A charity has unaudited accounts. Which of the following represents the highest risk factor for terrorist financing?

Question

Options

• ADisbursement of funds to entities unrelated to the purpose of the charity.
• BAn international board composed of politically exposed persons.
• CFrequent deposits from third parties into the charity's bank account.
• DFrequent changes to the senior management of the charity.

• A
  82% (31)
• B
  5% (2)
• C
  11% (4)
• D
  3% (1)

Explanation

This represents the highest risk factor for terrorist financing because it may indicate that the charity is diverting funds to support terrorist organizations or activities, or that it is acting as a front or conduit for terrorist financing. Disbursement of funds to entities unrelated to the purpose of the charity may also violate the donor's intentions, the charity's mission, or the applicable laws and regulations. A charity with unaudited accounts may have weak internal controls, governance, or transparency, which may increase the risk of misappropriation, diversion, or misuse of funds.

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