A new study by UK financial expert Tom Keatinge examines the problems UK charities are experiencing with access to financial services for their international operations. U.S. charities face the same kinds of barriers, and a similar study is needed on the problems they face. The Press Release from Demos, which published the study, said the report:
- Reveals challenges NGOs face in securing and transferring funds due to the counter-terrorism regulation fears of banks
- Calls on banks, charities, and government bodies to improve dialogue on resulting financial restrictions and impact on charitable activity
- Critical aid struggling to reach conflict zones such as Syria
The full text of the study can be found here.
Washington, February 7, 2017 –Two-thirds of U.S.-based nonprofit organizations (NPOs) working abroad are facing problems accessing financial services, according to a comprehensive report released today by the Charity & Security Network.
The report, Financial Access for U.S. Nonprofits, is based on the first-ever empirical study of the global phenomenon known as “derisking,” as it relates to U.S.-based NPOs. Derisking refers to financial institutions terminating or restricting business relationships to avoid rather than manage risk. The report also reflects information from numerous focus group sessions and interviews with stakeholders over the last year. It outlines and analyzes the scope, frequency, and prevalence of various financial access problems, including delayed wire transfers, account refusals and closures, and unusual additional documentation requests. The report also provides recommendations to address these challenges. Author Sue E. Eckert of the Center for New American Security noted, “At a time of unprecedented need in regions of conflict, humanitarian crises, and natural disaster, American charities’ efforts to save lives and prevent the further erosion of democracy and human rights are being stymied unnecessarily. The data are clear: there is a serious and systemic problem that must be addressed.”
Sue Eckert, Adjunct Senior Fellow, Center for a New American Security; and Adjunct Professor of Law, Case Western Reserve Law School
Emile van der does de Willebois, Global Lead, Financial Market Integrity & Asset Recovery, World Bank Group
Michael Pisa, Policy Fellow, Center for Global Development
Scott Paul, Senior Humanitarian Policy Advisory, Oxfam America
Shannon N. Green. Senior Fellow and Director, Human Rights Initiative, CSIS
The scope and prevalence of challenges that U.S.-based nonprofits face in accessing financial services are far more vast than previously understood, according to a comprehensive new report by the Charity & Security Netowrk, Financial Access for U.S. Nonprofits.
Two-thirds of U.S.-based nonprofits working abroad are facing problems accessing financial services, the report finds. These include delays in wire transfers, account closures and account refusals, requests for unusual additional documentation, and inccreased fees.
The report is based on the first-ever empirical study of the global phenomenon known as "derisking," as it relates to U.S.-based NPOs. The report also reflects information from a number of focus group sessions and interviews with stakeholders over the last year.
In issuing its final rule on beneficial ownership, the Financial Crimes Enforcement Network (FinCEN) exempted charities and nonprofit entities from the ownership prong of the requirement, but not the control prong.
In a guidance document issued October 21, 2016, the Financial Action Task Force (FATF) advises financial institutions that may terminate or restrict business relationships with entire countries or classes of customer in order to avoid, rather than manage, risks in line with the FATF’s risk-based approach (RBA), a practice known as de-risking. Although the guidance is focused on correspondent banking and does not address the financial access plight of nonprofit organizations (NPOs), it does have implications for NPOs' ability to access banking services.
The financial access problems faced by nonprofit organizations (NPOs) are a significant part of the findings from a workshop hosted last summer by the World Bank and the Association of Certified Anti-Money Laundering Specialists (ACAMS). The report, Stakeholder Dialogue on De-risking: Findings and Recommendations, summarizes the main findings of the May 31-June 1 meeting as well as the recommendations made by participants. These recommendations are simply a reflection of the discussion rather than any endorsement by the World Bank or ACAMS.
The financial access problems faced by nonprofit organizations (NPOs) are a significant part of the findings from the workshop hosted last summer by the World Bank and the Association of Certified Anti-Money Laundering Specialists (ACAMS). The report, Stakeholder Dialogue on De-risking: Findings and Recommendations, summarizes the main findings of the May 31-June 1 meeting as well as the recommendations made by participants. These recommendations are simply a reflection of the discussion rather than any endorsement by the World Bank or ACAMS.
New guidance on correspondent banking from the U.S. Treasury's Office of the Comptroller of the Currency (OCC) advises all OCC-supervised banks, as part of their best practices, to consider "the extent to which account closures may have an adverse impact on access to financial services for an entire group of customers or potential customers, or an entire geographic location." It also encourages banks to ensure a clear audit trail of the reasons and method used for account closure.
The guidance, Risk Management Guidance on Periodic Risk Reevaluation of Foreign Correspondent Banking, advises banks to consider mitigating information provided by foreign financial institutions, and provide them "sufficient time to establish alternative banking relationships before terminating accounts, unless doing so would be contrary to law, or pose an additional risk to the bank or national security, or reveal law enforcement activity."