CSN Essay on FATF in State of Civil Society Report 2015

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July 20, 2015

An essay on FATF by the Charity & Security Network’s Kay Guinane is among the 27 guest contributions commissioned by CIVICUS for its State of Civil Society Report 2015 focus on civil society resourcing. “The International Anti-Terrorist Financing System’s Negative Effect on Civil Society Resources” examines the role of FATF in contributing to the global trend of restrictions on civil society. The essay describes the civil society response and advocacy campaigns on FATF, the successes to date and the work that lies ahead.

It also suggests ways in which civil society organizations (CSOs) around the world can engage in the FATF process to prevent restrictive laws and policies and to reverse regressive trends. 

When countries sanctioned persons and organizations and put them on terrorist lists as part of their post-9/11 efforts to cut off the flow of financial resources to terrorist organisations, civil society became negatively impacted, FATF likewise added anti-terrorist financing to its agenda and developed special recommendations to address it. Its recommendation on nonprofits unfortunately adopted the rhetoric of the George W Bush administration, finding the civil society is "particularly vulnerable" to terrorist abuse. As the FATF promoted increased government monitoring and supervision of CSOs, they have become negatively impacted by these policies. 

The essay explains: "While some governments cite FATF directly as justification for restrictions on CSOs, others cite ‘anti-terrorist financing’ or ‘national security’ more generally. Either way, the impact on civil society is negative and fails to take the proportional, risk-based approach that is central to FATF policy."

Because FATF recommendations also cover financial institutions, since 9/11,they have increasingly been expected to act as monitoring and enforcement arms of governments in order to identify, track and stop illicit money flows. Between the cost of compliance and the threat of significant sanctions for violations, banks have begun ‘derisking’ by dropping low profit customers such as CSOs. As a result, charities and grant-makers that need to conduct international financial transactions for their operations have experienced increasing difficulty getting access to financial services. 

Civil society continues to respond to “pressing global challenges, of growing inequality, corrupt relationships between political and economic elites, the privatisation of the public sphere, violent conflicts, environmental destruction, and an enduring lack of opportunity for people to have a say in decisions that affect their lives,” according to the CIVICUS report. At the same time, there “has never been a greater need for civil society’s capacity to offer responses and alternatives to the major problems of these contested and uncertain times,” it states.

Read the FATF essay by Kay Guinane. The full report can be read here