According to a new report from the World Bank, the effect derisking varies widely from country to country and does not affect broad categories of clients. The report, The Decline in Access to Correspondent Banking Services in Emerging Markets: Trends, Impacts and Solutions, examined the impact of derisking and found the effect at the macro level to be limited. At the same time, impact at the micro level is often intense, with banks losing access to the international financial system. Read more
A new report from the Human Security Collective and the International Center for Not-for-Profit Law examines the drivers of the global trend known as "de-risking" as it relates to nonprofit organizations (NPOs).
Inordinate delays in cash transfers, onerous due diligence requirements, inability to open bank accounts and arbitrary closure of bank accounts are all components of de-risking. The report, At the Intersection of Security and Regulation: Understanding the Drivers of "De-risking" and the Impact on Civil Society Organizations, examines these practices an looks at how regulations on money laundering and terrorist financing "permeate policymaking, influencing institutions (perversely, at times) and negatively impacting humanitarian and development work." Read more
In July 2016, Maina Kiai, Special Rapporteur on the rights to freedom of peaceful assembly and of association, visited the United States on an official mission to assess the civil society’s freedoms of assembly and association. While regarding the United States as “a nation of ...resilience,” Kiai stressed its current struggle “to live up to its ideals on a number of important issues.”
Kiai’s findings were largely unsurprising. He pinpointed the issue of racial, social and economic inequality as the most critical when assessing assembly and association rights in the U.S.
“Racism and the exclusion, persecution and marginalization that come with it, affect the enabling environment for the exercise of association and assembly rights,” Kiai said.
Additionally, Kiai noted that economic inequality, unnecessarily militarized policing at some peaceful protests, intimidation of activists, lack of accountability for rights violations, disproportionate counter-terrorism measures, and increasing corporate power also largely influences and constraints civil society in America).
Country Visit: United States Of America (A/HRC/35/28/Add.2)
In August 2017, Chatham House’s International Security Department and International Law Programme issued a report -- Recommendations for Reducing Tensions in the Interplay Between Sanctions, Counterterrorism Measures and Humanitarian Action -- that identifies concrete ways for all stakeholders to address the issue.
Often, sanctioned or terrorist-designated groups control areas of humanitarian need. The legal prohibitions regarding these groups can include incidental payments that humanitarian actors may need to make in order to operate. Continuous engagement between the international, state, banking and humanitarian sectors is critical to alleviating the tension, the report states. It asserts that systematically adopted exemptions in UN and EU sanctions regimes are the most effective way to ensure that restrictions do not apply to humanitarian action. Currently, only one conflict-related UN Security Council sanctions regime includes this type of exemption.
"The world has witnessed an alarming rise in restrictions placed on civil society actors to curtail their space and operations, impeding upon the realization of their rights to the freedom of expression, association, and peaceful assembly - frequently in the name of countering terrorism and protecting national security, among other drivers," according to a March 2018 report from the Center for Strategic and International Studies, Counterterrorism Measures and Civil Society: Changing the Will, Finding the Way. ( Read more)
A new study from the UK's Charity Finance Group found that 79% of charities face some kind of difficulty in accessing or using mainstream banking channels. The same number of respondents also said that banks had become "substantially or slightly more risk averse to them."
The report is based on results from the survey responses of 34 charities, ranging from medium and large organizations. Eighty-eight percent had income over £1 million, all worked overseas, 62% were secular organizations, 21% identified as Christian, and 12% as Islamic. The types of work conducted included humanitarian, sanitation, peacebuilding, medical assistance, research, human rights, education, welfare, children, grantmaking and environmental protection. Eighty-three percent worked in Africa, 74% in Asia and 62% in Europe. More than 50% worked in the MENA region.
The report, Impact of money laundering and counter-terrorism regulations on charities, found the following results:
41% had transfers delayed by a correspondent bank
32% had transfers delayed by their bank
27% had transfers denied by their bank
20% had transfers denied by a correspondent bank
15% had accounts closed
15% had delays in opening bank accounts
8% had donations blocked
8% had funds frozen
6% had accounts denied
For most respondents, banks did not provide any explanation for why the charities were being derisked. Read more
On February 15th, 2018, the Ministry of Finance of the Netherlands, the Human Security Collective and the World Bank hosted an international stakeholder meeting with on derisking of nonprofit organizations (NPOs) in The Hague. New research on the impact of derisking of NPOs was presented and 75 representatives from NPOs, governments, international organizations, financial institutions and academia shared their knowledge and insights during three roundtable sessions, which took place under Chatham House Rules. Discussions included the impact of financial access challenges for NPOs, banks' concerns about regulatory actions and costs of compliance, and policy implementation and coordination
In the realm of new research, a recent study by the London School of Economics found that in some cases aid organizations and other NPOs will “cease to provide assistance” because of refusal from banks to take on the risk. When sending international wire transfers, banks may demand extra information such as detailed lists of beneficiaries. This not only delays the transfers, but also endangers local contacts in conflict areas because of the degree of transparency it entails. While Significant Well-Established Entities (SWEEs), or larger NGOs, are better able to mitigate the requirements of an increased due diligence threshold, smaller NPOs often lack the resources and operational framework to do so. Raising mutual awareness among NPOs (via roundtable initiatives) is important to bolster engagement. Also, pooling resources within the broader NPO sector, coupled with a continuous exchange of information, could be beneficial. Read more
The primary goal of a study conducted by Mercy Corps was to test the possible causality between young people’s improved economic outcomes and their support for political violence -- defined as “violence targeted primarily at the state."
The study, Can Economic Interventions Reduce Violence?, examined young people’s economic conditions, psychosocial well-being, and perceptions of government to see how interventions may reduce willingness to support armed opposition groups (AOGs). The research focused on youth in the Kandahar Province (second largest city in Afghanistan), afflicted by high unemployment rates and violence. Though the provincial government maintains control of Kandahar and neighboring districts, AOGs, such as the Taliban, still have a strong influence in the area.
In the first report since her appointment in August 2017, Fionnuala Ní Aoláin, UN special rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism, details the relationship between states of emergency and sustained human rights violations. In the report (A/HRC/37/52, 27 February 2018), she encourages governments to adopt guidelines while countering terrorism to address the problems of permanent emergencies.
“Recalling that human rights law considers war as a justified legal basis for the declaration of emergency … the post-9/11 articulations of fighting a global war on terror may have muddied the legal and rhetorical waters on the legal basis for emergency powers,” the report states.
In the March 13 podcast segment of AML Now, a production of the Association of Certified Anti-Money Laundering Specialists (ACAMS) John Byrne,ACAMS advisory board member speaks with C&SN director Kay Guinane about the derisking challenges that nonprofit organizations are facing and how to best maintain a banking relationship in this risk environment.