A February 2012 report from the Transnational Institute and Statewatch, Counter-Terrorism, ‘Policy Laundering’ and the FATF: Legalising Surveillance, Regulating Civil Society, finds that that the legal and regulatory measures the Financial Action Task Force (FATF) recommends are being used by governments to suppress non profits. The report finds that FATF rules are being used by governments as an ‘instrument, to further cut back on the space of civil society…freedom to access and distribute financial resources for development, conflict resolution and human rights work.’ The report soundly rejects the ‘one size fits all’ approach to non profit regulation used by the FATF and calls for ‘urgent reforms limiting the scope of FATF Special Recommendation VIII and clarifying its purpose and intent.’
UK Humanitarian Aid in the Age of Counter-terrorism: Perceptions and Reality (March 2015), published by the Humanitarian Policy Group, looks at the effect of UK counter-terrorism legislation and policies on British non-governmental organisations working in international development and humanitarian aid. Specifically, British Muslim international NGOs (INGOs) have asserted that they are disproportionately affected, even actively discriminated against, by UK counter-terrorism measures.
The UN Report of the Special Rapporteur on the rights to freedom of peaceful assembly and association, Maina Kiai, (April 2013), highlights concerns about laws and regulations that infringe on freedom of assembly and association around the world. The report focusses on access to financial resources for civil society groups and the right to hold peaceful assemblies. It highlights the FATF’s Recommendation 8 on non profits, saying it ‘fails to provide for specific measures to protect the civil society sector from undue restrictions to their right to freedom of association…’
Kiai states ‘…civil society organizations play a significant role in combatting terrorism. By their direct connections with the population and their prodigious work in, inter alia, poverty reduction, peacebuilding, humanitarian assistance, human rights, and social justice, including in politically complex environments, civil society plays a crucial role against the threat of terrorism.’
This report was updated in 2014 in the context of multilateral institutions.
A study (January 2014), Global Surveillance of Dirty Money: Assessing Assessments of Regimes to Control Money-Laundering and Combat the Financing of Terrorism, commissioned by the International Monetary Fund (IMF) found deficiencies in the evaluation process undertaken by the Financial Action Task Force (FATF). The report found that, despite improvements in FATF’s standards and methodology for evaluation, a focus on ‘program effectiveness and outcome effectiveness’ was still lacking.
The study goes on to offer three specific ways that FATF’s recommendations can harm civil society:
- Registration and reporting requirements for civil society groups will ‘increase the intrusion of state monitoring and thereby control their affairs.’
- ‘Administrative and financial costs,’ created by regulatory compliance, “can threaten the survival of small associations.’
- ‘In Islamic societies, controls intended to restrict the financing of terrorism can deprive societies of locally delivered charitable activities’ that help the local society.
A report from the World Bank (2010), Nonprofit Organizations and the Combatting of Terrorism Financing: A Proportionate Response, an official FATF observer, said, ‘The rarity of instances of terrorism financing by NPOs, when contrasted against the enormous scope of the sector, does raise the question of whether, in and of itself, government regulation is the most appropriate response.’ This report questioned the necessity of implementing FATF recommendations for non profits: ‘Despite the energy put into this effort [combating terrorist financing], we are not aware of examples in which measures proposed by individual countries in implementing SR VIII and the [Interpretive Note], or similar national legislation, have resulted in detecting or deterring cases of terrorism financing.’
A report by the European Commission (April 2008) found that the ‘incidence and prevalence of NPO financial abuse in the EU are limited’. It goes on to add that, ‘The current levels of compliance with the FATF recommendations … on one side and the perceived costs of compliance on the other side suggest that further regulation and legislation need to be approached with caution.’
A March 2013 report by the Observatory for the Protection of Human Rights Defenders, Violations of the Right of NGOs to Funding: From Harassment to Criminalisation, states that the increasingly widespread restrictions on the funding of non-governmental organisations (NGOs) under the guise of counter terrorism efforts undermine the ability of civil society to promote and protect human rights. The report says, ‘This worrying trend was notably confirmed by the Financial Action Task Force (FATF)’ recommendations on government anti-terrorist financing regulation of non profits. The report says, ‘The potential prejudicial character of this recommendation on the work of NGOs is aggravated by the fact that it is not accompanied by explicit guaranties of the right of NGOs to access funding.’
An October 2012 feasibility study on an ‘European NPO Observatory’ commissioned by the Directorate General Home Affairs, European Commission (EC) and carried out by LSE Enterprise found numerous challenges to the setting up of such an Observatory, not least in terms of the framing, objective and value-add as set out by the EC. Unless these pitfalls were addressed, the report concluded, it would be difficult to ensure the buy-in of nonprofits – one of the key stakeholders in the process. The study recommended that the EC determine whether some of the aims of the Observatory could not be pursued through alternative means, including through dialogue and consultation with the nonprofit sector.