Edited by Sergio Silvestri

The nonprofit sector plays a fundamental role in our society, providing aid and support to groups in need, especially in times of urgent crisis and challenging environments. However, charitable fundraising activities have, in some cases, been exploited to cover up terrorist financing activities.

At its October 2023 Plenary, the FATF agreed on amendments to Recommendation 8, aiming to protect non-profit organizations (NPOs) from terrorist financing abuse through the effective implementation of risk-based measures.

It is important to note that Recommendation 8 does not apply to the entire nonprofit sector, but only to those organizations that meet the FATF definition of NPOs. It is up to countries to identify these organizations, assess their risks of abuse for terrorist financing, and adopt targeted, proportionate, and risk-based measures to mitigate those risks.

The FATF has updated its Best Practices to reflect changes to Recommendation 8, providing guidance to countries, the nonprofit sector, and financial institutions on how to effectively protect relevant NPOs from misuse for terrorist financing, without unfairly disrupting or discouraging legitimate nonprofit activities.

For the first time, a FATF best practices document includes examples of bad practices and specifically explains how not to implement FATF requirements. With the revision of Recommendation 8 and the update of the best practices document, the FATF has clarified how to implement measures proportionate to the assessed terrorist financing risks, preventing the adoption of excessively burdensome or restrictive measures for nonprofit organizations.

These new guidelines represent a significant step forward in the fight against terrorist financing, protecting nonprofit organizations that are vital to our social fabric.

DOWNLOAD Best Practices Paper on Combating the Abuse of Non-Profit Organizations

SOURCE: fatf-gafi.org