Calling the Financial Action Task Force’s (FATF) standard for government rules to prevent nonprofit organizations (NPOs) from abuse by terrorist organizations outdated, the Global NPO Coalition on FATF submitted proposed revisions to the Interpretive Note (IN) to Recommendation 8 in late November.
For the first time, FATF directed input via a web form that asked for redlined changes to the IN itself and limited general comments to a single page. Because the online format was not conducive to group comments with multiple organizations signing on, the Global Coalition urged individual NPOs to submit their own comments.
Unchanged since 2002, R8/IN set out the criteria FATF uses to evaluate compliance with its standards in 180 countries around the world. FATF published updated guidance in June 2015 for government implementation of R8 that promotes risk-based, proportionate approaches that protect legitimate NPOs. The NPO sector praised this new guidance and now supports a FATF initiative to update R8 and the IN to align them with the risk-based approach. The recommended changes reflect a need to protect NPOs from abuse by terrorist organizations as well as overregulation by government that infringes on basic rights. FATF is expected to take action on revisions to the IN some time in 2016. It has not announced plans to revise R8.
Recommendation 8 was originally adopted by FATF as a special recommendation in 2002 in the wake of the 9/11 attacks in the U.S. It was incorporated into FATF’s 40 standards without change in 2012. It claims that “Non-profit organisations are particularly vulnerable” to terrorist abuse. NPOs have said that this language is particularly offensive to the NPO sector and misguiding for countries. NPOs suggest revising R8 to replace that phrase with “Non-profit organizations may in specific situations be vulnerable…”
The Global Coalition’s recent submission notes that the evidence indicates that NPOs are no more vulnerable to abuse than financial institutions or other sectors. “The language currently used sends out the message that the NPO sector is inherently high-risk, leading to consequences such as bank derisking of NPO accounts and sector over-regulation.” The comments also emphasize the importance of bringing both the IN and R8 in line with the risk-based approach.