TOOLS FOR DETECTION OF ILLEGAL OPERATIONS OF NON-PROFIT ORGANIZATIONS

Abstract

The article examines the methods of using non-profit organizations for illegal purposes and the tools that primary financial monitoring entities can use to identify such methods. The most significant risks inherent in non-profit organizations are highlighted. Despite the classic focus on the terrorist financing risks inherent in non-profit organizations, the study examines the schemes of using non-profit organizations for the purposes of money laundering and fraud with collected funds. It has been established that effective sources of information for implementing customer due diligence measures are data from official public registers, information about the client's financial transactions in the internal automation systems of reporting institutions in the field of financial monitoring, and specialized typological studies of international organizations or national financial intelligence units. Determining the quality of the non-profit organization's internal control system, the presence of evidence of actual receipt of assistance by recipients, analysis of the non-profit organization's credit activities, determination of the effectiveness of the national financial monitoring system, analysis of the charitable institution's connection with high-risk legal entities and individuals, comparison of declared activity goals with actual financial transactions, analysis of geographical risks and the non-profit organization's capabilities to mitigate them to an acceptable level are the main tools for detecting illegal activities of non-profit organizations. The current legislative field in which non-profit organizations operate in Ukraine is studied. Indirect legislative requirements for non-profit organizations regarding the need to identify persons making donations and recipients are identified. The possibility of primary financial monitoring subjects to apply analysis tools based on comparing the connection of donors, management of a non-profit organization and recipients of assistance to exclude the possibility of such persons committing illegal actions using the status of a non-profit organization is emphasized.