Seventy nonprofit organizations (NPOs) from 28 countries submitted joint comments April 24, 2015 on the draft Financial Action Task Force (FATF) Best Practices Paper (BPP). The comments stressed that the final Best Practices Paper should guide governments on how to take a risk-based and proportional approach to protecting NPOs from terrorist abuse. The Transnational Nonprofit Working Group on FATF (Working Group) hopes that a consultation process between FATF and the NPO sector can be formalized so that NPOs are not again put in the position of trying to comment in a short time frame on a draft that has not been made publicly available.
Garnering 70 signatures to the new joint comments was no simple feat, given FATF’s unwillingness to make its draft BPP publicly available. At a March 25 meeting in Brussels, FATF agreed to release the draft only to meeting invitees, which included 28 country members and several NPOs selected by FATF. After the Working Group raised a request for a formal consultative process on the draft document, FATF agreed that national delegates could share the draft with other stakeholders. At a March 31 meeting with the U.S. Treasury Department, which represents the U.S. before FATF, the agency agreed to share its draft at the request of the Charity & Security Network, which immediately released the document to the Working Group. Without this agreement, many of the 70 joint comment signatories would have been shut out of the process. “We remain concerned by the limited and indirect process of sharing the draft and the short time for response. This undermines the FATF’s commitment to outreach to the sector,” the recent comments state.
The joint comments were the result of a collaborative process between the Charity & Security Network, the European Centre for Not for Profit Law, the European Foundation Centre, the Human Security Collective and the International Center for Not for Profit Law. Similar to written comments sent in December 2014, the recent joint comments emphasize that the BPP’s primary purpose should be to “provide guidance for governments” and support outcomes that do not over-regulate NPOs. They ask that the BPP be cognizant that “the overall risk of terrorist abuse of the NPO sector is very low,” both in numbers and geography. “This will improve the credibility of the paper as well as its validity among stakeholders,” the comments state, adding that “although safety will always be a concern when working in high-risk environments, NPOs must be able to take appropriate risks without fear of drastic enforcement measures.”
Regarding the risk assessment, the comments request that throughout the paper, the BPP include more explicit statements that any further regulatory measures should be adopted only after a risk assessment is conducted, existing measures are applied and assessed regarding their ability to manage and mitigate the risk identified, and gaps are identified. They add that if risk is low, imposing further restrictions or regulatory burdens is not justified. In addition, the BPP should be more explicit that when mitigating risk, actions and measures should relate only to identified risk and be evaluated against the principles of proportionality, protection of legitimate NPO activities and international human rights and humanitarian law, and be applied only to those NPOs at risk, the comments state.
Finally, the comments request that the BPP “emphasize and ask for outreach discussions at every step of the process (risk assessment, mitigation, mutual evaluation, financial services) and recommend specific good outreach practices.”
NPOs have long been critical of FATF’s Recommendation 8 (R8), on laws relating to their work, noting that it takes a one-size-fits-all approach and can be misused by authoritarian countries to clamp down on the rights of NPOs. FATF began to formally engage with NPOs, including members of the working group, in April 2013 and their input was incorporated into a June 2013 limited BPP update. Since that time, the Working Group has coordinated civil society input into the final update of the BPP. This included an October 2014 meeting with FATF, December 2014 written comments, a February 2015 conference call and a formal meeting in Brussels in March.
The December 2014 comments were intended as a starting point for discussions between FATF and the NPO sector, both before and after the draft BPP was produced. Those comments included a strongly worded statement on the NPO sector’s fundamental disagreement with the premise of R8, with a call for its revision, and a note that the comments were informed by documented cases of the negative effects of inappropriate implementation of R8, including overregulation and disproportionate restrictions on legitimate NPO activities. The comments also stated that BPP revisions should focus on the steps that governments, rather than NPOs, should take to implement R8 and its Interpretive Note, and a call for a risk-based approach, proportionality, effectiveness and protection for the legitimate activities of NPOs.