No matter where you live on this planet, if you have an account at a financial institution then you are aware of Customer Due Diligence information. No doubt your financial institution would have required you to produce at least proof of identification and proof of address when you opened your personal account.
As a result of ongoing concerns about Money Laundering and Terrorist Financing, international and national financial services industry and their clients must implement systems to mitigate these concerns.
Small Businesses and Non-Profit Organisations (“Non-Profits”) are not exempted. In fact, you are probably aware that businesses must be prepared to provide source of funds information for large deposits. Such information may entail showing invoices, contracts or any additional supporting documents required by the financial institution.
It is in the best interest of Non-Profits to maintain sufficient details of their financial transactions including monetary and non-monetary donations. As someone responsible for the administration of a Non-Profit registered in The Bahamas, you should be aware that your organisation face being fined if it fails to produce financial records if and when required to do.
Section 15 (1) of the Non-Profit Organisations (Amendment) Act, 2019 states that:
“(1) The Registrar may impose an administrative fine not exceeding five thousand dollars, if after an investigation it is proven that a non-profit organisation has failed, without reasonable cause to produce financial records reflecting all monies received and expended.”
Please note that financial records have a specific definition under the NPO Act as Amended requiring Non-Profits to explain transactions in sufficient detail to show that funds have been used in a way that is consistent with the organisation’s objectives. Additionally, Non-Profits must maintain sources of its income and the same must be reflected in its financial position.
In order to mitigate the risk of fines, Non-Profits should maintain their financial records in a way that is easily accessible and detailed. Furthermore, whatever you do, develop a practice of being responsive to the regulator, the Registrar. This will help develop and maintain the credibility of your Non-Profit with the Registrar General’s Office.
Feel free to direct any questions to Kean Smith at kean@smithkas.com or comment below.