NGO Due Diligence in Bangladesh: Checking a Partner Before a Foreign Grant in 2026

NGO due diligence in Bangladesh: what to verify before a foreign grant

NGO due diligence in Bangladesh starts with one question that a signed award letter cannot answer: may this organisation lawfully receive this money, for this activity, in these districts, through this bank route and under this board? A foreign donor, an international NGO or a corporate funder can hold a polished proposal, a credible budget and a respected local partner, and still find that the funds sit frozen in a mother account because the project was never approved, the board resolution was signed by the wrong committee or an onward partner was never named in the approval.

The ground moved in 2026. The Foreign Donations (Voluntary Activities) Regulation (Amendment) Act 2026 rewrote the registration, project-approval, foreign-personnel and appeal provisions of the 2016 Act, added a Tk 50 lakh notification route and introduced institutional support funding. On 30 September 2026 the Bangladesh Financial Intelligence Unit replaced its decade-old anti-money-laundering instructions for NGOs with a new circular. This guide sets out what a funder should verify, in what order, and how to write the findings into the grant.

Summary: Before a foreign grant is signed, the funder should confirm the recipient's legal identity and governing body, its current NGO Affairs Bureau registration, the project approval or Tk 50 lakh notification that covers the exact activity and area, the mother account and fund-release route, its AML/CFT controls under BFIU Circular No. 33 of 2026, the lawfulness of any subgrants, and its reporting and audit record. Each finding should become a condition, warranty or covenant in the grant agreement.

Key point: Registration with the NGO Affairs Bureau is not the same as permission to spend. Unless the limited Tk 50 lakh annual notification route applies, a registered NGO still needs Bureau approval for each project, and its bank may not release foreign donation from the mother account without the Bureau's release order.

At a glance

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Table of Contents

What NGO due diligence in Bangladesh must establish

Foreign-funded voluntary work in Bangladesh runs on a two-layer permission model. The organisation must be registered with the NGO Affairs Bureau before it conducts any voluntary activity with foreign donation, and each project must then be approved before money for it is received.[4] [2] A funder that checks only the first layer has checked the wrong thing. The useful test has five parts: authority, eligibility, money route, controls and evidence.

Authority, eligibility and evidence

Authority asks whether the right body approved the grant and whether the signatories can bind the recipient. Eligibility asks whether each expense falls inside the registration, the approved project, its budget and its districts. Evidence asks whether delivery can be proved through vouchers, beneficiary files and bank trails. A clean audit can coexist with a legal defect, such as accurately recorded spending in a district the approval never covered.

Who should run the review

NGO due diligence in Bangladesh matters to international NGOs funding local partners, foundations, corporate funders routing CSR money from abroad and Bangladeshi NGOs taking their first foreign grant. The recipient carries the sharper risk: an NGO that accepts money before its approvals are in place faces fines, suspension and blocked funds. TRW approaches the exercise as it would transactional due diligence in Bangladesh, relying on primary records rather than assurances.

The 2026 position: Act No. 54 of 2026

Commentary from early 2026 often cites an instrument that no longer exists. The Council of Advisers approved a draft amendment ordinance on 29 November 2025, describing simpler registration, easier fund release and no prior approval for donations of up to Tk 50 lakh a year.[14] It was promulgated as Ordinance No. 77 of 2025 in the Bangladesh Gazette of 11 December 2025.[2] After the February 2026 election, a bill to amend the 2016 Act was placed in Parliament as Bill No. 55 of 2026 on 9 April 2026.[3]

The result is the Foreign Donations (Voluntary Activities) Regulation (Amendment) Act 2026, Act No. 54 of 2026, published on 10 April 2026.[1] It is deemed to have come into force on 11 December 2025, repeals Ordinance No. 77 of 2025 and treats action taken under the ordinance as taken under the Act.[5] Grant files should cite the 2016 Act as amended by Act No. 54 of 2026.

What changed

Three changes deserve emphasis. First, the Tk 50 lakh route lets an NGO receive up to that amount a year without project approval, provided it informs the Bureau in advance of all the project's activities and areas and, after completion, files an audit report prepared by a Bureau-listed auditor in the prescribed form and time.[2] Second, institutional support funding, meaning donor money given outside project support and used with Bureau permission as institutional support for voluntary activities, is now recognised, but its detailed rules are left to subordinate rules.[2] Third, where the Home Ministry or another ministry does not give its opinion within the prescribed time, the Director General may now proceed with registration, project approval or security clearance.[2]

What did not change

For NGO due diligence in Bangladesh, the core architecture survives. Registration is still a precondition, voluntary activities must stay within the approved project, no more than 20 per cent of approved project expenditure may go on administration, and registration and renewal certificates still run for ten years.[2] [4] The mother-account rule, the subgrant conditions, the five-year voucher retention and the penalty and wind-down powers in the 2016 Act were not replaced.[4] Our guide to NGO registration in Bangladesh covers the registration application, documents and fees in detail; this article focuses on what a funder must test once a partner claims to be registered.

