Overseas funding: The challenge of banking for charities and not-for-profits
Hazra Patel, 25 November 2025
Hazra Patel, 25 November 2025
For charities delivering services overseas or working with international partners, being able to move money swiftly and securely across borders is essential. However, what should be a straightforward task has become increasingly complex.
From derisking by banks and money laundering compliance to tightening regulatory scrutiny and logistical barriers, the challenges of international banking continue to mount for charities and non-profits.
International transactions are, by their nature, more complicated than domestic ones. They often involve multiple financial institutions, each with its own compliance checks, regulations and timelines.
Successfully traversing this ever-changing landscape without compromising either on compliance or the needs of their beneficiaries has become a real challenge for many organisations.
One of the biggest obstacles in recent years has been the trend of derisking by financial institutions. With fraud and complex international criminal activity on the rise, regulators have had to get tough on banking.
In response to stricter anti-money laundering (AML) and counter-terrorist financing (CTF) rules, many banks are increasingly cautious about facilitating transactions to, or maintaining accounts linked with, higher-risk jurisdictions.
This is particularly true of regions affected by conflict or sanctions, where many not-for-profits and charities need to operate.
For charities, this has led to account closures, extended payment delays and heightened scrutiny of legitimate humanitarian and development work.
In the most difficult cases, organisations have been forced to use informal or alternative channels to transfer funds, increasing the risk of fraud, loss and reputational damage.
Even when formal banking routes are used, compliance checks and payment holds can cause delays that undermine time-critical operations, particularly in emergency response or disaster relief scenarios where every moment matters.
The Charity Commission has acknowledged the difficulties faced by charities operating overseas, but its expectations remain clear ‘trustees must take all reasonable steps to ensure funds reach their intended recipients and are used for their intended purposes’.
Before entering into any financial arrangements, charities should carry out thorough due diligence on their overseas partners. This includes verifying credentials, assessing financial stability and understanding the local regulatory environment. Detailed records must be maintained for every transaction, noting the purpose, amount and recipient. This is not just good governance but essential for meeting many compliance requirements.
Just as important are robust internal controls, which should segregate duties for authorising and processing payments. Organisations should also perform checks to ensure that funds reach the intended beneficiaries overseas. With strict sanction regimes and increasing reporting obligations, these challenges are not only limited to organisations directly in a sanctioned area.
In practice, charities frequently encounter issues with currency conversion, fluctuating exchange rates and unclear or unexpected international banking fees.
A payment sent in good faith can arrive days late or significantly reduced due to intermediary bank processes, so this should be accounted for in your activities.
In areas with weak financial infrastructure, some organisations resort to informal or alternative transfer systems to move money quickly. These should be avoided in most instances, with professional financial and legal guidance sought where they are necessary.
Flexibility is often required in challenging environments, but trustees remain ultimately responsible for ensuring that charitable funds are used appropriately.
This means having a clear and documented understanding of the risks associated with overseas transfers and developing proportionate controls to manage them.
Our experienced charity and not for profit team are happy to help organisations and trustees with a wide range of issues, including support with record keeping and other essential procedures.
Please get in touch with Partners Hazra Patel (hazrapatel@lubbockfine.co.uk) and Lee Facey (leefacey@lubbockfine.co.uk) to arrange a confidential discussion.
