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Charities may be at risk of being targeted by tax evaders and money launderers, the Organisation for Economic Co-operation and Development (OECD) has warned in a new study of the abuse of charities by criminals.
Tax evasion and tax fraud through the misuse of charities is a serious and increasing risk in many countries, although its impact is variable, according to the report.
It shows that some countries have not identified abuse of charities, while nations estimate it is becoming more prevalent and costs treasuries many hundreds of millions of dollars.
The OECD paper summarises the status attached to charities in 19 countries surveyed and compiles the common methods of the abuse of charities and the sectors at risk. It sets out the detection strategies that countries have adopted.
It also provides the red flag indicators that will help tax staff in processing tax returns and carrying out audits.
The report gives examples of information resources and describes the detection and investigation approaches adopted by a number of the countries.
It also gives illustrative case studies to aid comprehension and to raise the awareness of tax authorities about the potential abuse of charities in their countries.
