The Australian Charities and Not-for-profits Commission Amendment (2018 Measures No. 2) Regulations 2018 were registered on the Federal Register of Legislation on Mon 26.11.2018. It amends the Australian Charities and Not‑for‑profits Commission Regulation 2013.
These Amending Regulations are made under s50-10 of the Australian Charities and Not‑for‑profits Commission Act 2012, which allows regulations to be prescribed setting out ‘external conduct standards’ (Standards), with which charities must comply (when operating out of Australia), if they are to be registered with the Australian Charities and Not-for-profits Commission (ACNC), or remain registered.
The instrument sets 4 minimum standards for conduct, governance and behaviour as follows:
- Standard 1 (Reg 50.20) a standard on the activities and control of resources (including funds) – for instance sub-reg (3)(a) requires a registered entity to: ‘take reasonable steps to ensure that its activities outside Australia are carried out in a way that is consistent with its purpose and character as a not‑for‑profit entity‘ and sub-reg(4) requires the entity to comply with various Australian Laws relating to (inter alia) money laundering, financing terrorism, sexual offences against children, slavery, debt bondage, people smuggling and bribery.
- Standard 2 (reg 50.25) – a standard on the annual review of overseas activities and record keeping – for instance, subreg (3) requires a registered entity to obtain and keep records necessary to prepare a summary of its activities outside Australia on a country by country basis for each financial year
- Standard 3 (reg 50.30) – a standard on anti-fraud and anti-corruption; for instance, subregion (3) requires a registered entity to “minimise any risk of corruption, fraud, bribery or other financial impropriety … ” and “identify and document any perceived or actual material conflicts of interest ….”
- Standard 4 (reg 50.35) – a standard on the protection of vulnerable individuals – for instance, subregion (3) requires a registered entity to “The registered entity must take reasonable steps to ensure the safety of vulnerable individuals outside Australia to the extent that those individuals are being provided with services, or accessing benefits, under programs provided by (a) the registered entity; or (b) a third party in collaboration with the registered entity.”
In August this year, Treasury released an exposure draft of these regulations. I reported on these, and there is more detail, in this Tax Technical Article.
By introducing this measure, Australia complies with international obligations including the Financial Action Task Force Recommendations (FATF) Recommendations. The FATF is an inter-governmental body established in 1989 to promote measures for combatting money laundering, terrorist financing and related threats to the integrity of the international financial system.
DATE OF EFFECT: 1 July 2019.
CPD questions (answers available)
- Were amending regulations made, to establish ‘external conduct standards’, for entities registered with the ACNC, that are operating outside Australia?
- When will they start operating?
- Is money laundering, financing terrorism, sexual offences against children in breach of Standard 1?
- Does Standard 2 require a registered entity to obtain and keep sufficient records to be able to prepare annual summaries of its activities outside Australia?
- Does Standard 3 prohibit ‘fraud’ whilst remaining silent on conflicts of interest that could lead to fraud?
- Is the protection of ‘vulnerable individuals’, in Standard 4, limited to programs provided by the registered entity?