July 2019

Here is a round-up of the recent FATF/CFT and related news and events:

• FATF news
o Private Sector Consultative Forum
o New Terrorist Financing Risk Assessment Guidance
• Global update: C20/G20
 Regional update: Anglophone West Africa, Central Asia and Eastern Europe, Expert Hub on AML/CFT, EU Supra-National Risk Assessment
• National update: Nigeria, Kosovo
• Coalition input to UN Special Rapporteur
• De-risking of NPOs: Queen Maxima’s speech at the Egmont Group Plenary
• Resources

FATF news
The 2019 Private Sector Consultative Forum (PSCF) took place in Vienna on 6 and 7 May. Apart from the Global NPO Coalition representation to the PSCF (four seats) across the two days, a number of additional Global NPO Coalition members from across the world attended the FATF NPO consultation on May 6 on a new Terrorist Financing (TF) Risk Assessment Guidance that the FATF has just published, making strong and relevant contributions to the topic. For consolidated notes from the PSCF, including on the session on the TF Risk Guidance, see here.
(The Global NPO Coalition submitted written comments to the FATF immediately after the PSCF on this Guidance, which has been taken into account in its preparation.)
For the official FATF report of the event, see here.
Global update:
C20 and G20:
C20: Members of the Global NPO Coalition were in Tokyo for the Civil Society 20 (C20) Summit in April, carrying on advocacy efforts to flag the issue of financial access difficulties (de-risking) for nonprofit organisations ahead of the G20 Summit in Osaka in June. The issue was taken up by both the International Financial Architecture as well as the Local2Global working groups, as reflected in this C20 Policy Pack that resulted from the Summit, and which was shared with G20 stakeholders.
G20: Coalition members then organised an event on the sidelines of the G20 in Osaka in June, which took the form of a dialogue between the FATF, the World Bank, the banking sector, and Japanese and international NPOs on issues of financial access. For more on the event, including on what the key FATF messages were for the Coalition, see here.
Regional update:
Anglophone West Africa: In April, ICNL and the West Africa Civil Society Institute (WACSI) held a three-day FATF training for NPO representatives from Gambia, Ghana, Liberia, Nigeria, and Sierra Leone entitled ‘Anti-Money Laundering and Terrorist Financing in West Africa: Strengthening civil society capacity to combat negative impact on civic space’.  Representatives of GIABA and the Ghanaian and Nigerian FIUs also participated, as did members of the Global Expert Hub on AML/CFT from Nigeria and Uganda.  ICNL and WACSI will hold a second training on the same topic for francophone West African countries later this year.
Central Asia and Eastern Europe: Members of the Global NPO Coalition, ECNL, ICNL and HSC, held a three-day workshop in Bishkek, Kyrgyzstan for NPO participants from Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan and Ukraine on ‘The Impact of AML/CFT Regulation on Civil Society: Building Capacity and Partnerships to Protect Civic Space’. For more, click here.
Expert Hub on AML/CFT: A sub-group of the Global NPO Coalition, the Expert Hub is a group of NPO experts from regions around the world facing restrictions due to AML/CFT rules and regulations. This group reconvened in Vienna, 5-8 May (after its formation and initial training in The Hague in January 2018) to discuss progress made during the last few months in their countries/regions and new/emerging challenges. Organised by ICNL, ECNL and HSC, and with representation from 29 countries, the peer to peer exchange was rich and fruitful. The Hub also engaged with the FATF Secretariat and select government representatives on the implementation of Recommendation 8. For more, see here.
EU Supra-National Risk Assessment (SNRA): The SNRA assesses the vulnerability of various entities and services in the common market, including non-profit organisations (NPOs), to risks of money laundering and terrorism financing. This is updated every two years. We are still awaiting the revised and updated assessment. The Global NPO Coalition, among others, took part in two rounds of consultations, and is keen to see that the risk-based approach is adhered to when assessing the sector, and that existing laws and regulations are 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, see here.
National update:
Nigeria: Coalition member Spaces for Change convened a multi-stakeholder meeting in Abuja on June 20 on the issue of terrorism financing (TF)/money laundering (ML) risk in the NPO sector. Nigeria is in the process of preparing for its FATF Mutual Evaluation, with an onsite visit scheduled for September 2019. Ahead of this, Nigeria published a National Risk Assessment for TF and ML (completed in 2016), which identified Designated Non-Financial Businesses and Institutions (DNFIs), of which NPOs are a subset, as being amongst those sectors most vulnerable to ML/TF. Spaces for Change came out with a report earlier this year challenging the assessment of risk for the non-profit sector. Titled Unpacking the Official Construction of Risks and Vulnerabilities for the Third Sector in Nigeria, the report sought to dispute the official classification of NPOs as DNFIs and to tease out the nuances between vulnerability and threat, among other issues.
The meeting in Abuja was a logical follow-up step. In the room on the 20th was a diverse representation of civil society from across the country (there was representation from every region of Nigeria). The leadership of SCUML (the Financial Intelligence Unit [FIU] for DNFIs) was present, Director down, including the consultant who oversaw the Risk Assessment process. GIABA, the FATF-Style Regional Body for West Africa was represented by the head of the Nigeria office, and there were representatives of various government ministries (Justice, Corporate Affair Commission, Finance). For further details on the dialogue and potential follow-up steps, see here.
