June 23, 2021
A June report by the European Public Interest Law Clinic of New York University Law School in Paris, in cooperation with Human Security Collective (HSC), ABN AMRO and Dentons Netherlands, offers new data along with a fresh take on the human rights implications of the banking practice of de-risking nonprofit organizations (NPOs). The report begins with an overview of de-risking, the practice of banks denying financial services to NPOs in order to avoid the perceived risks associated with doing business with nonprofits. As the report explains, these perceived risks are typically rooted in concerns about money laundering, terrorist financing, or running afoul of sanctions regimes. Rather than managing these potential risks, many banks have sought to sidestep them entirely by refusing to conduct business with certain NPOs.
The report then explores the human rights impacts of de-risking on NPOs and the communities they serve before getting into a range of actions that banks can take to manage perceived risks while upholding human rights, including:
- Embedding de-risking in human rights policy and due diligence processes
- Engaging stakeholders
- Aligning practices with compliance policies and guidance documents
- Staffing banks with dedicated specialists to work with NPOs
- Enhancing communication between banks and NPOs and building capacity to facilitate communication