The purpose of the new Ordinance is to consolidate and clarify the requirements applicable to charities and other NPOs, whilst also making a number of revisions to ensure that the framework is sufficient to protect the public and to enable the jurisdiction to meet international standards for addressing money laundering and terrorist financing. The obligations imposed and the changes brought by this legislation will impact upon most Guernsey charities and require each charity to carefully consider its position and to implement any amendments in structure and governance necessary to ensure compliance. Certain charities will now be obliged to register with the new Charities Registrar, particularly those with assets in excess of £100,000 or a gross annual income of £20,000 or more.
The framework under the Ordinance is broadly in line with that under the 2008 Law, however it differs from it in the following respects:
- Number of registered and reporting charities has increased:
– To evidence a sentiment that any risks that are considered to be presented by the sector are covered effectively:
– the 2008 Law exemption applicable to organisations administered by parties licensed by the Guernsey Financial Services Commission has been removed. - the meaning of “charity” has been further clarified by the introduction of a charitable purposes test;
- a disqualification regime has been created: persons who do not meet a “fit and proper test” (who have, for example, been convicted of criminal offences or disqualified from acting as a company director) are also prohibited from running a charity or other NPO unless the Registrar directs otherwise;
- the scope of the information that must be provided by charities and NPOs has been augmented, and a reporting obligation has been introduced in relation to payments made abroad (subject to certain risk-based exemptions such as where a payment is made to an affiliated organisation in the UK or another Crown Dependency); and
- the information gathering and sanctioning powers of the Registrar have been brought in line with the powers that exist under other registration regimes.
Additional regulation making powers have been introduced and have already been utilised. An example of this is the Charities (Amendment, Exemptions, Governance and Specified Amount)(Guernsey and Alderney) Regulations, 2022 (Governance Regulations). The Governance Regulations impose obligations including those relating to the composition of the management team, record keeping, financial probity and the verifying of the identity of certain donors.
Under the Governance Regulations a charity must now:
- have a written constitution or governing document;
- provide a copy of its constitution to the Register when applying for registration;
- notify the Registrar of any change to the constitution within 21 days of the change;
- keep and retain records for a period of not less that six years in relation to:
– the names and principal residential addresses of its board members;
– minutes of any board meetings and AGMs or EGMS of the members
– any documents relevant to the obligations under Part III of the Governance Regulations
– information concerning affiliate or UK Based parent organisations ie:- documents that demonstrate or are otherwise relevant to that affiliation
- any contracts that are entered into by or on behalf of the registered organisation which relate to:
- goods or services in excess of £5000;
- a registered Charity and any international partner or any other affiliated organisation.
- put in place measures to ensure its financial probity and the transparency of its dealings to its members and other interested parties, including but not limited to a requirement for all funds given or received from the registered organisation to pass (so far as is reasonably possible), through its bank account and where not possible to record the reason why it was not possible (with the exception of funds not exceeding £1000 in any twelve month period) and payments made or received within the Bailiwick in respect of purchases or other payments that are ancillary or incidental to the purpose of the registered organisation;
- comply with a general obligation to mitigate risks including an obligation to put in place all necessary internal or other controls to ensure that neither it, nor its activities can be used for criminal purposes. The regulations note that Charities must undertake the following:
– account fully for all funds and assets
– use the funds and assets of the charity in a manner consistent with its purpose, mission and objectives,
– fulfil all obligations under its constitution
– discharge any legal obligations to which it is subject - undertake certain steps to identify the following entities in relation to the provision of funds or assets from outside the Bailiwick by:
– any British registered organisation
– any international partner - undertake certain steps to document the identity of any donor of any unusual donation or any donation over £15,000 in any given year
- have a written anti- financial crime policy that addresses the risks to the registered organisation of it, or of its activities, being used for criminal purposes;
- review annually its compliance with these Regulations and the Ordinance, and put in place any necessary mitigating measures;
- review annually its anti-financial crime policy and put in place any necessary mitigating measures;
- review periodically its constitution; and
- record the findings of these reviews.
TRANSITIONAL PROVISIONS AND DATES
The Schedule to The Charities (Commencement and Transitional Provisions) (Guernsey and Alderney) Regulations, 2022 contains some important transitional requirements. This has been replicated in the table below for your information.