: A workshop for NPOs was organised in May to discuss the Council of Europe Kosovar AML/CFT Assessment Report (in which NPOs were rated Partially Compliant on Recommendation 8 and Low on Immediate Outcome 10).  The discussions were centred around the findings of the sectoral risk assessment and the new NGO Law. In Kosovo too, as in Nigeria, NPOs are listed as obliged entities, and Coalition members met with the FIU to discuss this among other things. The AML/CTF Law is due to be amended and a cross-sectoral working group, which includes NPO representation, has been established to discuss this. The National Risk Assessment has also been revised, but is not in the public domain yet. NPOs at the workshop also discussed the financial access problems they were facing.
Coalition input to UN Special Rapporteur: The Global NPO Coalition has made this submission to the United Nations Special Rapporteur on the promotion and protection of human rights and fundamental freedoms while countering terrorism. The Special Rapporteur is studying the impact of the proliferation of ‘soft law’ instruments and related standard-setting initiatives and processes in the counter-terrorism context on the promotion and protection of human rights at the global, regional and domestic level. The outcome of the study will contribute to the report of the Special Rapporteur to be submitted to the 74th session of the General Assembly.
The Coalition’s comments focus on the Financial Action Task Force (FATF), whose recommendation on counterterrorist financing and nonprofit organizations (NPOs) has had a major impact on civil society globally. Because FATF evaluates and publicly rates states’ implementation of its standards, it has enormous influence over how states formulate and implement counterterrorist financing measures. Read more here.
De-risking of NPOs: Queen Maxima’s speech at the Egmont Group Plenary: Queen Maxima of The Netherlands, the United Nations Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), highlighted the financial access problems that NPOs face, and its great impact, in her speech at the Egmont Group of Financial Intelligence Units plenary meeting in The Hague on the 4th of July. Excerpts from her speech (full text here):
‘Nearly nine years ago, I highlighted at a FATF meeting in Amsterdam that financial inclusion and financial integrity were complementary, something I still very much believe today.
…the issue of de-risking still threatens these crucial financial flows. The number of active correspondent banks declined by 3.8% in 2018—a decline that has been continuous since 2009.
The decline of correspondent banks and money transfer operators has negative consequences for individuals, businesses and non-profit organizations that send or receive money abroad.
Many non-profit organizations, especially those working in sensitive geographies, have lost access to international payments, and are sometimes driven back to cash. This is critical at a time when populations in need of humanitarian assistance are growing.
… the Egmont Group could further promote dialogue at the national level between international banks working locally, local banks, MTOs, NPOs, as well as regulators. It is essential to have this dialogue. It can help these stakeholders gain a common understanding of the specific nature of the risks of money laundering and financing of terrorism to then determine a proportionate approach.
I was also pleased to hear that the World Bank and the Dutch Ministry of Finance are exploring solutions on improving business relationships between banks and non-profits by building a mutual understanding of AML/CFT issues.’
Consortium for Financial Access: Banking Nonprofit Organizations – The Way Forward. The guidance can serve as a resource and reference document for nonprofit organizations (NPOs) and financial institutions (FIs), as well as governments, in an effort to dramatically improve financial access for NPOs and start to reverse the trend known as ‘de-risking’. The guidance provides information to the financial sector on the NPO community so that FIs can be better equipped to respond to regulatory supervisors. It also includes relevant information on: the way that NPOs work to prevent diversion of assets; distinctions between nonprofit and commercial FI customers; and the application of the risk-based approach. This document provides NPOs with information on steps they can take to facilitate adequate access to financial services, and sets forth recommendations for governments and financial regulators with regard to steps they can take to increase NPO financial access.
Center for Global Development (Mike Pisa) Does the FATF Help or Hinder Financial Inclusion?: A Study of FATF Mutual Evaluation Reports: The report examines whether the Financial Action Task Force’s (FATF) Risk Based Assessment (RBA) approach helps developing countries implement its anti-money laundering (AML) and countering the financing of terrorism (CFT) standards without increasing financial exclusion. The Global NPO Coalition organised a webinar on the report, with Mike Pisa detailing his findings. For a recording of the webinar, click here.
FinDev Gateway/CGAP blog: The Hole in the Bucket: The Impact of
De-risking on Non-Profit Organizations (Who loses out in the global push for individual financial inclusion?)
‘While we see a global push for financial inclusion at the individual level on the one hand, whole groups are at risk of falling out of the system on the other, a veritable “hole in the bucket” which needs to be plugged with some urgency. We would like to draw attention to these organizations, as a growing body of evidence shows that the non-profit sector is bearing the brunt of de-risking decisions.’
Human Security Collective: ‘Between the Devil and the Deep Blue Sea: Countering the Financing of Terrorism and the Unintended Consequences for Non-Profit Organizations’, in Extremisms in Africa, Volume 2, with case studies from Uganda, Nigeria and Tunisia.