• Global update: G20
• Regional update: EU SNRA, Latin America
• National update: Uganda, Kenya
• FATF Mutual Evaluation Update: UK, Israel
The Global NPO Coalition has worked hard this past year to place the issue of financial access barriers NPOs face (commonly referred to as ‘derisking’) on the G20 agenda. Many members collaborated closely on a number of initiatives to accomplish this goal in the months leading up to the G20 Summit in Buenos Aires in November. At the conclusion of the Summit, our coordinated efforts produced the following results:
• The Financial Action Task Force (FATF) Report to the G20 Leaders’ Summit called the G20’s attention to the problem of derisking and NPOs (see particularly paragraphs 32-35).
• The Civil Society 20 (C20) and the G20 Interfaith Forum explicitly incorporated the Global NPO Coalition on FATF’s calls for G20 action on derisking and NPOs into the recommendations they submitted to the G20. Click here for the C20 recommendations and here for the G20 Interfaith Forum ones.
• A well-regarded high-level conversation on derisking of NPOs was convened, in which the FATF Executive Secretary stressed the importance of Government-NPO engagement on derisking and affirmed that States will be evaluated on their efforts to address the problem. Present at the meeting, which also discussed positive examples on how to arrange multi-sectoral, evidence-based engagement on derisking, were, among others, the Deputy Executive Secretary of GAFILAT, the Latin American Regional FATF body; the Argentine National Coordinator on Anti-Money Laundering and Counter-Terrorism Financing (AML-CTF); the Argentine C20 Co-chair; and the Japanese 2019 C20 Co-chairs; as well as representatives of other G20 governments and leading Argentine NPO network representatives. Each of these actors can influence the debate on the global, regional, and national standards on bank derisking and its negative impact on NPOs. Conversation participants responded favourably; for example, the German government representative expressed his interest in collaborating moving forward.
• The Japanese C20 delegation has committed to incorporating the problem of bank derisking for NPOs into its agenda for the fast-approaching 2019 G20 Summit.
European Union Supranational Risk Assessment
The European Commission published its first Supranational Risk Assessment (SNRA) in 2017, assessing the vulnerability of various entities and services to risks of money laundering and terrorism financing in the context of the common market. The SNRA found that NPOs may be exposed to risks of being misused for terrorism financing purposes. Global NPO Coalition members who were involved in the consultation process were pleased to note that, in drawing recommendations for action, the EC did not opt for regulatory treatment but rather for soft law approaches that would be developed in a participatory manner with the NPO sector.
This Risk Assessment is now being revised for 2019, and NPOs (including many of our members) have been involved in a further round of consultation, with another one coming up in January 2019. The Global NPO Coalition, among others, are keen to see that data on the NPO sector is gathered in a way that is fit-for-purpose (the current EC questionnaire is anything but), that the risk-based approach is adhered to when assessing the sector, and that existing laws and regulations be taken into account when determining mitigating measures. Best practice examples in terms of Risk Assessments conducted at the national level have been provided to the EC. For more information and to get involved in the consultation process, please contact Hanna Surmatz (firstname.lastname@example.org).
Global NPO Coalition members launched the first sectoral risk assessment for NPOs in the region in November. The initiative aims to set out terrorism financing, money laundering and corruption risks facing NPOs in Argentina and Mexico. It will also cover organizational accountability and transparency practices. The methodology will be based on Greenacre Group’s (UK) proposal, adapted to the Latin American regional context, in order to be replicable and produce comparable results. The data will be of use for advocacy purposes and to decision makers alike, especially within the contexts of governments participating in GAFILAT (the FATF regional body for Latin America). For a press release on the event, see here in English and here in Spanish.
Uganda: A three-day workshop on ‘The Impact of AML/CFT Regulation on Civil Society: Building Capacity and Partnerships to Protect Civic Space’, focussing on Eastern Africa, the Horn and Southern Africa was organized by Global NPO Coalition members Defenders Protection Initiative and ICNL Alliance. For the agenda, see here. And click here for the report.
Kenya: A similar workshop to the one above, on ‘Building Capacity and Partnerships on the FATF Framework’ was organized by MUHURI, Kenya and discussed the impact of AML/CFT Regulations on NPOs in Kenya.
FATF Mutual Evaluation Update:
UK: The UK’s Mutual Evaluation Report was published in December. It was judged ‘Compliant’ on Recommendation 8 on NPOs, one of only two countries in the world to get this rating, and rated ‘High’ on IO10. This followed on from the 2017 National Risk Assessment, which assessed the risk of abuse of NPOs for terrorism financing as ‘low’. The risk assessment also flagged the issue and impact of bank derisking on charities.
Israel: Israel received a ‘Largely Compliant’ rating on Recommendation 8, and a ‘Substantial’ one on IO10. However, the Mutual Evaluation Report recommended that ‘A mechanism should be established to increase co-ordination in relation to NPOs, including proactive and effective compliance with measures to address potential TF abuse of NPOs, on a whole-of-government basis’.
Israel was also admitted as the 38th full member of the FATF.
FATF Business Bulletin with updates concerning the private sector.