The Charities Regulations, 2022 (“the Regulations”) represent a new era for charities and were introduced to address the need for improved governance practices, financial accountability, transparency, and compliance with the Proceeds of Crime Act and the Terrorism Prevention Act. Charitable organizations, which are entitled to are entitled to some tax relief, have been governed by statute, the Charities Act, for just over a decade. Compliance concerns, especially as Jamaica seeks to maintain its standing on financial compliance lists, have led to a stricter approach with the implementation of regulations.

Protected Charities

Protected charities are a new category introduced by the Regulations to safeguard against a charity being misused or exploited for purposes that are not charitable. A recommendation by the Department of Cooperative and Friendly Society (DCFS) for an organization to be designated as a protected charity by the Minister will be made if, after a risk assessment and inter-agency consultation, there are reasonable grounds for believing that the charity is vulnerable and likely to be at high risk of being misused for financial crimes including money laundering and the financing of terrorism, and further, the detection, prevention and mitigation of the high risk requires more stringent protective measures.

The Regulations have introduced programmes, policies, procedures and controls which must be established and implemented by the protected charity to remain compliant. These include identity and transaction verification procedures, systems to monitor listed entities, internal reporting procedures for suspicious transactions, record-keeping procedures, accounting and financial reporting procedures, continuous training of employees and annual independent audits by a registered public accountant or Chartered Accountant. A failure by the protected charity to implement these measures constitutes an offence and the organization may be liable to a fine.

Compliance Requirements for All Registered Charitable Organizations

The Regulations provide that a person may be liable to a fine or to imprisonment for a failure to allow the DCFS to audit or examine its management, operations, finances and accounts, using the organization for a purpose other than its charitable purpose and for a failure to designate a compliance officer who is to be responsible for overseeing the implementation of and compliance by employees with the Regulations.

A registered charitable organization has a duty to issue receipts for every donation received and maintain donor records for a period of not less than seven years. A failure to do so is an offence and a fine or imprisonment may result.

Another duty imposed by the regulations is to provide donors and the general public with accurate information regarding the name of the charitable organization to receive the donations, the charitable purpose for which the donations will be used, whether any commercial fund-raiser has been engaged in soliciting the donation and adequate arrangements to solicit donations which should include control measures and safeguards for proper accountability and to prevent any misapplication, loss or theft of donations.

The introduction of the Charities Act Regulations, 2022, marks a significant step forward in ensuring transparency, accountability, and robust governance within the charitable sector in Jamaica. By adhering to these comprehensive compliance requirements, charities can safeguard their operations against misuse, uphold their integrity, and foster public trust. As the landscape of charitable giving continues to evolve, it is crucial for organizations to stay informed and diligent in their compliance efforts. Embracing these regulations not only aligns with legal mandates but also reinforces the commitment to ethical practices and the positive impact of charitable activities. The future of giving depends on the ability of charities to navigate these regulations effectively and maintain their focus on genuine, impactful philanthropy.