Author: Ammna Nasser

Know Your Customer (KYC) Due Diligence is an imperative first step when looking to establish a long-term relationship with a client; one which contributes to the success of a business operating in any industry. In the philanthropic sector, it plays a key role when prospecting and securing new donors, in addition to periodic Enhanced Due Diligence (EDD) on existing donor individuals and/or entities, to ensure potential risks are averted. Risks could range from: Legal (i.e. would engaging with a supporter, or accepting a donation expose the organization to legal or regulatory challenges?), Financial (i.e. could receiving a gift affect the organization’s ability to raise funding in future?), and Reputational (i.e. is the funding unethical, or inappropriate given the organization’s mission, or by the standards of the stakeholder community? What is the source of the gift?).

Given the rise of a global network, donors can range from companies and/or people who operate in a high risk sector, derive over fifty percent of their revenue from a ‘high risk’ or sanctioned country, or simply are Politically Exposed Persons (PEP).

First, the philanthropic entity should establish a comprehensive and clear risk appetite, and design parameters or a ‘risk grid’ to categorize an individual and/or entity within or outside of risk. Once a trigger list is solidified, if met by a prospect, a further review could be mandated. A trigger list could often comprise unclear source(s) of wealth, complex organization structures, international prospects, and perhaps, involvement in known crimes and/or scandals. Then, a program should be established making note of pertinent policies and procedures, which acknowledge the company’s mandate, and abide by the laws of the jurisdiction in which it is operating. This should be followed by regular team meetings to obtain valuable feedback and finesse the process.

Although most organizations may not have sophisticated software to conduct KYC or due diligence searches, we live in an information era, therefore resources can be readily accessed on the internet using open source intelligence gathering techniques in the absence of expensive memberships, and subscriptions. Open source intelligence (OSINT) is the practice of collecting information from published or otherwise publicly available sources and can be used to identify significant high risk information.

To start the process, the following are initial steps a prospect researcher should employ when conducting OSINT:

First and foremost, does this organization exist legally? Try a simple google search using the registered “name of entity”, “address”, “phone number” and “email address”, always using “. This allows the researcher to target their search.

If it is a local Canadian prospect, and a public company, you can use Sedar: https://www.sedar.com/homepage_en.htm

Open Corporates enables us to identify most registered companies in the world:
https://opencorporates.com/

Second, has this organization, beneficial owner, or the prospect donor individual been involved in any form of crime; one which may have attracted widespread media attention?

The International Consortium of Investigative Journalists is an excellent resource. The International Consortium of Investigative Journalists, legally International Consortium of Investigative Journalists, Inc., is an independent global network of 280 investigative journalists and over 100 media organizations spanning more than 100 countries.

International Consortium of Investigative Journalists:
https://www.icij.org/

Other organizations worthy of a browse also include:

Transparency International
https://www.transparency.org/en/cpi/2020/index/nzl

Interpol Wanted Persons
https://www.interpol.int/en/How-we-work/Notices/View-Red-Notices

United Nations Sanctioned Persons
https://scsanctions.un.org/p6wvnen-all.html

Learning the basics of verification, conducting an investigation efficiently, and within a given time frame is pertinent. Some things to remember include; ensure your research is verified – one way to do so is to use diverse and reputable sources. Storing a donors’ information appropriately is key, and should abide by Data Protection laws.

The philanthropic sector offers significant benefits to the most vulnerable. However in recent years it has been susceptible to major financial crimes. But, with good due diligence and monitoring efforts, charitable projects can be conducted in a safer fashion without threat to the integrity of the entity.

Good luck, and start monitoring!