A bill (HR 2706) intended to address concerns about federal bank regulators pressuring banks to limit or drop customers passed the House Financial Services Committee on Oct. 12, 2107 on a 59-1 vote. Arising from a dispute over the controversial “Operation Choke Point” during the Obama administration, the bill would require regulators to have a “valid” reason to tell banks to drop a customer or class of customers, and require customers be given notice of the reasons. If passed, the bill could impact nonprofit organizations (NPOs) that need financial services for international programs by allowing derisking without notice or the requirement of a “valid” reason when based on vaguely worded “national security” considerations.
The Latest News
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.
A Congressional budget amendment that would have de-funded a large UK-based humanitarian aid organization was successfully fought back earlier this week.
The amendment, which was proposed by Rep. Ron DeSantis (R-FL) as part of the Department of State’s foreign operations appropriations, would have cut all US government funding to Islamic Relief Worldwide (IRW). A grassroots effort by Islamic Relief USA, InterAction, Charity & Security Network and other organizations sent emails to various Congressional staff members working on the appropriations bill. As the bill went to a vote Monday evening, the amendment was not offered and will not be a part of this funding measure.
A "Dear Colleague" letter drafted by Rep. Keith Ellison (D-MN) in an effort to oppose the amendment, gathered more than 50 signatures from nonprofit organizations in less than 24 hours, according to Ellison's office. The letter urged members of the U.S. House of Representatives to vote against the amendment, asserting that IRW was singled out for its religious affiliation.
Updated August 23, 2017
In an August 16, 2017 letter to Congress, the U.S. Department of Justice (DOJ) announced that its controversial program dubbed "Operation Choke Point" has officially ended. In the letter, DOJ also repudiated the program, which it described as a "misguided initiative." Significantly, the letter states that DOJ "will not discourage the provision of financial services to lawful industries."
Operation Choke Point was established during the Obama administration to "choke" payday lenders, gun dealers and other business sectors by forcing banks to end relationships with clients deemed "high-risk," a term also used to describe charities in the Bank Examiners Manual. According to the letter to Congress, under the program, a series of subpoenas were issued in 2013, accompanied by a Federal Deposit Insurance Corporation guidance document that listed a number of "elevated risk" merchants. An October 19, 2015, article in American Banker documented the impact on money service businesses and correspondent banks, thereby contributing to the global "de-risking" crisis.
An international sanctions bill primarily focused on Russia contains language devoted to countering the financing of terrorism (CFT) and supporting remittances to Somalia as well as wire transfers by legitimate entities.
Countering America's Adversaries Through Sanctions Act (HR 3364), signed into law by President Trump on August 2, incorporates two bills that passed in the U.S. House of Representatives in late December, in the final hours of the 114th Congress, HR 5594 (National Strategy for Combating Terrorist, Underground, and Other Illicit Financing Act) and HR 5607 (Enhancing Treasury's Anti-Terror Tools Act), with some modifications, in Subtitle C of the bill.
The Terrorism and Illicit Finance subcommittee of the U.S. House of Representatives Committee on Financial Services held a hearing July 18 to examine the regulations surrounding money service businesses (MSBs), or remittances, and the important role they play in impoverished communities overseas, to learn about informal remittance systems and potential terror finance exploitation of remittance networks.
Among those testifying at the hearing, "Managing Terrorism Financing Risk in Remittances and Money Transfers," was Scott Paul, senior humanitarian policy advisor at Oxfam America, who emphasized the important role that remittances play in sustaining at-risk communities. "Remittances give people agency over their own lives," Paul noted. Matthew Oppenheimer, president and CEO of Remitly, testified that a recent survey of their customers revealed that "nearly all are using our service to send money intended to pay for the basic needs of their family members - housing, food, water, electricity, medical care, and education - basic things we take for granted in the United States but can be unattainable for millions living abroad."
The hearing also touched on the issue of de-risking, and whether it forces charities and remitters into less transparent, unregulated money transfer channels, thus making the anti-terror finance regime ineffective. The subcommittee will seek to find ways to streamline remittance regulations in a way that will keep legitimate funds in legitimate channels, subcommittee members said.
In his written testimony, Paul said, "[A] strategy that aims to maximize remittances, keep them within the formal financial system, and curb illicit financial flows will achieve the twin aims of poverty alleviation and combating the financing of terrorism. To do this, remittance services must be accessible, affordable, and accountable - both to law enforcement authorities and to the families sending and receiving money."