A February 2012 report from the Transnational Institute and Statewatch finds that the legal and regulatory measures the Financial Action Task Force (FATF) recommends are being used by governments to suppress nonprofits. The FATF is an international consortium of 36 countries that sets anti-terrorist financing and anti-money laundering standards used by 180 countries.
The ABCs of FATF: What Nonprofits Need to Know in 2017 and Beyond
Like their American counterparts, British NGOs working in or near areas where non-state armed groups are active increasingly face restrictions on their access to the financial system, according to a 2017 report from Chatham House, Humanitarian Action and Non-state Armed Groups: The Impact of Banking Restrictions on UK NGOs. This may include delayed transfers, the freezing of funds, and closure of bank accounts.
The report, like many before it, tie the perception of NGOs as high-risk to the Financial Action Task Force's Recommendation 8. In addition, the global financial crisis has made banks subject to tougher regulatory and enforcement regimes, decreasing their appetite for risk. It notes, "Humanitarian NGOs generally accept the need for regulation and due diligence, but the current weight of compliance demands by their banking partners is often seen as disproportionate, resulting in a need to spend donor money on additional staff and due diligence tools, increased administration costs, aid delivery and financial transfer delays, and in some circumstances the closure of programmes to which funding cannot be delivered."
Prior to its revision in 2016, the Financial Action Task Force's Recommendation 8 referred to nonprofit organizations as "particularly vulnerable" to terrorist abuse. As a result, many countries implemented laws and policies designed to curb this perceived risk. As a result, NPOs have faced increased scrutiny and legal constraints, shrinking the space for charitable work.
A report from Spaces for Change in Nigeria, Closing Spaces for Civil Society and Democratic Engagement in Nigeria, examines the impact of Recommendation 8 on civil society in that country. The first part, Beyond FATF: Trends, Risks and Restrictive Regulation of Non-profit Organisations in Nigeria, is the product of systematic review of that country's legal framework for combating money laundering and the financing of terrorism to understand the connection between Nigeria's implementation of Recommendation 8 and shrinking space for civil society there. The second part, Closing Spaces for Civic Engagement and Civil Society in Nigeria, assesses the effectiveness of these policies and created a database of closed spaces, highlighting 100 incidents of overbroad application of these laws.
The Global NPO Coalition on FATF, co-chaired by the Charity & Security Network, plays an important rule in ensuring that recommendations for country-level counter-terrorism finance policies respect human rights and the important role of civil society. Two new reports praise the coalition's work.
Financial Action Task Force (FATF) Recommendation 8 and FATF recommendations following evaluations add to the restrictions faced by civil society organizations, according to a new report from Bread for the World, The Impact of International Counterterrorism on Civil Society Organisations: Understanding the Role of the Financial Action Task Force. Asserting that the links between measures that fight the financing of terrorism and civic space are not known widely, the report explains the role of FATF in setting international standards that affect the way in which civil society organisations are regulated by nation-states, their access to financial services, and their obligations to avoid proscribed organisations and other groups deemed to pose a terrorism risk. The report summarizes the Global Coalition's achievements to date in its Annex. Read more about this report.
A report from UN Special Rapporteur Maina Kiai, Imagining a World without Participation: Mapping the Achievements of Civil Society, notes that the Global Coalition has "progressively made gains in voicing concerns around the adverse effects on non-profit organisations of international policies against counter-terrorism and money laundering."
Financial Action Task Force (FATF) Recommendation 8 and FATF recommendations following evaluations add to the restrictions faced by civil society organizations, according to a new report from Bread for the World, The Impact of International Counterterrorism on Civil Society Organisations: Understanding the Role of the Financial Action Task Force.
Asserting that the links between measures that fight the financing of terrorism and civic space are not known widely, the report aims to "inform civil society organisations and non-profit organisations (NPOs), but also political decision makers who are not familiar with anti-terrorism measures." Specifically, it explains the role of FATF in setting international standards that affect the way in which civil society organisations are regulated by nation-states, their access to financial services, and their obligations to avoid proscribed organisations and other groups deemed to pose a terrorism risk.
In February 2017, the Global NPO Coalition on FATF, learned that it will for the first time have seats on the Financial Action Task Force’s (FATF) Private Consultative Forum (PCF). The PCF is an annual meeting, hosted by FATF, in which it discusses issues affecting nongovernmental entities subject to anti-money laundering and counter-terrorism financing obligations.
The Financial Action Task Force (FATF) made important changes to the criteria it will use to evaluate countries' implementation of Recommendation 8 (R8), its standard for government anti-terrorist financing regulation of nonprofits, at its October 2016 Plenary.
A new report, Enhancing Effective Implementation of FATF Standards on Nonprofits: Lessons learnt from mutual evaluation processes, summarizes the main discussion points and recommendations from a September 2016 a meeting with representatives of governments, nonprofit organizations and Financial Action Task Force Secretariat staff.
The Financial Action Task Force (FATF) released the results of its Mutual Evaluation of the United States on Dec. 1, 2016, assessing compliance with its 40 anti-terrorist financing and anti-money laundering standards, including Recommendation 8 (R8) on nonprofit organizations (NPOs).
While the evaluation found the U.S. to be “largely compliant” with R8, it noted that R8 was revised in June 2016. The evaluation is based on the prior version. Key elements of the new R8, including the proportionality of rules to risk, were not addressed. However, FATF said, “The revised version will be taken into account during the follow-up process.” Problems NPOs experience with banking services were also discussed.