united-kingdom charity money-laundering
Are charities prevented from paying money to other charities?
<p>I was recently a participant in a group study, in which there was an option for participants to donate the gratuity offered to a charity. However, I received a message from a researcher today saying that this is not possible:</p>
<blockquote>
<p>Earlier this year, you participated in our three-part study... we asked you if you would be willing to donate some or all of your £4 bonus to the charity Shelter.</p>
<p>However, we were recently advised by our Finance Team that this was not possible. It transpires that <strong>the University of Southampton has charitable status and, therefore, is prohibited by anti-money laundering regulations from making payments to other charities</strong>. Hence, we cannot transfer the donations to Shelter.</p>
</blockquote>
<p><em>(quoted excerpt from researcher's message, bold emphasis mine)</em></p>
<p>I searched and found the <a href="http://www.legislation.gov.uk/ukpga/2018/13" rel="noreferrer">Sanctions and Anti-Money Laundering Act 2018</a>, a 2017 <a href="https://www.gov.uk/government/consultations/money-laundering-regulations-2017/money-laundering-regulations-2017" rel="noreferrer">'Money Laundering Regulations' consultation</a>, and a <a href="https://www.lawscot.org.uk/members/business-support/financial-compliance/anti-money-laundering/" rel="noreferrer">guidance page on the Law Society of Scotland</a>. I cannot find an obvious or direct reference to inter-charity payments, but I am not sure if I am looking in the right places.</p>
<p><strong>Are charities really prevented from 'making payments' to other charities</strong>? If so, what is the ostensible motivation for such a prohibition? Does it extend to every type of payment? I suspect the law may vary in Scotland, but I would be interested to understand the situation in any part of the United Kingdom.</p>

<p>It looks to me as if "money laundering" is a misunderstanding; though any organization has a duty to prevent this, charities have no special responsibilties.</p>

<p>However, charity law <em>does</em> in general terms prevent a charity from giving money to a cause that does not further the charity's aims. <a href="https://www.gov.uk/guidance/return-a-gift-how-charities-can-make-moral-ex-gratia-payments" rel="nofollow noreferrer">The Charity Commission's guidance</a> says "Charities can only spend their money on projects or activities that support the aims stated in their governing document" (and although it goes on to outline exceptions, you still need to obtain the Commission's agreement to return a gift from a source you find objectionable, for example). The rationale is that people gave money to the University to further the cause of education; the researchers have no right to divert that money to Shelter (or another charity like the Roman Catholic Church) without the giver's consent. My experienced but non-expert view is that these payments would be a breach of the law, though they would probably be treated as a <em>de minimis</em> exception; you can't blame the University's legal team for insisting they should not be made.</p>
