Listen to this TEDx talk to learn more about the FATF and its effect on non profit organisations (NPOs)
How is the non profit sector affected ?
In recent years, non profit organisations (NPOs) around the world have faced operational and legal restrictions due to counter-terrorism regulations. For example, banks have blocked or closed accounts of organisations working in conflict zones; laws have been enacted to restrict foreign funding or to introduce burdensome governance and audit requirements; human rights defenders have been prosecuted; and the right to protest has been limited. This has had a negative effect on NPOs’ abilities to implement activities and protect the needs of beneficiaries, especially in crisis or conflict areas.
Where does this originate?
These restrictions are often justified by citing the requirements of the Financial Action Task Force (the FATF) regime and, specifically, its 40 Recommendations. Those concerning NPOs are:
- FATF Recommendation 8 on non profit organisations;
- Interpretative Note to Recommendation 8;
- Best Practices Paper (BPP).
The FATF standards do not always provide clear and illustrative guidance for implementation, thus creating space for misinterpretation and, most worryingly, for misuse by national regulators. FATF regulations single out the NPO sector as being vulnerable to terrorist abuse despite the lack of evidence, with the result that a growing number of countries are enacting laws that restrict the legitimate activities of NPOs.
How are FATF regulations enforced?
Since its establishment, the FATF has evolved into an increasingly influential policy-making and compliance body. Over 180 countries are now committed, at the ministerial level, to implementing the FATF Recommendations in and through law and policy. These countries are subject to rigorous assessment by the FATF and its regional bodies every 6-7 years with peer review and follow-up mechanisms used to assess and improve states’ compliance with each of the Recommendations. Countries that score badly must agree to enact wholesale reforms; ‘non-cooperating territories’ are named-and-shamed and face ‘blacklisting’. This gives the FATF enormous influence over NPO regulation. Because FATF standards have become a central feature of the global ‘good governance’ agenda, good compliance ratings from the FATF are particularly important for developing countries seeking aid, trade and investment deals.
Despite the FATF’s global standard-setting role, there is no intergovernmental convention underpinning or regulating its activities. This makes it difficult to understand and influence the workings of the organisation and as a result the FATF remains highly non-transparent in its work.
 See for example the 2011 Busan Declaration on aid effectiveness.