Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (MONEYVAL)

 
  Non-profit organisations
Following the terrorist attacks in 2001, initiatives have been taken by a number of international stakeholders to identify the threats and vulnerabilities associated with terrorism. Based on the assessments of risks connected with terrorism, the FATF formulated in the same year (2001) new measures to be put in place by countries in this respect (the FATF IX Special Recommendations), where one of the designated areas of focus was the non-profit sector (Special Recommendation VIII). This was due to the fact that the non-profit sector is highly vulnerable to abuse for the purposes of financing of terrorism.

It is to be stressed that the FATF recognises the importance of the non-profit sector and appreciates its efforts. The measures foreseen by the FATF concerning the NPO sector are therefore to be implemented whilst simultaneously protecting the values inherent to its purpose and activities and without disrupting them. The aim of setting out standards to protect the non-profit sector from terrorist financing abuse is to cut terrorists from their sources of financing and create an environment which would not be susceptible to abuse. On the other hand, it further envisages to protect the sector itself, as potential risks the sector encounters could lead to losing its credibility and trust in the eyes of the public, which are key to its role in society.

The measures envisaged by the FATF Standards in respect of NPOs firstly aim at increasing the capacity of NPOs themselves to identify the risks they are facing and to avoid potential abuse. It has been however identified that given the complexity of the issue and the ingenuous ways criminals manage to hide their illicit activities, it is not sufficient to rely only on the private sector in this matter. Accordingly, the second part of Recommendation 8 of the FATF 2012 Recommendations requires state authorities to maintain a comprehensive understanding of the NPO sector in the country, its characteristics and corresponding risks, as well as to designate an authority responsible for the conduct of supervision in an extent sufficient to identify potential illicit activities.

In order to provide countries with guidance regarding the implementation of measures concerning NPOs, the FATF issued a “Best Practices”-document on the implementation of the respective FATF Recommendation, which has been regularly updated in order to reflect current developments. The most recent version of the guidance was also based on consultations with the NPO sector, enabling the FATF to better identify the potential areas of concern and to target more precisely the issues presenting practical difficulties.
 
Reference documents

FATF Best Practices 2015 – Combating the Abuse of Non-Profit Organisations (Recommendation 8)
FATF Typologies 2014 – Risk of Terrorist Abuse in Non-Profit Organisations
FATF Best Practices 2013 – Combating the Abuse of Non-Profit Organisations (Recommendation 8)