Section 5: CONSIDER THE FOLLOWING RED FLAGS FOR NGOs

DONATIONS i. Unusual or substantial one-time donations are received form unidentifiable or suspicious sources. ii. If a series of small donations are received from sources that cannot be identified or checked iii. Where donations are made in a foreign currency or foreign sources where financial regulation or AML/CFT legal framework is not as rigorous. iv. Where payments received from a known donor but through an unknown party. v. Where donations are received from unknown or anonymous bodies vi. Where payments received from an unusual payment mechanism where this would not be a typical method of payment. vii. Where donations are conditional to be used in partnership with particular individuals or organisations where the NPO has concerns about those individuals or organisations. viii. If conditions attached to a donation are such that the NPO would merely be a vehicle for transferring funds from one individual or organisation to another individual or organization ix. Where an NPO is asked to provide services or benefits on favorable terms to the donor or a person(s) nominated by the donor as beneficiaries BENEFICIARIES i. Where an NPO provides assistance, services or support on the basis of certain sum of money per beneficiary and the numbers are relatively high. ii. Where an NPO provides services to larger numbers or beneficiaries, where it may be easier to disguise additional beneficiaries iii. Where there may appear signs that people may have been placed on distribution and aid lists by providing kickbacks and bribes to officials iv. Lists of beneficiaries contain multiple manual corrections, multiple names may appear, may contain more family members v. Evidence that third parties or intermediaries have demanded payment for recommending or nominating beneficiaries vi. Fake or suspicious identity documents. vii. Beneficiaries with identical characteristics and addresses or multiple identical or similar names and signatures of employees EMPLOYEES i. Indications that staff may be living beyond their means or appearing at unusual times. ii. Staff carrying out tasks or jobs they should not be, or other unusual staff behavior or conduct iii. Sudden or increased staffing costs for the projects PROJECTS i. Invoices and paperwork have been tampered with, altered in crucial aspects with handwritten amendments. ii. Inventory shortages iii. The project is vague or lacks adequate financial or technical details. iv. Missing key documents or only copies can be reproduced. v. Lack of evidence to show fair and transparent tendering or procurement procedures vi. Invoices and papers recording a higher cost for goods or services than expected or agreed. vii. Signatures confirming receipt or payment are missing or the invoice unsigned or undated. viii. Receipts have been signed and dated a long time after the goods or services should have been delivered. ix. Repeated excuses of system crashing, losing records or paperwork. x. Discrepancies between budgeted needs and payments requested. xi. Requests for payments in cash to be made to an unknown third party or other organization. xii. Funds are not being banked or accounted for. xiii. Emails from new or unusual email addresses not in the partner's domain name or from someone who is not a previously agreed contact point. xiv. Inconsistencies between narrative reports and financial claims and reports Partners. PARTNERS i. The structure or nature of the proposed project makes it difficult to identify the partner and verify their identity and details. ii. The proposal includes delegating work to other unknown partners or newly formed organisations. iii. Partners request unnecessary or unusual levels of privacy and secrecy. iv. Requests by partners to use a particular auditor or accountant. v. The project involves unusual payment mechanisms, requests for cash, or for money to be paid into an account not held in the name of the partner, or in country in which the partner is not based and not where the project is being carried out. It is important to note that it is not only cash transactions that may be suspicious. ML includes the layering and integrating stages where there is no new cash, but funds that are moved around while trying to confuse the money trail.