C&SN Submits Comments to U.S. Treasury on Update to National Terrorist Financing Risk Assessment

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Date: 
June 11, 2018

On June 11, 2018 the Charity & Security Network sent comments to the U.S. Department of Treasuryt regarding its pending update to the 2015 National Terrorist Financing Risk Assessment. Thie comments, which reflect input and insights from C&SN members, also request a meeting to follow up on the April 12 discussion Treasury hosted on this topic. Overall, the comments point out that net risk of terrorist financing abuse of legitimate NPOs is low, due to the combination of government oversight and robust nonprofit sector good governance and due diligence practices. They also note the importance of the need to distinguishing between risks for in two categories - sham/fraudulent charities and abuse of legitimate NPOs - since different types of risk reduction measures are needed for each. 

The comments recommend a methodology for assessing risk to the NPO sector based on the revised FATF Recommendation 8 and guidance, which "states that governments should identify the subset of NPOs that face risk of terrorist financing abuse so that proportionate, targetd steps an be taken to addres that risk." It notes that "Except for fraudulent fundraising or sham NPOs, generally risks are not primarily with an NPO itself, but with the context in which it may operate." It then suggests that Treasury take account of ways risk can be managed and mitigated before determining overall (net) risk.

The comments then address:

  • the nature of risks and risk mitigation already in place:
  • sham charities and fraudulent fundraising
  • financial exclusion - lack of adequate access to financial services for international transfers
  • humanitarian vacuums created by restrictions on NPO access to civilians in need
  • crimes against NPOs by external actors
  • crimes agaisnt NPOs by internal actors (bad apples)
  • citing specific portions of the 2015 version that need to be corrected

The document also cites specific portions of Treasury's 2015 NTFRA that need to be corrected. It concludes by noting that although Treasury says this update will not include a review of existing laws and measures in light of risks identified (a step required by FATF) it should "caution all parties, including government and financial institutions, that any steps taken to address identified risks should be consistent with FATF criteria." (These are "targeted and in line with the risk-based approach" and consistent with "countries' obligations under the Charter of the United Nations and international human rights law."

There are three annexes providing background on regulation of U.S. NPOs at the federal, state and local level, a comprehensive list of "self-regulatory" resources the sector provides and a description of the World Bank/ACAMS multi-stakeholder dialogue.