THE RSL NSW is voluntarily suspending all fundraising activities such as raffles, barbecues and cake sales after the new leadership discovered that some of its processes are illegal under the state's charity laws.
The suspension, which is likely to cause hardship to some sub-branches and women's auxiliaries around the state but needs to be done urgently ahead of the major "Poppy Day" fundraising drive in November, will allow the new state council to fix what President James Brown said were "technical" breaches of the law.
The state league is the subject of an inquiry by former Federal Court judge Patricia Bergin and a probe by the Australian Charities and Not-for-profits Commission following a series of financial impropriety allegations that toppled the previous council and brought Mr Brown and a largely new council to power two months ago.
Mr Brown, in a directive sent to hundreds of sub-branches and other subsidiary organisations, said that "RSL NSW is treating this matter very seriously".
"It is vital that RSL NSW, and its sub-branches and auxiliaries, do everything possible to ensure that any non-compliance with these legal obligations cease immediately."
The problem is understood to centre on the fact that much of the fundraising – in particular the sales of Remembrance Day poppies and Anzac Day badges – is legally the responsibility of the state branch based at Anzac House but about half the money raised stays with the sub-branches and auxiliaries.
While Anzac House has broad oversight of the way the sub-branches spend their money, it can't currently match the fundraising dollars to those spent at the local level.
Mr Brown said the state branch was "working on a strategy to rectify this situation urgently" and was conscious of "our great responsibility to be accountable for the public money we are entrusted with".
The directive stressed the suspension was not being driven by any revelation of fraud or misuse of funds raised from the public.
"This suspension is happening because RSL NSW had determined its technical fundraising procedures are not compliant with the required standards," the directive states.
While much of the RSL's donations come from the Anzac Day and Remembrance Day appeals, some smaller and poorer sub-branches and auxiliaries – there are 634 subsidiaries across the state – are likely to feel the pinch while the issue is being resolved.
Mr Brown said that RSL NSW understood "the significant impact that this directive will have on each of its sub-branches, auxiliaries and individual members" but added that the league had to comply with "all legal obligations".
The Bergin inquiry and ACNC probe are looking at financial abuse claims including misuse of credit cards by former council members, payments of consulting fees to councillors by the league's aged care arm and cover-ups of possible abuses.
