In February, the Charity & Security Network and the Human Security Collective sent recommendations to the Financial Action Task Force (FATF) calling for adherence to principles of effectiveness and proportionality as they review their Typologies of terrorist abuse of nonprofits. The FATF is an intergovernmental body that sets policy recommendations for governments to prevent money laundering and terrorist financing. FATF has come under some scrutiny for its characterization of nonprofit groups as “particularly vulnerable” to terrorist abuse—an argument that has been used by some governments as an excuse to crack down on civil society.
The recommendations urge FATF to take an evidence based approach to formulating terrorist abuse typologies. These typologies—categories of the ways in which terrorist abuse of an organization can occur—are used to guide FATF’s “Best Practices” for governments formulating counterterrorism laws and regulations. It is vital for FATF to use appropriate and nuanced typologies to ensure that civil society groups are not unduly impacted by anti-terrorist financing laws around the world.
The recommendations were created based on input from the Transnational NPO Working Group on FATF (which CSN and the Human Security Collective co-chairs) in addition to meetings with FATF representatives, a literature review and a survey of the nonprofit sector. The specific recommendations made to FATF state:
FATF should distinguish between potential risk and actual abuse
Research shows that money or goods from nonprofit organizations make up a miniscule portion of overall terrorist financing. Yet, FATF argues they are “particularly vulnerable.” FATF should utilize available research on the prevalence of abuse to ensure any measures are proportional to the actual threat.
Typologies should be based on analysis of evidence that classifies clusters of similar cases
FATF should use concrete data, rather than “isolated case studies” when crafting their typologies. By focusing on trends, FATF can craft nuanced typologies that more accurately reflect on-the-ground realities.
A variety of strategies are needed to address a variety of types of abuse
A one-size-fits-all approach to countering terrorist financing is ineffective and can negatively impact civil society groups. Of the few nonprofits that have been found to be funneling money to terrorist groups, a majority were front organizations that served no charitable purpose. Fewer organizations had funds diverted to terrorists through fraud by a bad actor. These and other distinctions should be kept in mind when formulating typologies.
Typologies should recognize the diverse structures and functions of NPOs
Many nonprofit organizations are not engaged in international funds transfers and do not work in conflict zones where terrorist groups are present. These organizations effectively pose no risk and typologies should recognize this fact.
FATF should avoid an overbroad definition of terrorist financing
Activities covered by the fundamental freedoms of speech and association should never be included in typologies or FATF’s recommendations. The definition of what is “extremist speech” may be too broad and any effort to regulate it opens the floodgates for governments to quell dissent or any speech it deems unacceptable.
Risk mitigation procedures undertaken by the NPO sector should be recognized
Nonprofit organizations often have robust processes already in place to prevent abuse from terrorists or other bad actors. FATF should acknowledge and describe these procedures.
Impacts on the NPO sector must be minimized
FATF should continue to bear in mind the impacts that laws and regulations can have on civil society. It should work to mitigate these impacts and, when appropriate, identify governments that are using anti-terrorist financing as an excuse to clamp down on nonprofits.
The recommendations conclude by saying that, “Significant strides have been made in the dialogue between FATF and the NPO sector over the past two years” and calling for “establishing a framework for a structured dialogue between NPOs and FATF, to ensure a transparent process and continued consultation and exchange on FATF’s work as it relates to NPOs.”