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How to Do Good: Compliance with the Charities Regulations  

Developments in the regulatory landscape in Jamaica have caused registered charitable organizations to improve their standards in terms of transparency, accountability and corporate governance.  The Charities Regulations, 2022 (“the Regulations”) ushered in a series of regulatory changes and imposed new obligations upon registered charitable organizations, aimed at ensuring compliance with anti-money laundering and counter terrorism financing. Existing registered charitable organizations or those considering registering as a charitable organization should be aware of these changes, some of which are highlighted in this article. 

Registration 

The Department of Co-operatives & Friendly Societies (“the Charities Authority”) is the regulatory body for registered charities. 

To register as a charitable organization, an application must be made to the Charities Authority, accompanied by various supporting documents including a copy of the constitution of the organization. The constitution refers to the rules made in writing governing the management of the charity and must contain provisions in accordance with the Regulations.

Other supporting documents to be submitted with an application for charitable status include:

  1. the audited financial statements of the charity for the previous financial year, prepared by a registered public accountant. 
  2. a detailed plan of the charitable activities to be carried out by the registered charity.  The Charities Authority has provided a template, which can be found on their website, which may be used as a guide to develop this plan of activities.
  3. the administrative and operations management policies and procedures for the charity. Although the Charities Authority has not specifically indicated what, at minimum,  should be included in these policies, it is recommended that they be developed, taking into account the actual operations of the charity. 

A charitable organization that is not registered under the Charites Act, is prohibited from using any name, title, word, terms or grammatical presentation that represents or implies that the organization is a registered charitable organization, subject to certain conditions as set out in the Regulations. 

Governance

In order to increase accountability and compliance, a registered charity is now required to designate one or more of its officers to be a compliance officer with the responsibility of monitoring the operations of the charity for compliance with the Regulations.  This is an example of the Charities Authority increasing its efforts to ensure registered charities are not used for a purpose other than its charitable purpose.

Ongoing Obligations 

A registered charitable organization has various ongoing filing obligations. Within three months after the end of each financial year, the charity must submit to the Charities Authority the following documents:

  1. the audited financial statements of the registered charitable organization;
  2. the auditor’s report on the use of donation monies and whether such use is in accordance with the charitable purposes of the charity;
  3. the fund raising activities and expenditure plans for the next financial year; and 
  1. the annual report of the charity.

A registered charity must change its auditor at least once every five years.

Transparency and Accountability

The obligation imposed on registered charities to maintain donation records has strengthened. A registered charity must issue receipts for every donation received and keep a record of all donations that have been made to the charitable organization (with particulars outlined in the Regulations). These records must be retained by the charitable organization for a period not less than seven years from the end of the year of assessment in which the donation was received. Failure to comply is an offence. 

In terms of duties owed, where a registered charitable organization is conducting a fund raising activity, it must provide the donors and the general public with accurate information in relation to  the donation and the fundraiser as required by the Regulations. A fundraising activity refers to an activity undertaken by a charitable organization to raise funds to further its charitable purpose.  

Protected Charites 

The Regulations create a new concept of protected charities. A registered charitable organization found to be at an increased risk of being misused or exploited may be, upon a recommendation by the Charities Authority, designated in writing, as a protected charity. The designation of a protected charity by the Minister is made on the recommendation of the Charities Authority after a risk assessment and inter-agency consultation is carried out with the Chief Technical Director of the Financial Investigations Division (“Designated Authority”), the Commissioner of Police, Tax Administration Jamaica and any other relevant department, agency or public body. 

The recommendation will be made where the Charities Authority has reasonable grounds to believe the charity is vulnerable and is likely to be at high risk for the commission of money laundering, the financing of terrorism and other financial crimes. 

In light of the heightened level of risk in the case of a protected charity, regulatory controls are imposed on protected charities such as the requirement to establish and implement programmes, policies and procedures to detect, prevent or mitigate the risk of being misused for the commission of money laundering, the financing of terrorism or other financial crimes. Some of these controls includes those applicable to financial institutions and designated non-financial institutions. 

A protected charity must appoint a nominated officer who performs management functions, responsible for overseeing the implementation of, and compliance by employees of these programmes, policies and procedures and to make reports to the Designated Authority. This includes reports of any suspicious transactions that may constitute or be related to the commission of money laundering, the financing of terrorism or other financial crimes. 

If you wish to ensure you do good, the right way, your registered charitable organization must remain compliant with the Charities Act and Regulations. 

Rachel Poole is an Associate in the Commercial Department at Myers, Fletcher and Gordon. She may be contacted at rachel.poole@mfg.com.jm or through the firm’s website www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.

This article is for general information purposes only and does not constitute legal advice.

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