Coalition at the FATF Private Sector Consultative Forum
The Global NPO Coalition on FATF was present in strength at this year's FATF Private Sector Consultative Forum (PSCF) in Vienna (8-9 May).
The overwhelming call from our members was for an improvement in effectiveness in terms of both the FATF normative framework as well as its implementation, while being cognizant of the wider impacts and harms caused.
On the opening panel, John Cusack remarked that when it came to financial crime:
- there are too many missions
- there is not enough clarity of purpose
- there is vagueness about how success is measured
- there are no targets, and not enough rigour about outcomes.
Additionally, many of the panellists pointed out that while fraud and scams account for a majority of financial crime, the focus seemed to be, somewhat disproportionately, on TF/ML.
The Coalition was on a panel titled ‘TF Abuse, NPOs and De-risking: Discussion on ensuring financial services for legitimate NPOs and the FATF’s ongoing work on updating its Best Practices Paper’. Moderated by the FATF Vice President Elisa de Anda Madrazo, the keynote speaker on the panel was Prof. Fionnuala Ní Aoláin, the UN Special Rapporteur (UNSR) on counter-terrorism and human rights, who said that 'CFT implementation and its impacts on NPOs are not a bad actor problem, but a systemic and structural problem.' Lia van Broekhoven, representing the Global NPO Coalition on FATF, Dax Bennett Roque NRC country director in Libya, and Carolina Garcés Monterrubio, Global Head of Financial Crime Compliance, Santander Bank, Spain discussed the financial access challenges facing NPOs and potential systemic and technical solutions from a multi-stakeholder perspective.
The ongoing work on the revision of the Best Practices Paper on Rec 8 was discussed on the panel by the penholders, Emile van der does de Willebois of the World Bank and Tim Hopkins of the UK Charity Commission. And while the Coalition is supportive of this endeavour, this is only the first step in a process that ought to entail a change in the Standard itself as well as to the Interpretive Note (IN) to the Standard, and potential further changes to the methodology, so that overregulation/suppression of NPOs and financial exclusion can be called out. In parallel, the training of assessors (and jurisdictions) on the NPO sector, the fundamental freedoms, and the unintended impacts of the implementation of the Standards is vital.
The Coalition organised a side event on Day 2 of the PSCF, which was very well-attended, including by Member States, FSRBs, the FATF Secretariat, the UNSR and her team, banks, the Wolfsberg Group, NPOs, etc. The US Treasury representative stated that the FATF Standards as they were were 'inadequate to deal with the unintended consequences'. There was discussion around the inclusion of ‘bad practices’ in the revised best practices guidance paper on R8, as also the role of sectoral self-regulation in mitigating risk. The UNSR spoke about looking at 'risk' more holistically, including the risks of securitization/abuse and misuse by governments (a discussion that is often lost in the narrow FATF focus on the technical nature of risk).
There was a lot of talk over the two days of the PSCF around public-private partnerships (PPPs) and their value in tackling financial crime. Coalition members expressed concern about privacy with the proliferation of PPPs.
Coalition members also asked for clarification on the concept of Beneficial Ownership as it applies to NPOs. And concern was also expressed by the Coalition about the data biases in AI-based systems used to gain operational efficiencies in fighting financial crime.
The FATF Vice-President mentioned that the June 2023 FATF Plenary would be an 'NPO Plenary', discussing the draft BPP, the revision of R8 and its Interpretive Note, and potential changes to the methodology to address the unintended consequences of the implementation of the FATF Standards on the sector.
Watch this space for more post the Plenary!