The 2025 administrative timelines

Before the statutory change, a Bureau circular of 3 March 2025 had already compressed the process. It gave the Home Ministry and the Financial Institutions Division 45 days to give their opinion on a registration, with silence treated as no objection, reduced background checks to a single intelligence agency, set a 45-day target for final project approval and required consent from the head of government's office for projects longer than five years.[11] Treat these as targets, not guarantees.

Why diligence matters more in the 2026 funding climate

Money is moving through NGOs at scale. NGO Affairs Bureau data reported in July 2026 put foreign grant receipts through NGOs at US$838.25 million in FY2025-26, a seven-year high, with fresh commitments rising 44.62 per cent to a record US$1.15 billion.[12] At the same time, a Bangladesh Institute of Development Studies study presented in October 2026 estimated that at least 2,200 small and medium NGOs face a funding squeeze as donors cut aid, recorded Tk 101.43 billion released for previously approved projects in FY2025-26 and noted that new project approvals had fallen to 1,654 from 2,061 in FY2021-22.[13]

Organisations under financial stress are more likely to use a new grant to plug an old deficit or stretch an approval across new districts. The Finance Minister, Amir Khosru Mahmud Chowdhury, told the same seminar that project approvals would increasingly weigh value for money and job creation, so NGO due diligence in Bangladesh should test outcomes as well as compliance.[13]

Step one: legal identity, constitution and governing body

Begin with the entity, not the proposal. The Bureau registers organisations that already exist under Bangladeshi law, and the 2016 Act defines an organisation as a non-political, non-profit voluntary association established or registered under the relevant law of Bangladesh.[4] In practice, local partners are usually societies under the Societies Registration Act 1860, voluntary social welfare agencies under the 1961 Ordinance or not-for-profit companies licensed under section 28 of the Companies Act 1994; BFIU's 2026 circular still lists these vehicles when it defines an NGO for AML purposes.[8] Charitable trusts raise distinct issues, covered in our note on trust registration in Bangladesh.

Reconcile every identifier

Obtain the primary registration certificate, the memorandum and constitution, the latest filing with the primary registrar and the Bureau registration certificate, and reconcile the exact legal name in Bangla and English, the registration numbers, the registered address and the stated objects. The 2016 Act requires each NGO to have a constitution covering its formation, objects and management, including a managing committee and a general committee.[4] Check that the objects actually cover the proposed activity.

The board-resolution test

Ask five questions. Did the correct body approve the grant? Was the meeting properly called and quorate? Does the resolution identify the donor, amount, currency, project, signatories and bank route? Does the constitution require general-committee approval for this transaction or for any related-party element? Is the board that passed it the same board shown in the filed record? An executive director's title does not by itself confer power to accept restricted funds or change a bank mandate, and where two factions claim control, funding should pause.

Prohibited recipients and key persons

Certain people may not accept foreign donations at all, including candidates for parliamentary or local office, members of Parliament, elected local representatives, political parties, constitutional office-holders, government employees, officers or employees of registered NGOs in their personal capacity, and persons listed or banned under section 18 of the Anti-Terrorism Act 2009.[4] Screen the executive committee, the chief executive and anyone who will control funds. BFIU now requires NGOs themselves to collect full identity details of those who control or direct them, including names, photographs, parents' and spouses' names, addresses, occupation and other affiliations, and to make that information public.[8]

Step two: NGO Affairs Bureau registration and project approval

This is the heart of NGO due diligence in Bangladesh. The NGO Affairs Bureau registers NGOs, approves projects and releases funds; lacking field offices, it relies on deputy commissioners and upazila nirbahi officers to monitor activities on the ground.[6]

Registration status

Obtain the Bureau registration certificate and record its start and expiry dates. Under the amended section 4, registration and renewal certificates last ten years, renewal must be applied for six months before expiry, the Director General reviews the applicant's previous five years of voluntary activities, and an NGO that applies in time may continue working while the renewal is pending.[2] The original 2016 text looked back over the previous ten years.[4] A pending renewal is only protective if it was filed on time, so ask for the stamped renewal application, not an email saying it is in hand.

