Financial Access Overview

In recent years, access to financial services has become increasingly difficult for civil society organizations that must conduct international financial transactions in order to operate overseas where their work is needed most. Financial institutions may delay, or refuse to make, transfers between organizations. Sometimes, nonprofit organizations (NPOs) are turned away as customers or have their accounts closed. Remittance services that facilitate fund transfers between diaspora populations and their families are threatened by the international banking system’s growing unwillingness to provide these services.

The U.S. government has said that banks should not “de-risk” but that policy has not been translated into concrete action or regulatory standards that remove current disincentives for banks to provide services to international NPOs. As a result, money will be taken out of transparent, regulated channels, making life more difficult for legitimate NPOs and easier for terrorist financiers. 

On February 7, 2017, we released a comprehensive report on Financial Access for U.S. Nonprofits. It represents the first empirical data on the subject and
includes perspectives from stakeholders as well as observations and recommendations. 

 

Infographic: FROM DONOR TO RECIPIENT: FINANCIAL ACCESS OBSTACLES FACING U.S. NONPROFITS
created by InterAction's Together Project

Featured Resources

Deplatforming

Deplatforming occurs when an online platform or provider drops a client account. Politically motivated actors have successfully gotten legitimate humanitarian aid, development, peacebuilding and human rights organizations deplatformed from financial services platforms by exploiting concerns around terrorist financing.

This Issue Brief describes the problem as it has impacted nonprofit organizations working in global hot spots. 

Letter to Senators: Help International Charities Facing Problems with Banking Services

Date: 
August 1, 2019
Author: 

Congressional efforts to update the Bank Secrecy Act could help nonprofit organizations (NPOs) that face increasingly urgent problems with transferring funds across borders. Four Senators have circulated a discussion draft ILLICT CASH ACT that includes provisions to address “bank derisking,” including the impacts on NPOs. A July 11 letter from the Charity & Security Network to Senators Tom Cotton (R-AR), Doug Jones (D-AL), Mike Rounds (R-SD) and Mark Warner (D-VA) expresses support for provisions on derisking and makes recommendations to strengthen them. In particular, the letter urges the bill to require federal banking regulators to update and revise the Bank Examination Manual chapter on NPOs to bring it into line with the Financial Action Task Force’s 2016 update of its standard on anti-terrorist financing regulations for NPOs. The Bank Examination Manual does not incorporate the new standard’s risk-based, proportionate approach that is intended to prevent terrorist financing while not disrupting the activities of legitimate NPOs. (A related bill is awaiting action on the floor of the House of Representatives.)

The Queen's Speech

Date: 
July 12, 2019
Author: 
Raquel Dominguez

                                        Bank derisking, one of the most significant threats to non-profit organizations (NPOs) and non-governmental organizations (NGOs), just got a publicity boost by none other than Queen Máxima of the Netherlands, who also serves as the United Nations Secretary-General's Special Advocate for Inclusive Finance for Development (UNSGSA). The queen, in her latter capacity, opened the 26th Egmont Group Plenary on July 4, 2019 by speaking about the need to address financial access problems NPOs are facing, calling for collaboration to address financial exclusion for individuals and organizations alike. In particular, the queen spoke about the derisking of NPOs, which “is critical at a time when populations in need of humanitarian assistance are growing.”

Read more.

Charity & Security Network Announces New Guidance for Banking Nonprofit Organizations

As a key partner of the Consortium for Financial Access the Charity & Security Network is pleased to announce the release of a new guidance document, Banking Nonprofit Organizations – The Way Forward.

The nonprofit sector provides essential services to assist those in need, often in high-risk areas, conflict zones and inaccessible regions. To carry out this vital work, funds must be transferred, often internationally, from donors to organizations, and then to partners, employees and service providers. The inability to do so can significantly delay or cancel lifesaving programs, endanger staff, hinder relationships and trust with vendors and partners and put the well-being of aid beneficiaries at risk. It can also force money into unregulated, less transparent, financial channels, which poses additional risks. 

Read more.

BSA Reform Bill Clears House Committee

Date: 
May 28, 2019
Author: 

A bill designed to update the Bank Secrecy Act for the first time since the PATRIOT Act was passed contains two provisions that could benefit nonprofit organizations (NPOs) struggling with access to financial services. The bill passed unanimously out of the House Financial Services Committee on May 8, 2019. 

The Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act of 2019 (COUNTER Act, H.R. 2514) directs the Secretary of the Treasury, in consultation with the Federal functional regulators (as defined under section 103) and other relevant stakeholders, to undertake a formal review and issue a report on the "adverse consequences of financial institutions de-risking entire categories of relationships, including charities, embassy accounts, money services businesses,"  countries, regions, and respondent banks; the reasons why financial institutions are engaging in de-risking; the association with and effects of de-risking on money laundering and financial crime actors and activities; and the most appropriate ways to promote financial inclusion while maintaining compliance with the Bank Secrecy Act. 

Derisking Conference Report Identifies Priority Measures

Interfering with the financial access of nonprofits operations designed to address post-conflict reconstruction or counter violent extremism "may in fact hinder other components of counterterrorism efforts," states a new conference report generated from a UK-Swiss meeting aimed at taking stock of existing initiatives, analyzing remaining obstacles and identifying future priorities. Read the full report. 

CGD Report Takes Stock of the Current State of Derisking

Date: 
November 1, 2018
Author: 

Over the past three years, progress has been made with the problem of derisking and the situation has stabilized so that no country is at risk of losing access to international payments services. At the same time, the problem has not yet been resolved, according to a report from the Center for Global Development(CGD), Policy Responses to De-Risking: Progress Report on the CGD Working Group's 2015 Recommendations

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