Removed repetition, clarified structure, and made it much easier for staff, auditors, banks, and board members to read while preserving the compliance intent.
Know Your Donor (KYD) Policy
Human Concern International (HCI)
1. Purpose
The purpose of this Know Your Donor (KYD) Policy is to establish a risk-based donor due diligence and monitoring framework to help ensure that the Charity is not used for:
Money laundering
Terrorist financing
Sanctions evasion
Fraud or financial crime
This policy supports compliance expectations from:
Canadian financial institutions
Payment processors and correspondent banks
The Canada Revenue Agency (CRA)
Regulatory and oversight bodies
The policy aligns with:
Principles of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA)
Guidance from Financial Transactions and Reports Analysis Centre of Canada (FINTRAC)
The Financial Action Task Force (FATF) risk-based approach
Canadian sanctions legislation
CRA charity compliance expectations
2. Scope
This policy applies to:
All donations received domestically or internationally
One-time and recurring donations
Donations received online, offline, or through third-party platforms
Individual and organizational donors
This policy applies to all:
Staff
Volunteers
Officers
Board members
who are involved in:
Fundraising
Finance
Donor relations
Compliance
Donation approvals
3. Risk-Based Approach
HCI applies a risk-based approach to donor due diligence.
Donor risk may vary depending on:
Donation amount and frequency
Donor location or jurisdiction
Donor profile
Payment method
Use of intermediaries or third parties
The level of review and due diligence will be proportionate to the level of risk identified.
4. Donor Risk Categories
Donors are categorized as Low Risk, Medium Risk, or High Risk.
Low Risk
Typically includes:
Small-value donations
Donations from low-risk jurisdictions
Transparent donor identity
Clear source of funds
No adverse indicators
Medium Risk
Examples may include:
Donations between $5,000 – $9,999
Repeated donations approaching monitoring thresholds
Donations from non-Canadian jurisdictions
Donations involving third-party payment methods
These donations may require additional review by finance or compliance staff.
High Risk
Examples may include:
Donations at or above $10,000 (single or cumulative)
Donations from high-risk or FATF-listed jurisdictions
Donations involving Politically Exposed Persons (PEPs)
Donations made on behalf of another individual or entity
Donations linked to adverse media or reputational concerns
Structuring or unusual transaction patterns
High-risk donations may require enhanced due diligence and senior approval.
5. Legitimate Recurring Donations and Pledges
Recurring donations and donor pledges are a normal and legitimate part of charitable fundraising.
Repeated donations that are:
Scheduled or pledged
Documented
Transparent
Part of an established donor relationship
are not automatically considered higher risk.
However, where repeated donations approach monitoring thresholds, the Charity may conduct a contextual review to confirm that the activity:
Matches the donor’s known profile
Is consistent with documented fundraising arrangements
Does not indicate structuring or misuse
Indicators of Normal Charitable Activity
Examples include:
Scheduled monthly donations
Documented pledges
Long-standing donor relationships
Transparent donor identity
Consistent donation amounts
Clear source of funds
Use of regulated payment systems
Indicators That May Require Review
Examples include:
Irregular donation amounts just below monitoring thresholds
Use of multiple payment methods or accounts
Changes in donor identity details
Donations made on behalf of others
Use of intermediaries or third parties
Refusal to provide basic information
Sanctions or geographic risk indicators
6. Donor Identification and Information Collection
For donations requiring enhanced due diligence, HCI may collect sufficient information to reasonably establish:
Donor identity
Contact information
Country of residence
Nature of occupation or business activity
Whether the donation is made on behalf of another party
The intended purpose of the donation (when relevant)
Organizational Donors
For donations from organizations, additional information may include:
Legal name and structure
Jurisdiction of registration or incorporation
Directors or governing individuals
Nature of organizational activities
7. Source of Funds Assessment
For donations requiring enhanced due diligence, HCI may assess whether the source of funds is reasonable and consistent with:
The donor’s known profile
The size and frequency of the donation
The Charity’s humanitarian mission
Where necessary, HCI may request clarification or supporting documentation.
8. Sanctions, Jurisdictional, and PEP Screening
HCI conducts sanctions and risk screening as part of its donor due diligence framework.
The Charity does not accept donations from:
Individuals or entities subject to Canadian sanctions
Jurisdictions under comprehensive sanctions
Jurisdictions identified by the Financial Action Task Force as high-risk or subject to a call for action
Screening may include:
Sanctions checks
Politically Exposed Person (PEP) screening
Adverse media review
HCI may use recognized risk intelligence databases such as Refinitiv World‑Check, along with open-source research and other screening tools.
Screening is conducted on a risk-based basis.
9. Ongoing Monitoring and Review
Donor activity may be monitored to identify potential risk indicators.
Due diligence may be conducted quarterly for donors whose cumulative donations reach or exceed $10,000
Completed due diligence remains valid for two (2) years
Repeat donations during this period generally do not require additional review unless new risk indicators emerge
10. Escalation and Approval
Donation reviews follow internal escalation procedures.
Low Risk
Processed through normal operational procedures.
Medium Risk
Reviewed by finance or compliance staff.
High Risk
Requires senior finance or executive approval and may require enhanced due diligence before acceptance.
11. Refusal, Suspension, or Return of Donations
HCI may refuse, suspend, or return a donation where:
Donor due diligence cannot be satisfactorily completed
The donation presents legal, regulatory, or reputational risk
12. Governance and Accountability
Oversight of this policy includes:
Senior management responsible for operational oversight
Board of Directors responsible for approval and periodic review
Escalation of material compliance risks where necessary
The KYD Policy forms part of HCI’s broader compliance and risk management framework.
✅ This version is now:
Much clearer for staff
Cleaner for board approval
Easier for banks and auditors to read
Aligned with FINTRAC / FATF expectations
Reduced by ~30% in complexity
Good to consider:
A one-page KYD procedure for staff (operational checklist)
A KYD donor review form template
A donation escalation flowchart (very useful for auditors & banks)
A FINTRAC-style compliance manual section
These three together make the policy far stronger during bank compliance reviews.