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Anti-terrorism legislation puts charity D&Os at risk


July 18, 2007   by Canadian Underwriter


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Government anti-terrorism regulation targeting purportedly charitable financial transactions which may support terrorist activities subject Canadian charities to stringent regulatory requirements and potentially expose charities directors to personal liability, an Aon Canadian advisory report warns.
Potential consequences of anti-terrorism act violations could include loss of existing charitable status; criminal investigation and prosecution; seizure or other constraints on charitable property; or even bankruptcy, insolvency of charity, the report warns.
Seizure or other constraint on a charitys assets can expose the charitys directors to liability for breach of fidicuary duty, Shelley Lloyd, research and legal practice advisor, Financial Services Group (Canada), wrote in the paper.
Some risk management measures for charities and their directors and officers, particularly those with any cross-border funding activity or operations within conflict zones include:
being aware of and practicing international best practices and due diligence guidelines;
identifying potentially problematic individuals or organizations with whom you have dealings;
establishing an anti-terrorism policy statement; and
educating directors and officers about organizations potential risks and liabilities.
To avoid potential violations of anti-terrorist and money-laundering laws, and personal liability for directors and officers, well-informed charitable organizations should establish due diligence and risk management procedures and review the coverage available to them under a non-profit D&O liability, Lloyd suggests.


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