The Financial Action Task Force (FATF) released a “limited update” of its Best Practices paper (BPP) for governments to “combat the abuse of nonprofit organizations” (NPOs) by terrorists on June 25, 2013 that incorporates suggestions provided by a civil society working group. The document is a “limited update to reflect the…need to protect NPOs’ legitimate activities.” In a letter to participants in a FATF consultation with civil so ciety, FATF President Bjorn Aamo said, “It is without doubt that the work of the FATF on this paper has benefitted extensively from the April 2013 Consultation meeting and the written comments that we received from the NPO sector after the Consultation meeting. The next step will be typologies research to gain a better understanding of the vulnerabilities and risks currently facing NPOs.” After that research is complete the specifics of the Best Practices Paper will be updated. The Transnational Civil Society Working Group on FATF will continue to provide input and engage in dialog with FATF on these issues.
The changes are a significant improvement over the previous document and will hopefully avoid the misuse or misinterpretation of FATF anti-terrorist financing standards that has contributed to unnecessary and harmful infringements on the rights of freedom of association and expression in some countries. The paragraph titled Respect for the Legitimate Activities of NGOs on page 5 notes that FATF’s Recommendation 8 on NPOs may be misused, and then “NPOs have problems in fulfilling their tasks.” It goes on to describe charities as a “vital component of the world economy” that can “play an important role in preventing the causes of radical ideology from taking root and are, therefore, potential allies in the fight against terrorism.”
Key changes made by FATF include:
The new BPP provides guidance on how the general definition and sub-set definition of international NPOs should be used, emphasizing that a risk-based approach should be taken and that the sub-set of international NPOs with significant funding may require supervision and monitoring that is not applied to all NPOs.
In the Guiding Principles section (p. 5-6) FATF notes that: