy.
Keep controls tied to the activity
Useful controls can include partner identification, payment records and evidence that assistance reached its intended recipients. The measures should reflect the actual risk.
A bank should assess the customer and service facts. It should not treat all non-profits, religions or overseas aid programmes as one risk category.
The terrorism-financing article describes the threat. The SMR article gives the separate Australian reporting test and deadlines.
Source: FATF: Risk-based measures; Access to financial services.