Project approval: read the whole document

Project proposals are filed on Form FD-6, which covers background, objectives, target groups, year-wise budget, partner NGOs, staffing, procurement and overheads.[7] Since the 2026 amendment, a proposal must specify the exact area in which the activity will be carried out, and the Bureau obtains the relevant ministry's opinion under the Rules of Business 1996 except for later phases of a multi-phase project in an unchanged area and for a foreign NGO's administrative-cost project.[2] Read the whole approval: it fixes the donor, amount, period, districts, budget, foreign personnel and partners. A grant funding three districts under an approval naming one has a legal defect, not a drafting point.

The Tk 50 lakh notification route

The new route is useful for small grants, but it is narrow. It removes the need for project approval, not for registration, the mother account, accounts, AML controls or the post-project audit report.[2] The Act does not say whether the threshold is measured per donor, per project or across all foreign donations received by the NGO in a year, and the prescribed notification and audit forms depend on rules. Until those are settled, confirm with the partner and, if necessary, the Bureau how the partner's aggregate foreign receipts for the year are counted before relying on the route.

Emergency relief and one-time grants

For disaster relief, Form FD-7 covers relief items, beneficiaries and areas, with a completion report due within two months of finishing.[7] The 2016 Act required the Director General to release funds within 24 hours of a proper emergency application; the 2026 text permits project approval and a release order within 72 hours.[4] [2] One-off donations, such as seasonal food distribution, have historically used Form FC-1.[6] None of these routes permits remitting first and regularising later.

Step three: the mother account and fund release

Every NGO must receive all foreign donations, in foreign currency or Taka, through one specific bank account, the mother account, maintained with a scheduled bank. No bank may debit that account for the NGO's benefit without the Bureau's release approval, and Bangladesh Bank sends half-yearly statements of each NGO's foreign receipts to the Bureau and the Economic Relations Division.[4] BFIU's 2026 circular confirms that an NGO keeps a single account for receiving foreign aid but may open separate accounts for each project once funds are received.[8]

How release works in practice

Release is requested on Form FD-2, which records the project period, amount requested, annual withdrawals, the previous year's achievements and the mother account details, and funds are released in tranches against the approved budget.[7] Form FD-3 then reports the previous year's receipts, donor screening against United Nations Security Council lists, use of funds, assets and transfers from the mother account to project accounts.[7] Reconcile recent filings with bank statements and the donor ledger.

Points the grant file should settle

• Account identity: the mother account details and current signatories, confirmed by the bank.
• Timing: money remitted before approval sits unreleased until the release order issues.
• Refunds: BFIU instructs NGOs not to return any amount to a donor without the appropriate authority's approval, so a refund clause must be drafted subject to that consent.[8]
• Cash discipline: NGOs must use the banking channel for any transaction of Tk 1 lakh or more unless management approves an exception, and should route all transactions through banks as a priority.[8]

Our overview of foreign exchange regulations in Bangladesh explains the wider rules on inward remittance that sit behind the mother-account requirement.

Step four: AML/CFT and sanctions controls

NGOs have been reporting organisations under Bangladesh's money-laundering law since 30 September 2010 and under the Anti-Terrorism Act since 17 January 2012.[10] On 30 September 2026 BFIU issued Circular No. 33, which sets the instructions NGOs and not-for-profit organisations must follow to prevent money laundering, terrorist financing and proliferation financing.[9] It replaces BFIU Circular No. 14 of 2 September 2015 and paragraphs 4.3.1 to 4.3.14 of the 2013 NGO/NPO sector guidelines, and took effect immediately.[8] Any NGO due diligence in Bangladesh carried out after that date should test the partner against the new circular, not the 2015 one.

What Circular No. 33 requires

• Policy and leadership: a written AML/CFT policy approved by the governing body, and an annual statement of commitment by the chief executive to all staff.[8]
• Compliance function: a Central Compliance Unit at head office, or at the Bangladesh office of an international NGO, led by a Chief Anti-Money Laundering Compliance Officer registered on BFIU's compliance officer portal, with quarterly meetings and branch-level officers where relevant.[8]
• Beneficiary identification: full identity records for each direct beneficiary receiving more than Tk 20,000 a year in cash, goods or services, and enhanced records for microcredit clients with balances of Tk 1 lakh or more.[8]
• Sanctions: no dealing with persons listed under United Nations Security Council resolutions or by the Government of Bangladesh; transactions of listed persons must be suspended and reported to BFIU by the next working day.[8]
• Enhanced due diligence: heightened checks on funds from countries named in FATF public statements as high-risk or non-cooperative.[8]
• Reporting and records: suspicious transaction or activity reports to BFIU through goAML, employee screening and training, an annual external audit by a chartered accountancy firm and retention of key records for at least five years.[8]

Turning the circular into diligence questions

Ask for the policy and approving minute, the compliance officer's name, the screening lists used and the last training record. Ask how the partner screens its own donors and onward partners: the circular requires a donor NGO to collect details of each partner's objectives, programme areas, experience and income sources, keep them for five years and monitor the partner's AML compliance.[8] The Bureau itself checks that foreign funds come from legitimate sources under the Money Laundering Prevention Act 2012 and counter-terrorism financing rules.[6] Our guide to anti-money-laundering law in Bangladesh covers the wider framework.

