Both the House of Representatives and Senate held hearings in late November on proposed legislation to update the 50-year-old Bank Secrecy Act (BSA), which is the primary law setting out anti-money laundering and counter terrorist financing (AML/CFT) rules for banks. While the bills in each house vary, statements in the hearings echoed the same theme: the world has changed substantially since the BSA was updated in 2001 and gaps and strains in the AML/CFT system need to be addressed. However, neither bill addresses the negative impacts of bank “derisking” (dropping accounts or limiting services) on nonprofit organizations (NPOs) or financial inclusion goals. The contradiction between the strict liability for violations in the current AML/CFT regime and the need for a proportionate, risk-based approach, cited by the Financial Action Task Force in 2016, was also not discussed. The move the update the BSA and related AML/CFT laws presents both opportunities and challenges for NPOs in 2018. The legislation and testimony is summarized below.
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The Charity and Security Network monitors U.S. and foreign government activities and a wide range of news sources to identify developments in national security policy that impact civil society and nonprofit organizations. We collect and disseminate relevant information on our website, via our Twitter and Facebook accounts, and through our biweekly email newsletter, which contains links to a variety of news articles. To read the most recent issues of our email newsletter or to subscribe, click here.
Our staff also creates news pieces on events and developments of particular interest to our members that are not covered in other news outlets. Those stories can be found below, in revese chronological order.
Just three days before International Human Rights Day, Charity & Security Network joined CIVICUS Alliance, the International Center for Not-For-Profit Law ICNL) and a defendant in the J20 criminal trial stemming from the Inauguration Day protests to present testimony on restrictions of the freedoms of association and peaceful assembly in the U.S. before the InterAmerican Commission on Human Rights.
Charity & Security Network’s Andrea Hall presented data from the February 2017 report, Financial Access for U.S. Nonprofits, on the financial access difficulties that nonprofits are having in accessing banking services. Her testimony outlined how this problem, which includes account closures and wire transfer delays, severely impedes the organizations’ ability to carry out their programs. Access to funds is integral to the right to freely associate.
Bobbie Traut of CIVICUS led the panel and gave an overview of the problems with freedom of association and assembly in the U.S. today, highlighting data available in the CIVICUS Monitor. Charity & Security Network is a research partner on the Monitor.
Nick Robinson of ICNL discussed the serious threats to freedom of peaceful assembly that have passed or are pending in various state legislatures. He also explained that the militarization of local police has created a hostile and dangerous environment for protestors that includes kettling and the use of chemical agents without proper warning. That information is contained in ICNL's protest law tracker.
Elizabeth Lagesse is a defendant in what is known as the J20 criminal trial. She is also a plaintiff in a civil lawsuit against the Washington, D.C. metropolitan police concerning the same events. Lagesse is facing multiple criminal charges associated with the protest, including felony rioting, inciting a riot and conspiracy to riot, even though prosecutors have admitted in court that they have no evidence that she harmed any people or property. More than 230 protesters, journalists and legal observers were arrested. As prosecutors have aggressively pursued these charges, they have depicted political organizing as a political conspiracy, she said, and described the prosecution’s disruption to the lives of her and her co-defendants, each of whom face up to several decades in prison. She also noted the chilling impact of these cases on other protesters.
The U.S. government was then given an opportunity to respond to the civil society panel’s presentation. They used this time to present a history lesson on freedom of speech in the United States. Following their remarks, the IACHR commissioners publicly scolded the U.S. government representatives for making “no reference to what is happening” in their remarks, and noting their serious concern with the problems outlined by civil society. The only way things can change is by admitting there has been a regression, … and that the regression is caused by the highest levels of power in the U.S. government,” said IAHCR chairwoman Margarette May Macaulay. She added that the situation with the J20 defendants is “unacceptable” and that she expected the U.S. government’s answer to focus on that. Finally, she noted that given the current state of civil liberties in the U.S., the country’s founders must be “turning in their graves.”
At its November 2017 plenary session the Financial Action Task Force (FATF) approved two documents relevant to nonprofit financial access concerns. First FATF adopted a customer due diligence supplement to its 2013 FATF Guidance Anti-Money Laundering and Terrorist Financing Measures and Financial Inclusion. These are combined in one document. While focused on individuals/natural persons rather than nonprofit organizations (NPOs), the new guidance is relevant in that it demonstrates FATF’s commitment to financial inclusion and provides some indication of how the risk-based approach (RBA) can be applied to increase access to the regulated financial system. At some point in the future, a similar document focused on NPOs would be useful for all stakeholders. Second, FATF published a short statement supporting technical innovation in financial services that is consistent with its standards.
International Humanitarian Law is supposed to protect civilians during armed conflict. However, in recent and ongoing wars, civilians have been injured or killed as a result of indiscriminate, foreseeable and preventable actions. More than 60 million people have been forced to flee their homes, civilian deaths from explosive weapons have increased by 92 percent since 2011, and there have been more than 5,000 civilian deaths since March 2015 in the Yemen conflict.
In a move to protect civilians from actions in war resulting from U.S. military operations and security partnerships, InterAction, an alliance organization of nongovernmental organizations, particularly humanitarian aid and development groups, has launched recommendations for Congress.
The Financial Action Task Force’s (FATF) Recommendation 8 (R8) on Nonprofit Organizations (NPOs) is among 40 standards it uses to evaluate country anti-money laundering/counterterrorist financing programs. FATF is now conducting an evaluation of the Kingdom of Saudi Arabia, with a report due in the summer of 2018. Under FATF procedures the June 2016 revised R8, which requires countries to apply a risk-based, proportionate approach to anti-terrorist financing regulation of NPOs, will be used to measure Saudi Arabia’s compliance. Because Saudi Arabia is a closed country where civil society rights are under harsh attack, it is not likely the R8 standard can be met. On October 31, 2017 the Charity & Security Network submitted comments to FATF, based on research of public records, that argue Saudi Arabia is using counterterrorism laws to target domestic dissent and “expressive organizations” in a manner inconsistent with FATF standards and the International Convention for the Suppression of the Financing of Terrorism. C&SN’s submission is available here.