As you can see some of the time frames have already passed and a full review of this Schedule must be undertaken to ensure a charity (old or new) complies with the new obligations and reporting requirements.
| RELEVANT REQUIREMENTS | TYPE OF ORGANISATION | COMPLIANCE ETC |
| REGISTRATION(Sections 10 & 11) | Organisation that were not registered under the 2008 Law as at 29th April 2022.Organisations that were registered under the 2008 Law as at 29th April 2022. | Must apply to register in accordance with section 10(1) by 31st July 2022.Will be deemed to be entered on the register under section 10 with effect from 29th April 2022. |
| ANNUAL VALIDATION(Section 12) | Organisations that were registered under the 2008 Law as at 29th April 2022. | Any information required under Schedule 5 to the Ordinance that has not previously been provided to the Registrar under the 2008 Law must be included in the first annual validation delivered to the Register by the organisation under section 12.The obligation to submit an annual renewal under paragraph 5(1) of Schedule 1 to the 2008 Law (including penalties for breach at paragraph 10A of Schedule 1 and paragraph 7 of Schedule 2 and the related oversight and enforcement powers of the Registrar at paragraphs 5(2), 7, 9 and 10 of Schedule 1) remains in force in respect of any annual renewal that should have been but was not submitted as at 29th April 2022, or that is due to be submitted after 29th April 2022 but before the point at which the first delivery of an annual validation is due under the Ordinance. |
| FILING ANNUAL FINANCIAL STATEMENTS WITH REGISTRAR(Section 16) | All organisationsOrganisations that were registered under the 2008 Law as at 29th April 2022 | First annual statement must be filed under and in accordance with section 16(1)(b) within 12 months of the end of the organisation’s financial year that is current as at 29th April 2022.The obligation to file annual financial statements with the Registrar under paragraph 8(1) of Schedule 1 to the 2008 Law (including penalties for breach at paragraphs 8(4) and 10A of Schedule 1 and paragraph 7 of Schedule 2 and the related oversight and enforcement powers of the Registrar at paragraphs 7, 9 and 10 of Schedule 1) remains in force in respect of any financial statement that should have been but was not filed as at 29th April 2022, or that is due to be filed between 29th April 2022 and the point at which the first filing of an annual financial statement is due under the Ordinance. |
| REPORTING OBLIGATION(Section 18) | Organisations making payments to parties outside the Bailiwick within the meaning of section 18 of the Ordinance. | Must comply with section 18(1) from 1st August 2022. |
| NOTIFICATION OF CHANGES(Section 19) | Organisations that are registered under the 2008 Law as at 29th April 2022. | The obligations under this section apply in respect of:(a) Any changes to information previously provided to the Registrar under the 2008 Law, and(b) any changes to information submitted with the first annual validation under section 12. |
| CONSTITUTIONAL DOCUMENTATION(Regulation 4) | Organisations that carry out international activity.Other Organisations. | Constitutional documentation must be in place in accordance with regulation 4(1) by 31st December 2022.Constitutional documentation must be in place in accordance with regulation 4(1) by 30th June 2023. |
| RECORD KEEPING ETC OBLIGATIONS(Section 16 and Regulation 5) | All organisationsOrganisations that are registered organisations or manumitted organisations under the 2008 Law as at 29th April 2022. | Must comply with section 16(1) and regulation (5(1) from 1st August 2022.The record keeping obligations under paragraph 8(1) of Schedule 1 to the 2008 Law (including penalties for breach at paragraphs 8(4) and 10A of Schedule 1 and paragraph 7 or Schedule 2 and the related oversight and enforcement powers of the Registrar at paragraphs 7, 9 and 10 of Schedule 1) remain in force up to and including 31st July 2022. |
| FINANCIAL PROBITY AND TRANSPARENCY MEASURES(Regulation 6) | All organisations. | Must comply with regulation 6(1) from 1st August 2022, except that the obligation to make annual financial statements publicly available at regulation 6(1)(e) does not apply in respect of annual financial statements that relate to any period before 1st March 2023. |
| IDENTIFICATION MEASURES(Regulation 8) | All relevant organisations. | Must comply with regulation 8(1) from 1st August 2022. |
| ANTI-FINANCIAL CRIME POLICY(Regulation 9) | All organisations that carry out international activity other than local branches of British parent organisations | Must comply with regulation 9(1) from 30th November 2022. |
| ANY ADDITIONAL FINANCIAL CRIME RISK MITIGATION CONTROLS(Regulation 7) | All organisations that carry out international activity other than local branches of British parent organisations.All other organisations. | Must comply with regulation 7(3) from 30th November 2022.Must comply with regulation 7(3) from 31st March 2023. |
| OBLIGATION TO PUT IN PLACE PROCEDURES AND CONTROLS RELATING TO INTERNATIONAL PARTNERS(Regulation 10) | All organisations that deal with international partners other than British registered organisations. | Must comply with regulation 10(2) from 30th November 2022. |
For further guidance, please check the Guernsey Registry website and the Association of Guernsey Charities information page.
Please do not hesitate to contact Appleby if you need us to review your current constitutional documents or need assistance in creating an anti-financial crime policy or internal frameworks to ensure you comply with these new obligations.
For further information, please contact:
Lisa Upham, Appleby
lupham@applebyglobal.com