Step five: subgrants and partner chains

Onward granting is where approvals most often fail. A registered NGO may grant foreign donation to another Bangladeshi non-government voluntary organisation only if three conditions are met: the recipient is registered under the law of Bangladesh, the granting NGO's approved project proposal contains the recipient's details and an outline of the expenditure to be granted, and the granting NGO guarantees implementation in line with the approval.[4]

A clause letting the recipient "select local partners" later does not work if the approval must already name them; the approval must cover the structure, or be amended, before any onward payment. A particular risk is the unregistered community group treated as a vendor while it in fact delivers the voluntary activity. Classification follows substance: if the group implements approved activities with foreign money, its status must satisfy the Act.

BFIU adds a second layer. A donor NGO may fund a partner only on condition that the partner keeps beneficiary information and does not use the funds for money laundering or terrorist financing, and the donor NGO must check compliance.[8] Flow-down terms in every subgrant should cover permitted use, procurement, safeguarding, anti-bribery, sanctions, records, audit access, incident reporting, data handling and return of unspent funds.

Step six: foreign personnel, travel and data

Foreign advisers, experts and officers may be appointed to an approved project, or have their terms extended, only within the person-months stated in the approved proposal and after security clearance. The Director General forwards the application to the Home Ministry and, if the ministry does not respond within the prescribed time, may approve it with reasons recorded.[2] Applications use Form FD-9, with a separate Form FD-9(1) for the work permit.[7] Under the March 2025 circular, the Bureau should forward clearance requests within three working days and the intelligence agency should report within 21 working days.[11] Visa and residence steps remain separate; see our guide to employment law for expatriates in Bangladesh.

The 2026 Act also inserted section 8A: when anyone employed on a project travels abroad on project business using project funds, the NGO must record that travel in its annual report.[2]

Circular No. 33 requires extensive identity records on beneficiaries, staff and leadership, and Parliament has enacted the Personal Data Protection Act 2026 as Act No. 63 of 2026.[8] [1] Grant agreements that require sharing beneficiary lists abroad should be checked against that Act; our analysis of the Bangladesh data protection law explains how it applies.

Step seven: reporting, audit and records

The reporting cycle is the evidence architecture of the grant. Each NGO must keep accounts and prepare annual statements, preserve expenditure vouchers for five years after project completion, file an annual report on its activities after each financial year and, unless exempted in writing by the Government, file a declaration of the amount, source and use of foreign donation.[4] The Bureau's forms include FD-4, a chartered accountant's certified statement of project expenditure with a budget-to-actual comparison, and an annual report due within two months of the end of the project year, with monthly progress reports to local administration.[7]

Review three to five years of audited accounts, management letters, Bureau submissions, donor reports and related-party disclosures. Five years matches the renewal review and BFIU retention periods.[2] [8] Ask for copies of any Bureau inspection findings and any correspondence from the deputy commissioner or upazila nirbahi officer about irregularities, because these officers review NGO activity through monthly coordination meetings and report concerns to the Bureau.[4]

Enforcement exposure: what happens when it goes wrong

Breach of the Act, its rules or orders is an offence. The Director General may issue a caution or a direction to rectify, cancel or suspend registration, stop activities and, where foreign donation was received without permission or approval, impose a fine of between the amount received and three times that amount; officials may also face penal action unless they show the breach happened without their knowledge despite reasonable precautions.[4] The 2026 amendment deleted the controversial limb of section 14 that made derogatory remarks about the Constitution or constitutional institutions an offence.[2]

If registration is cancelled, activities are suspended, the term expires or the NGO is dissolved, the Director General may, with Government permission, freeze transfers of funds and property, appoint an administrator and direct residual funds or assets to the foreign donor after debts are paid or, failing that, to the Government or another NGO with similar objectives.[4] An aggrieved NGO may now appeal within 45 days, extendable by up to 15 days, instead of the former 30 working days.[2]

Who regulates foreign-funded NGOs

NGO due diligence in Bangladesh means dealing with several regulators at once, each holding a different part of the record.

