AUSTRAC Warns Terrorism Financing Risks Persist in Australia’s Non-Profit Sector

Key Takeaways

• Stable but Persistent Risk: AUSTRAC said the risk of terrorism financing and money laundering within Australia’s non-profit sector remains stable but continues to pose concerns for regulators and financial institutions.
• New Suspicious Activity Indicators: The updated guidance includes indicators designed to help banks, remitters, and foreign exchange providers identify potentially suspicious behaviour involving charities and NPOs.
• Focus on Risk-Based Controls: AUSTRAC urged regulated businesses working with charities to maintain proportionate, risk-based AML/CTF systems and controls to prevent criminal misuse.
• Conflict Zone Exposure: The agency noted that charities operating in conflict zones or moving funds internationally can face heightened vulnerability to exploitation by illicit actors.

Deep Dive

Australian banks, remitters, and foreign exchange providers are being urged to sharpen their scrutiny of transactions involving charities and non-profit organizations after AUSTRAC warned the sector remains vulnerable to terrorism financing and money laundering abuse.

The Australian Transaction Reports and Analysis Centre on Thursday released an updated assessment examining terrorism financing risks across the country’s non-profit organization sector, alongside new guidance intended to help regulated businesses identify suspicious behaviour linked to potential illicit financing activity.

The agency said the overall level of risk within the sector remains stable, though criminals continue attempting to exploit charities and NPOs to move illicit funds both domestically and overseas.

AUSTRAC Deputy CEO Intelligence Dr Alexandra Caples said the risk remains concentrated within a relatively small portion of the sector, but warned organisations and reporting entities cannot afford complacency.

“Charities and NPOs do amazing work in the community and supporting people in conflict zones overseas, but unfortunately the sector is also at risk of being used to fund terrorism in a small number of cases,” Dr Caples said.

“Our work shows that while this risk remains stable and limited to a small cohort, NPOs are still vulnerable to terrorism financing and must remain alert.”

The updated report includes suspicious activity indicators designed to help reporting entities identify behaviours that may signal money laundering or terrorism financing involving non-profits. AUSTRAC said the guidance is intended to strengthen anti-money laundering and counter-terrorism financing controls across the financial sector, particularly among businesses working closely with charities and humanitarian organisations.

“The update aims to assist businesses to ensure their AML/CTF systems and controls are robust and effective so they can detect suspicious activity relating to NPOs,” Dr Caples said.

The warning reflects a persistent challenge for financial institutions and regulators alike. Charities operating in conflict zones or moving funds internationally for humanitarian purposes can face elevated exposure to financial crime risks because of the environments in which they work, the speed at which funds may need to move, and the complexity of cross-border financial flows.

AUSTRAC stressed that regulated businesses should apply proportionate, risk-based controls when working with the sector rather than treating all organisations as presenting the same level of exposure.

“All regulated businesses working with NPOs and charities, must understand the risks they face in relation to money laundering and terrorism financing and ensure they have proportionate, risk-based systems and policies in place to prevent criminal misuse,” Dr Caples said.

The agency also emphasized the importance of cooperation between regulators, reporting entities, and the non-profit sector itself, arguing that preventing abuse depends on sustained information sharing and vigilance across all parties involved in moving and monitoring funds.

“It’s vital that AUSTRAC, reporting businesses, and the NPO sector continue working together to keep the sector safe from criminal abuse and terrorism financing misuse,” Dr Caples said. “This update will assist our reporting entities like banks, remitters and foreign exchange providers to assess their level of vulnerability, strengthen their controls, and report suspicious activity to AUSTRAC.”

The updated assessment arrives as financial crime regulators globally continue focusing on how legitimate organisations and financial channels can be exploited to conceal illicit activity, particularly in areas involving cross-border payments, humanitarian operations, and high-risk jurisdictions.

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