Precedent-setting Venezuelan Mutual Evaluation Report

The Caribbean FATF (CFATF) has just published the Mutual Evaluation Review for Venezuela. According to the report, the 'country considers that the use of non-profit organisations (NPOs) to facilitate TF is its highest TF risk'. The assesors, however, note that 'such conclusion is not based on an in-depth sectoral assessment. Consequently, NPOs are rated as high-risk customers for all reporting entities. The excessive attention given to the NPO sector and the measures that the country is trying to implement are not justified under the FATF Standards'. The assessment team categorically states that it does not share the country's opinion on the risk related to the NPO sector, and furthermore emphasises that the 'high-risk' categorisation on NPOs could not be justified (nor was it shared, they note, by all competent authorities they spoke to). The assessors also raised concerns about redundant NPO registers that do very little to combat actual TF risk.

This report sets a good precedent for future Mutual Evaluations in terms of calling out similar disproportionate and non-risk-based approaches to regulating the sector for potential terrorism financing abuse.