On Jul. 24, 2024, the Global NPO Coalition on the FATF (Global NPO Coalition), which is co-chaired by the Charity & Security Network (C&SN) and the Human Security Collective (HSC), submitted input to the Financial Action Task Force (FATF)’s call for input on their National Risk Assessment (NRA) guidance. Amongst many recommendations, the Global NPO Coalition submission called for a specific section of the guidance to be tailored to the unique circumstances of combating financial crime in the nonprofit sector, creating guidelines for delineating the differences between types of nonprofit organizations (NPOs), noting that not all NPOs fall under the FATF definition of NPOs, and establishing a clear methodology for addressing these challenges through a measured and collaborative approach with NPOs.
The 2013 FATF Guidance: National Money Laundering and Terrorist Financing Risk Assessment document FATF held this public consultation to update “is intended to provide guidance on the conduct of risk assessment at the country or national level, and it relates especially to key requirements set out in Recommendation 1” while “outlin[ing] general principles that may serve as a useful framework in assessing ML/TF risks at the national level.” (Recommendation 1 pertains to “Assessing risks and applying a risk-based approach”).
The FATF invited input from civil society, private sector, and academic actors to help ensure it reflects the challenges and opportunities according to each stakeholder. The public input will help shape revisions of the guidance before its potential adoption at the Oct. 2024 FATF Plenary.
The Global NPO Coalition’s submission calls for a separate section within the NRA guidance dedicated to assessing the terrorist finance threats in the nonprofit sector in accordance with the 2023 revisions made to FATF Recommendation 8 (R.8) and its Interpretive Note. R.8, and indeed all FATF standards, are supposed to uphold FATF’s “risk-based approach” (RBA) to ensure that money laundering and terrorist financing (ML/TF) risks are fully assessed and understood and, and that associated risk mitigation measures are developed commensurate to the risk.
The FATF notes that the vast majority of NPOs pose little risk for terrorist financing. The Global NPO Coalition emphasized that the NRA guidance should reconceptualize risk to avoid the over-securitized approach that has been the predominant one. Further, the input highlighted that risk mitigation must uphold international humanitarian, refugee, and human rights law, and must not impinge countries’ obligations on fundamental freedoms.
The Global NPO Coalition’s submission also outlined country-specific challenges related to the FATF framework and outlined methods for addressing these challenges through the NRA guidance – leveraging the wide range of expertise from NPOs within the Global NPO Coalition, including examples from Nigeria, Tunisia, South Africa, Austria, and Peru.
Read the full submission to learn further details about our recommendations and case examples.
Previously, FATF recommendations have been weaponized by governments and have played a role in banks de-risking NPO clients rather than managing risk – causing NPOs working in fragile contexts to be deprived of services and undermining their life-saving work.
Clear FATF guidelines help address these challenges by making international standards that mitigate potential for weaponization or unintended consequences, like de-risking. C&SN is grateful that FATF is undertaking this update to their NRA guidance and seeking civil society input; alongside our partners at the Global NPO Coalition, we will continue to advocate for civil society at the FATF.