Domestic Reviews of the Non-Profit (NPO) Sector: Common Themes. Information Paper by the FATF Secretariat
- Document number
- 1055
- Date
- 2005
- Title
- Domestic Reviews of the Non-Profit (NPO) Sector: Common Themes. Information Paper by the FATF Secretariat
- Author/publisher
- Financial Action Task Force on Money Laundering (FATF)
- Availability
- View/save PDF version of this document
- Document type(s)
- Guidelines/Recommendations, Media/News, Meeting Documentation/Conference Reports,
- Keywords
- Civil Society Contributions on Draft Recommendations: http://ec.europa.eu/justice_home/news/consulting_public/code_conduct_npo/news_contributions_code_conduct_npo_en.htm, Terrorism, Justice and Home Affairs, European Union, Advocacy, NGO, Civil society,
- Summary
- In response to mounting concern over money laundering, the Financial Action Task Force on Money Laundering (FATF) was established by the G-7 Summit held in Paris in 1989. The Task Force was given the responsibility of examining money laundering techniques and trends. In 2001, the development of standards in the fight against terrorist financing was added to the mission of the FATF. FATF presently has 33 members, i.e. countries and the European Commission. After the terrorist attacks 11th September 2001 the focus of the work in FATF has been on fighting financing terrorism. FATF has issued eight special recommendations (SR) which the member countries are obliged to follow. SR VIII deals with volunteer organisations and was issued in October 2002. The term chosen is Non-profit Organisations (NPOs). This term includes almost every such organisation, including political parties, churches and the labour market organisations. SR VIII reads as follows. "Countries should review the adequacy of laws and regulations that relate to entities that can be abused for the financing of terrorism. Non-profit organisations are particularly vulnerable, and countries should ensure that they cannot be misused: i. by terrorist organisations posing as legitimate entities; ii. to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset freezing measures, and iii. to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist organisations." In order to further implement SR VIII the FATF secretariat 11th of March 2005 issued an information paper with draft proposals. They conclude that the WGTF should make the following recommendations to the Plenary: (a) Additional guidance on SR VIII should be issued; (b) That guidance should be in the form of an Interpretative Note; and (c) The substance of the Interpretative Note should contain: (i) A functional definition of non-profit organisation that focuses on characteristics that may make an NPO a high terrorist-financing risk; and (ii) Strengthened AML/CFT measures that make use of existing mechanisms whenever possible and minimise the negative effects of fragmented monitoring/supervision of the NPO sector. The proposals were very far reaching and would mean a very huge bureaucracy, high costs and severe interference with needed social work carried out by volunteer organisations.
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