Published daily by the Lowy Institute

Finding the right balance: Terrorism financing offences, charitable donations and aid

A candlelit vigil for victims of 2015 terrorist attacks in Paris, Beirut, and Baghdad. (Photo: Flickr/UCI)
A candlelit vigil for victims of 2015 terrorist attacks in Paris, Beirut, and Baghdad. (Photo: Flickr/UCI)
Published 4 May 2017 

As the humanitarian crisis in Syria and Iraq worsens, Australians are likely to donate to charities operating in the region. Some of those who give - and some of those they give to - may run the risk of inadvertently breaching laws that have made 'reckless' and indirect funding of terrorism a criminal offence.

Since 9/11, Australia’s counter-terrorism efforts have included wide ranging legislative amendments to the Commonwealth’s Criminal Code. In an attempt to combat threats in an era of heightened terrorism, there have been eight tranches of legislation covering offences that range from travelling to a conflict zone to providing support to a terrorist organisation. In 2002, as a response to the UN Security Council’s binding resolution, Australia criminalised direct funding of terrorism. In 2005, the Code was further amended to prohibit indirect and reckless financing of terrorism.

The 2005 amendments sought to ‘enhance the clarity’ of terrorism financing by criminalising the supply of funds ‘through an intermediary’. They make it a criminal offence to indirectly provide or collect funds for, or on behalf of, another person where the first person is reckless as to whether the other will use it to engage in terrorism. 

This criminal offence was created predominantly in response to recommendations made by the intergovernmental Financial Action Task Force (FATF) that was established in 1989 by 35 countries to combat money laundering that could be used to support terrorism. One FATF recommendation strongly encouraged states to criminalise the collection or provision of funds by any means, whether those funds are directly or indirectly used by a terrorist organisation. Although the recommended level of intent was knowledge that funds will be used to engage in terrorist activity, intention can also be inferred from objective factual circumstances. Australian legislators argue the Australian law complies with the FATF recommendation.

The Australian Commonwealth Criminal Code defines recklessness as taking a ‘substantial risk’. In this case, the risk would be that funds given or received will be used for a terrorist act. A conviction may be secured if it is regarded as ‘unjustifiable’ in the circumstances to have taken such a risk. The maximum penalty for the offence is life imprisonment. However, as this law remains largely untested, it is unclear what would qualify as a ‘substantial risk’ and satisfy the requirement of recklessness.

What about donations?

It's worth considering how this law could be applied to charitable giving.  Last year Australians discovered that two charities had raised over $1 million each for a terrorist organisation. However, while AUSTRAC, Australia’s financial intelligence agency has acknowledged these incidents, the details of the charities involved are not publicly available, meaning individuals could potentially donate to the charities involved – thereby possibly contravening the law – without knowing of their links to terrorism. While one assumes the charities involved have been deregistered, this would not prevent the charity from collecting donations. The ambiguity evident here could potentially render the offences non-compliant with international law.

The Security Council’s Resolution 1373 and the International Convention for the Suppression of Financing Terrorism urged states to criminalise the wilful provision or collection of funds with the intent or knowledge that they will be used to carry out terrorist acts. The Australian offence goes beyond this in imposing a standard lower than actual knowledge. Known as 'gold-plating', this is permitted under international law as long as the laws comply with the requisite international obligations.

As the global response to terrorism financing is relatively recent, international approaches vary. The UK’s Terrorism Act requires a level of criminal intent akin to Australia. It prohibits receiving or providing funds if there is reasonable cause to suspect that it may be used for the purpose of terrorism. The US takes an intermediate approach, requiring knowledge and intent to provide support or resources that will be used in preparation for or carrying out a terrorist act. However, this same standard does not apply to giving material support, for which there is no need to prove an intent that support provided would be used to carry out an attack. Conversely, the French Penal Code and the Canadian Criminal Code, both of which have the lowest maximum penalty of the countries surveyed, stipulate the requirement of knowledge or intent that funds collected or received will be used for the commission of an act of terrorism.

Possible impact on humanitarian work

There are pertinent questions around how the 2005 law on terrorism financing affects those pursuing humanitarian goals in combat zones.

Unlike the offences of associating with a terrorist and entering a declared area (Mosul and Al-Raqqa), there is no permissible humanitarian exception to the offence of terrorism financing leaving civilians, doctors and aid workers potentially exposed.

A 2010 case in the United States, Holder v Humanitarian Law Project, is pertinent here. In its ruling, the US Supreme Court declared that training the PKK to peacefully resolve disputes, as well as in ways to comply with international humanitarian law, violated the US criminal law. The court reasoned that such support can 'free up resources that can be put to violent ends', as there was a lack of evidence that terrorist organisations 'meaningfully segregate support of legitimate activities' from terrorism. This is the US law but its reach and influence can be seen in the Australian and UK legal systems where it is viewed as an example of a state fulfilling its international obligations by exercising due diligence in preventing terrorism. Such measures, however, have to be balanced with the need for humanitarian organisations to operate in terrorist-controlled areas to aid civilians.

In 2013, a report identified the use of proscribed terrorist group Al-Shabaab by prominent international charities as a gateway to secure humanitarian access to Somali communities. More than 80 aid workers were interviewed and the majority said there was a greater chance of gaining and maintaining access if staff formed links with Al-Shabaab. This included the payment of ‘registration fees’ and ‘taxes’. The consequences that these relationships have for individual donors is yet to be explored, however Australian law does not rule out such liability. This reflects the lack of specificity in the offence that leads to legal uncertainty.

The Australian Law Council suggests that this is not the only danger in these laws, arguing they could 'serve as a hook for the exercise of a wide range of law enforcement and intelligence gathering powers'. The case of Muhammad Haneef highlighted the broad and undefined parameter of these laws, although the case was ultimately unsuccessful. Haneef was charged with intentionally providing support to an organisation and being reckless as to whether it was a terrorist organisation after providing a SIM card to a second cousin who was suspected of involvement in the 2007 Glasgow Airport bombings. After being detained for 12 days without charge, evidence showed the SIM card was not in fact used and Haneef was acquitted. It could be argued the initial charge demonstrates a dilution of what defines criminal intent.

Australian charities focused on international development sent $1.7 billion overseas in 2015. Community support accounted for 61% of this total. Community support for NGOs that provide humanitarian aid has increased by an average of 5.6% since 2010, suggesting Australians have a high level of confidence in the charity sector.

In 2015, nearly 7000 Australian charities had beneficiaries located overseas while 57 disclosed operations in Iraq and Syria. The Australian Charities and Not-for-profits Commission regulates the national charities’ register, and in 2017 alone 590 charities had their status revoked for failing to adequately account for funds collected. Although this may appear reassuring, charities that have been deregistered by the ACNC – or never registered - can still accept donations from the public, leaving open the possibility that individuals may donate funds that end up in the hands of a proscribed organisation. It is unclear whether donating to one of these charities could be construed as reckless.

Australia’s legal framework must define our approach to the fight against terrorism. However, it is equally vital that humanitarian assistance is able to reach civilians in need, no matter their location, and that those willing to give to support such assistance should not run the risk of inadvertently breaking the law. In the years ahead, the balance Australia strikes between these goals will need to be constantly re-weighed.

*Charlotte Warden is an intern in the Lowy Institute's West Asia program. She has a Juris Doctor from the University of Sydney and has a research interest in human rights law, development and the law on the use of force.

You may also be interested in