Global NPO Coalition on FATF Provides Input on Recommendation 8
September 2020 Charity & NFP Law Update
Published on September 30, 2020

By Terrance S. Carter, Nancy E. Claridge and Sean S. Carter


The Global NPO Coalition on FATF, a network of diverse not-for-profits, has released its submission to the Financial Action Task Force (FATF) Secretariat’s Strategic Review process, seeking to “initiate a discussion on whether the existing country evaluation/assessment framework for the not-for-profit sector and for Recommendation 8 […] is fully appropriate, feasible or effective for the purposes of achieving the goals of the FATF.” The FATF’s Recommendation 8 deals with combating the abuse of non-profit organizations particularly with regard to money laundering and terrorist financing, as discussed in Anti-Terrorism and Charity Law Alert No. 46.

The submission states that, unlike other sectors subject to FATF Recommendations, the not-for-profit sector plays a special role in society and is protected by international humanitarian and human rights law. Therefore, the submission states that the current one-size-fits-all methodology of the FATF Recommendations cannot easily or effectively fit all sectors, as it does not allow for the specific nuances of the not-for-profit sector and its internationally-protected role. Instead, the FATF could adopt a risk assessment methodology that is uniquely effective for the not-for-profit sector for the Mutual Evaluation process of Recommendation 8.

The submission argues that many countries are struggling significantly to achieve effective implementation of Recommendation 8 under the current system, and further cites the latest report of the United Nations Security Council’s Counter-Terrorism Committee Executive Directorate, which stated “fewer than 50 per cent of reporting States indicated that their approach to non-profit organizations was risk-based and in accordance with international human rights obligations” and that “54 per cent of responding States indicated that they had never identified cases of terrorism financing through the non-profit sector.”

The submission reiterates that the risk in the not-for-profit sector lies in only a very small subset of organisations; and that any measures, which must be proportionate and targeted, must be compatible with international humanitarian, human rights and refugee law. As such, the submission includes a set of suggestions to improve the country evaluation methodology for the implementation of Recommendation 8.


Read the September 2020 Charity & NFP Law Update