A bill designed to update the Bank Secrecy Act for the first time since the PATRIOT Act was passed contains two provisions that could benefit nonprofit organizations (NPOs) struggling with access to financial services. The bill passed unanimously out of the House Financial Services Committee on May 8, 2019.
The Coordinating Oversight, Upgrading and Innovating Technology, and Examiner Reform Act of 2019 (COUNTER Act, H.R. 2514) directs the Secretary of the Treasury, in consultation with the Federal functional regulators (as defined under section 103) and other relevant stakeholders, to undertake a formal review and issue a report on the "adverse consequences of financial institutions de-risking entire categories of relationships, including charities, embassy accounts, money services businesses," countries, regions, and respondent banks; the reasons why financial institutions are engaging in de-risking; the association with and effects of de-risking on money laundering and financial crime actors and activities; and the most appropriate ways to promote financial inclusion while maintaining compliance with the Bank Secrecy Act.
The bill also would require 10 hours of annual training for federal bank examiners on on anti-money laundering (AML) and the countering of the financing of terrorism (CFT), including, among other items, "de-risking and its effect on the provision of financial services."
Charity & Security Network sent a letter to Financial Services committee leadership, thanking the committee for its efforts to tackle the derisking crisis and suggesting language to enhance the bill in ways that would benefit NPOs. In particular, the letter highlighted the bill's language on bank examiner training and noted, "We hope that the committee will also direct the federal financial regulators to update the sections of the Bank Examination Manual that refer to nonprofit organizations, to bring it in line with the Financial Action Task Force’s 2016 revision to its Recommendation 8. That revision shed the perception of nonprofits as uniformly vulnerable to terrorist abuse and emphasized the importance of a risk-based approach. These changes were echoed in U.S. Treasury’s 2018 update to its National Terrorist Financing Risk Assessment." A group of nonprofit organization and financial institution representatives met in 2017 to rewrite the NPO sections in the Bank Examination Manual. Those suggested changes were submitted to regulators in October 2017 but have not yet been implemented.
C&SN will continue to advocate for strengthening of this bill.