Financial Action Task Force (FATF) has published a report that spells out best practices for combating the abuse of non-profits by terrorists and criminals seeking to use these sorts of organizations to move money to finance their illegal activities, the Paris-based organization announced on Friday.
The FATF, which develops policies to protect the global financial system against money laundering and terrorist financing, is also asking for feedback on revising its guidance in this area.
The non-profit sector, and “the threat environment in which it operates” have evolved, the FATF says in a statement. In response, the organization is seeking to update its approach, to focus on the subset of non-profits that may be particularly vulnerable to money laundering abuse, and to clarify its risk-based approach.
A review by the Canada Revenue Agency (CRA) found that, among non-profits, “in Canada, the organizations at greatest risk of terrorist abuse because of the nature of their activities and characteristics are charities,” the FATF report on best practices says.
As a result, the CRA has focused on charities as the starting point for its national risk assessment, the report says. The CRA has also established a special division to support the government’s anti-terrorism legislation, and to mitigate and manage the risks of terrorism in connection with registered charities. “This includes preventing organisations with connections to terrorism from obtaining charitable registration,” the FATF report says.
“The division uses a risk based approach in reviewing the activities of applicant and registered charities, and takes into consideration factors such as the location of operation and connections to entities with links to terrorism or terrorist financing,” the FATF report says, noting that this reviews are carried out by analysts, researchers and auditors with specialized training in terrorist financing.
Comments on proposed revisions to FATF policy in this area are due by Nov. 27.
At its next meeting in February 2016, the FATF will discuss the input received through this consultation process and will determine the next steps towards finalizing its guidance later in 2016.