On January 15, 2016, 123 signatories from 46 countries sent a letter calling on the Financial Action Task Force “to open a process to revise Recommendation 8” as it inaccurately states that “Non-profit organisations are particularly vulnerable” to abuse by terrorists. The letter notes that “Recommendation 8 fails to recognize that the vast majority of the millions of NPOs [nonprofit organizations] pursue legitimate charitable activities and that abuse for terrorist financing is rare. Indeed, the FATF Typologies Report, which only identified 102 case studies, acknowledged that cases of abuse are rare.”
This language, and FATF’s power to evaluate country implementation of its standards, has helped fuel the trend of overly restrictive regulations for nonprofits around the globe and contributed to the growing problem of bank derisking of charity accounts.
FATF has taken positive steps to address these problems, as seen its 2015 revision of the Best Practices Paper and implementation of a risk-based approach to anti-terrorist financing regulation. In the fall of 2015, FATF announced that it will revise the Interpretive Note, which provides detail on how governments should implement Recommendation 8. The goal is to make it consistent with the riskbased approach as well as principles of proportionality and protection for the activities of legitimate NPOs that are set out in the Best Practices Paper. However, FATF said it was not revising Recommendation 8 at this time.
The letter’s signatories stress the need for FATF to revise Recommendation 8 as well as the Interpretive Note, since the phrase “particularly vulnerable” will continue to cause problems for NPOs. “If the harmful and inaccurate language is not removed, FATF’s nonprofit standard will continue to disrupt the important and often life-saving work of nonprofit organizations,” said Kay Guinane, coalition co-chair and director of the Charity & Security Network.
Lia van Broekhoven, co-chair of the coalition and director of the Human Security Collective, said, “Without revision of the standard to reflect FATF’s risk-based approach, the operating space for civil society worldwide will continue to shrink.“
Read the press release here.
Read the letter here.