The non-profit sector performs a vital role in our society, providing relief and support to groups of the population in need, “at times of urgent crisis and often in challenging circumstances and regions.”
Unfortunately, charitable fundraising has also “been used to provide cover for the financing of terrorism.”
At its October 2023 Plenary, the Financial Action Task Force (FATF) agreed on amendments to Recommendation 8 that aim “to protect NPOs from potential terrorist financing abuse through the effective implementation of risk-based measures.”
Recommendation 8 does not apply “to the entire not-for-profit sector, but only to the sub-set that falls within the FATF definition of an NPO.”
Countries should identify organizations “that fall within that definition, assess their risks of abuse for terrorist financing and have in place focused, proportionate and risk-based measures to mitigate these risks.”
The FATF has updated its Best Practices to “reflect the amendments to Recommendation 8 and to help countries, the non-profit sector and financial institutions understand how best to protect relevant NPOs from abuse for terrorist financing, without unduly disrupting or discouraging legitimate NPO activities.”
For the first time, an FATF best practices paper also “includes examples of bad practices and specifically explains how not to implement the FATF’s requirements. With the revision to Recommendation 8, and the updated best practices paper, the FATF has clarified how to implement measures that are proportionate to the assessed terrorist financing risks and prevent the implementation of measures that are overly burdensome or restrictive for organisations working in the not-for-profit realm.”
The updated best practices paper reflects “input from relevant stakeholders.”
In another update from FATF, it was noted that cyber-enabled fraud is a major transnational organized crime “that has grown exponentially in recent years, both in volume of frauds reported and their global spread.”
Such crimes can have a devastating impact “on individuals, organizations, and economies worldwide, causing significant financial losses and eroding trust in digital systems.”
The transnational nature of this crime, “with proceeds of cyber-enabled fraud often rapidly transferred to different jurisdictions, makes this a global concern.”
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