FATF Holds First Consultation with Civil Society on Anti-Terror Financing Rules and Protecting Nonprofits

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Date: 
May 2, 2013

The consultation and dialog between the Financial Action Task Force (FATF) and twenty civil society representatives from around the world that took place on April 24, 2013 in London was the first time the inter-governmental financial body has formally met with nonprofits (NPOs) to discuss its standards for governments anti-terrorist financing rules for NPOs and the need to protect nonprofits from both abuse by terrorists and the adverse impacts of poor governmental implementation of FATF’s NPO standards.  After the meeting FATF issued a statement  saying it “will continue working on this issue.” Civil society groups attending, including the Charity & Security Network, committed to an ongoing, positive role of input and dialog.  Specific input into the update of the “Best Practices Paper on Combating the Abuse of Non-Profit Organisations” and the upcoming typologies study will be the focus of work going forward.

Concerns about FATF’s Recommendation 8 on NPOs and its impact on civil society, including basic rights of association and expression, were raised in a 2012 report by Statewatch and Transparency International.  The summer of 2012 the Charity & Security Network sponsored a meeting with the author and a working group made of up of nonprofits in the U.S. and European Union (EU) was established to develop an advocacy strategy to address the problem. It has since expanded to include nonprofits from around the globe. 

The working group approached FATF in the fall of 2012 and the initial response, under leadership of FATF President Bjorn Aamo (Norway) was constructive.  At the October 2012 plenary meeting FATF approved a statement saying “It will be important that regulations and actions in this area do not harm the legitimate activities of such organizations.”  In December Aamo called for dialog with civil society.  The April 24 meeting was the result.

What’s Next

At its June plenary meeting the FATF will consider a limited update of its Best Practices Paper to “highlight the importance of ensuring that the implementation of Recommendation 8 and its Interpretive Note does not disrupt or discourage legitimate charitable activities.”  After that work will begin on an update of typologies of the threat terrorists pose to charities “to gain a better understanding of the vulnerabilities and risks currently facing NPOs.”  This will be crucial phase in FATF’s work, as its current typology is outdated and based on four anecdotal examples listed at the end of the Best Practices Paper.  A more evidence-based approach could lead to a better framework for more proportionate and appropriate governmental approaches to regulation of nonprofits in this area.

FATF says “a more comprehensive revision of the best practices paper will be considered, in light of the outcomes of typologies work.”

The Transnational Civil Society Working Group will continue to coordinate input and advocacy for nonprofits on these issues.  Nonprofit representatives interested in learning more or participating in the working group can contact us here.  Background information is available on our web resource page here.