FATF – Best Practices on Combating the Abuse of Non-Profit Organisations

FATF – Best Practices on Combating the Abuse of Non-Profit Organisations

The non-profit sector, crucial for providing relief and support in urgent crises and challenging regions, has unfortunately faced misuse for terrorist financing. In response, the Financial Action Task Force (FATF) made significant amendments to Recommendation 8 during its October 2023 Plenary. These changes focus on protecting non-profit organizations (NPOs) from being exploited for terrorist financing by implementing effective, risk-based measures.

Importantly, Recommendation 8 targets a specific subset of the non-profit sector that fits the FATF’s definition of an NPO. Countries are tasked with identifying organizations within this definition, assessing their risk of terrorist financing abuse, and establishing tailored measures to mitigate these risks.

The FATF has also revised its Best Practices guide to align with the amendments to Recommendation 8. This guide aids countries, the non-profit sector, and financial institutions in safeguarding relevant NPOs from terrorist financing abuse while ensuring that legitimate NPO activities are not unnecessarily hindered or discouraged.

For the first time, this best practices document also presents examples of what not to do, clarifying how FATF requirements should not be implemented. This inclusion aims to prevent the adoption of overly burdensome or restrictive measures for NPOs, ensuring that the actions taken are proportionate to the assessed terrorist financing risks.

This updated guide reflects the contributions and feedback from various stakeholders involved in the non-profit sector, ensuring a comprehensive and practical approach to protecting these vital organizations.

Source: https://www.fatf-gafi.org/content/fatf-gafi/en/publications/Financialinclusionandnpoissues/Bpp-combating-abuse-npo.html

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