Charity or crime? Discovering the dark side of a charitable front

In the world of compliance, it's often the subtle inconsistencies that raise the loudest alarms. Lorelai, a seasoned compliance specialist, found herself navigating one such case in early 2024 when she encountered a new charity attempting to secure a virtual office. Since 2022, the virtual office had been using the First AML platform for customer onboarding, which flagged this charity during routine checks and revealed inconsistencies that caught Lorelai’s attention.

An unusual client

Typically, Lorelai’s work involves vetting UK-based charities. It was unusual, to say the least, for a charity to opt for a virtual office service, particularly one located in the United States. But that was just the first of many anomalies.

When Lorelai first attempted to find information about this charity, she quickly hit a wall. Their online presence was minimal, raising immediate red flags. To dig deeper, she requested the charity’s rules and any amendments, hoping to gain some clarity. Then, she turned to their website, expecting to find a clearer picture of who they were and what they stood for. Instead, what she found only deepened her concerns.

Red flags waving

The website's homepage proudly displayed a “Grand Opening” banner—a curious choice for a charity. “Since when does a charity have a pre-launch?” Lorelai wondered. More troubling was the charity’s scattershot focus on multiple, unrelated causes: Ocean Cleanup, Deforestation, Children Help, Poverty Alert, Air Emergency, War Victims. The sheer breadth of their stated mission seemed more like a list of trending buzzwords than a coherent charitable focus.

And then there was the app. Why did a charity need an app? Why were there so many vague buzzwords? Lorelai's suspicion deepened as she read their mission statement: 

“Donation recipients based on merit and past virtuous deeds, encompassing organisations, foundations, businesses, or individuals.” The language was deliberately opaque. 

“It’s vague. I found it suspicious,” Lorelai admits. The absence of a centralised charities register—akin to the UK’s Companies House—made it even harder to verify the legitimacy of the organisation or its trustees.

Determined to get to the bottom of things, Lorelai scoured the website's Terms of Service for any clues about the legal company name or its base of operations. Her persistence paid off. Buried in the fine print, she discovered that the charity was based in the Bahamas. “Why is a charity based in the Bahamas looking for a virtual office in the UK?” she asked herself. It was yet another unusual choice, and it wasn’t the only one.

The smoking gun

Eventually, the documents Lorelai requested, the charity’s rules and any amendments, arrived. Instead of providing clarity, they only confirmed her suspicions. “The documents weren’t built out at all,” she recalls. Even more peculiar was the fact that the documents bore the exact titles she had requested—“Charity Rules” and “Charity Rules Amendments”—as if someone had quickly whipped them up to meet her request. They were bare-bones and uninformative.

Another red flag appeared when Lorelai noticed that the charity suddenly started mentioning blockchain and AI in their documents—topics not previously associated with their stated charitable causes. Furthermore, there was still no mention of specific charities they were supporting, no references to board members, and no board of trustees listed.

The documents did, however, name a President. “Well, I’ve got one person’s name,” Lorelai thought. “Let’s have a look around.”

What she found next made everything click into place. A quick search of the President’s name led her to a news article with keywords that jumped out at her – Investigated for Embezzlement and Money Laundering. 

The article detailed how an individual with the same name that she was searching for was under investigation, along with his parents, for serious crimes, including embezzlement, money laundering, and forgery. The allegations centred around the exploitation of an elderly woman’s finances, money that was then laundered through various means.

“I also started looking around at content of him online. I watched a video where he spoke and he mentioned a bunch of apps. So now here was this man with an uncommon name with an app connection, and a blockchain connection.” 

The connection between the man, the app, and the blockchain suddenly made sense. Lorelai realised that the charity could be a front for illegal activities.

The outcome

Armed with this information, Lorelai took the case to her client, the virtual office service, who, to her relief, immediately decided to cease all dealings with the charity and the individual involved. 

“It was quite reassuring,” she said. “In this economy, it’s easy to assume that companies will accept the risk and sweep it to the side. I gave them cursory information, with a (small) possibility that it might be a different person to the one they were dealing with—but it was nice to see that it wasn’t a case of money just coming first.”

Lorelai’s diligence and intuition had uncovered a dangerous scam, highlighting the importance of thorough compliance checks in an increasingly complex and globalised world. With First AML’s platform, your team can harness the same power, ensuring that red flags are seen and able to be investigated. Not every hero wears a cape; some just know how to follow the money.

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