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Fifty-eight nonprofit organizations (NPOs) from around the world, including umbrella groups with more than 300 member organizations, have sent a letter asking the U.S. Departments of Treasury and State to convene a multi-stakeholder dialogue as part of a broader effort to ensure that registered, law-abiding NPOs are able to access the global financial system. The signatories to this letter represent more than $8.3 billion annually in humanitarian aid and services to the world’s most needy.
Read the letter here.
February 25, 2016
The Honorable Jacob J. Lew
Secretary, Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
The Honorable John F. Kerry
Secretary of State
320 21st St NW
Washington, DC 20451
On February 25, 2016, 58 nonprofit organizations (NPOs), including umbrella groups with more than 300 member organizations, sent a letter to the U.S. Departments of Treasury and State asking them to convene a multi-stakeholder dialogue as part of a broader effort to ensure that registered, law-abiding NPOs are able to access the global financial system.
We've been hearing for years that private list-checking services such as Thomson Reuters' WorldCheck were riddled with errors and were perhaps a major driver of the bank de-risking problem. Muslim charities with no connection to terrorism, the rumors held, were somehow finding themselves on these programs, leading banks to terminate long-held client relationships.
Bank de-risking represents a market failure. In such instances, either government or the public sector must intervene to re-align market factors, either through incentive programs or through enhanced regulatory guidance, concludes a new report from the Global Center on Cooperative Security and Oxfam America, Understanding Bank De-risking and its Effects on Financial Inclusion.
According to the report, the goals of financial inclusion and anti-money laundering and countering the financing of terrorism (AML/CFT) are not inherently in conflict, although tensions emerge in practice. Overly restrictive AML/CFT measures “may negatively affect access to financial services and lead to adverse humanitarian and security implications,” the report states. It adds that de-risking actually contributes to increased vulnerability by “pushing high-risk clients into smaller financial institutions that may lack adequate AML/CFT capacity, or even out of the formal financial sector all together.”
"Show me the money," Tom Cruise famously said in the 1996 film Jerry Maguire. Now, three weeks after the Paris Attacks, counterterrorism "experts" across the pond, channel and elsewhere seem to be saying the same thing: find the funding sources for these terrorist groups, cut them off, and you'll solve the problem.
Not so fast. An array of overbroad counter-terrorism financing laws and policies have not only failed to stop terrorism over the past decade and a half, these very laws may ironically be responsible for forcing money into unregulated channels. Financial institutions can hardly keep up. With the ever-increasing costs of compliance, and a steady increase in the number and volume of fines, is it any wonder that financial institutions are cutting off relationships with any customer suspected of being the least bit risky?