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Regulator alerts charities to international consultation

Charities encouraged to take part in Financial Action Task Force consultation on protecting charities against terrorist abuse.

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The Charity Commission is issuing an alert to charities to draw their attention to the Financial Action Task Force’s public consultation to consider amendments to its Recommendation 8 which focusses on non-profit organisations and the risk of terrorist abuse.

The Financial Action Task Force (FATF) is the global standard setting body for anti-money laundering and counter terrorist financing. FATF has developed a series of Recommendations for countries to implement. Collectively these represent the global standard that every country is expected to meet.

FATF Recommendation 8 (R8) focuses on Non-profit organisations (NPOs) and the implementation of measures so that they cannot be abused for the financing of terrorism. Following a consultation in November 2015 on FATF’s Interpretative Note to R8 and its earlier typologies report about the risk to the NPO sector (see endnote 1) and Best Practices paper on Combating the Abuse of Non-Profit Organisations (see endnote 2) FATF is now consulting on the text of R8 itself to align the various documents and resources on this issue.

R8 as currently written is 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:

(a) by terrorist organisations posing as legitimate entities;

(b) to exploit legitimate entities as conduits for terrorist financing, including for the purpose of escaping asset-freezing measures; and

(c) to conceal or obscure the clandestine diversion of funds intended for legitimate purposes to terrorist organisations’

The FATF consultation will consider responses and proposed amendments to the wording of R8. The consultation closes at 18:00 CET on 29 April 2016, all responses should be sent to FATF-NPOconsultation@fatf-gafi.org. Please visit the FATF website for information and details about how to submit a contribution.

The commission considers that charities which work internationally to provide services or which fund overseas partners to do so - particularly in conflict zones or in close proximity to terrorist groups - will find this consultation of particular interest.

Endnotes

  1. FATF Report: Risk of Terrorist Abuse in Non-Profit Organisations, June 2014.
  2. FATF Best Practices Report: Combating the Abuse of Non-Profit Organisations (Recommendation 8).

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Published 22 April 2016