The 2026 Act also created a Government-NGO Consultative Council of eight ministry nominees and eight NGO representatives to advise on policy.[2]

A step-by-step process for NGO due diligence in Bangladesh

The sequence below reflects how TRW structures a pre-grant review; it scales down for small grants without changing the order of questions.

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Red flags that should pause funding

• No current Bureau registration, or a renewal filed after the six-month window.
• No project approval, or an approval whose donor, amount, districts or partners differ from the grant.
• Reliance on the Tk 50 lakh route without the advance notice to the Bureau or a clear view of aggregate annual receipts.
• A disputed board or a bank mandate that does not match the filed record.
• Payments outside the mother account, large cash withdrawals or unexplained related-party procurement.
• No AML policy, compliance officer or sanctions screening, or late reports and qualified audits.

A red flag is a trigger for a defined response, such as an independent audit, a restricted tranche, an amended approval or a decision not to fund, recorded in the file.

Making the grant agreement do legal work

Conditions precedent

Make the first remittance conditional on the documents that make it lawful: the current registration certificate or timely renewal application, the project approval or evidence of a valid Tk 50 lakh notification, the board resolution, bank confirmation of the mother account and completed sanctions screening. Make later tranches conditional on Bureau release orders, reconciliations, reports and closure of open diligence points.

Warranties and covenants

Use testable warranties on constitution, current registration, authorised signatories, approved or notified districts, the mother account and the absence of listed persons, rather than absolute promises of full compliance. Add covenants to notify any Bureau notice, inspection, suspension, cancellation, audit qualification, bank restriction, board dispute, sanctions match or change in project area.

Termination, wind-down and access

Acknowledge that the statutory wind-down powers prevail over the contract, and require an asset inventory, a beneficiary-protection plan and an orderly handover of records. Because vouchers and AML records must be kept for five years, reserve audit and inspection rights that survive termination for at least that long. For complex structures, a transaction due diligence review by Bangladesh counsel before signature is far cheaper than an approval amendment after the money has arrived.

Frequently asked questions

What is NGO due diligence in Bangladesh?

A pre-grant legal review confirming that an NGO may lawfully receive and spend a specific foreign grant, covering identity, governance, registration, project approval, banking, AML controls, subgrants and reporting.

Does an NGO need Bureau registration before receiving a foreign grant?

Yes. No organisation or NGO may conduct voluntary activities with foreign donation without NGO Affairs Bureau registration. An individual needs Bureau approval instead of registration. The 2026 amendment did not create any exception for unregistered organisations.[2]

Which law governs foreign donations to NGOs in 2026?

The Foreign Donations (Voluntary Activities) Regulation Act 2016, as amended by Act No. 54 of 2026. The amending Act was published on 10 April 2026, is deemed effective from 11 December 2025 and repealed the 2025 amendment ordinance.[1] [5]

Can an NGO receive up to Tk 50 lakh without project approval?

Yes, up to Tk 50 lakh a year, if it informs the Bureau in advance of all activities and areas and files an audit report by a Bureau-listed auditor after completion. Registration, the mother account and AML duties still apply.[2]

How long does NGO Affairs Bureau registration last?

Ten years. Renewal must be applied for six months before expiry, the Director General reviews the previous five years of activity, and a timely applicant may continue working while renewal is pending.[2]

Can a funder send money before the project is approved?

Money may reach the mother account, but the bank cannot debit it for the NGO without a Bureau release order. Make the first tranche conditional on approval or a valid notification to avoid funds sitting idle.[4]

Can a Bangladeshi NGO subgrant to an unregistered community group?

Not as a subgrant. The recipient must be registered under Bangladeshi law, named in the approved project proposal with an expenditure outline, and the granting NGO must guarantee implementation in line with the approval.[4]

What AML rules apply to NGOs in Bangladesh?

NGOs are reporting organisations under the money-laundering and anti-terrorism laws. BFIU Circular No. 33 of 30 September 2026 requires a board-approved policy, a compliance officer, sanctions screening, beneficiary identification, goAML reporting and five-year records.[8] [9]

Can foreign consultants work on an approved NGO project?

Only within the person-months in the approved proposal and after Bureau security clearance, which involves the Home Ministry. A separate work-permit application is made on Form FD-9(1).[2] [7]

What happens to grant funds if registration is cancelled?

The Director General may freeze funds and property, appoint an administrator and direct residual assets to the foreign donor after debts, or otherwise to the Government or a similar NGO. Plan wind-down terms in advance.[4]