Saturday, April 3, 2021
FATF Announces New Project to Mitigate Unintended Consequences of Its Standards, Especially on Nonprofits
The Financial Action Task Force (FATF) has announced that in February of this year it launched "a new project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards." Those standards guide countries in implementing legal rules and processes to combat money laundering, terrorist financing, and other illegal, international financial activity. Nonprofits have long complained that countries have used the standards as cover for improperly cracking down on cross-border philanthropy, particularly philanthropy supporting disfavored nonprofits.
Here is the full announcement:
In February 2021, the Financial Action Task Force (FATF) launched a new project to study and mitigate the unintended consequences resulting from the incorrect implementation of the FATF Standards.
The project will focus on four main areas:
- De-risking, or the loss or limitation of access to financial services. This practice has affected non-profit organisations (NPOs), money value transfer service providers, and correspondent banking relationships, in particular;
- Financial exclusion, a phenomenon whereby individuals are excluded from the formal financial system and denied access to basic financial services;
- Suppression of NPOs or the NPO sector as a whole through non-implementation of the FATF’s risk-based approach;
- Threats to fundamental human rights stemming from the misuse of the FATF Standards or AML/CFT assessment processes to enact, justify, or implement laws, which may violate rights such as due process or the right to a fair trial.
The FATF will conduct the project in two phases:
Phase One: research and engagement. The project team will analyse these unintended consequences resulting from the misuse of the FATF’s Standards on preventing and combating money laundering and the financing of terrorism. This work will draw on the knowledge and experiences of members of the FATF’s Global Network of 205 jurisdictions, its observers, and outside stakeholders.
Phase Two: solutions. The second phase will develop options the FATF could consider to prevent and mitigate these unintended consequences.
The FATF welcomes input to inform this project, including, for example: scholarly research; industry and civil society perspectives; and documented instances of unintended consequences. Information may be sent to firstname.lastname@example.org. While contributions are welcome for the duration of the project, they would be most relevant for Phase One if submitted on or before 20 April 2021.
This is not an investigative endeavour, but an opportunity to study trends and propose solutions. Any information provided to the FATF Secretariat will be shared with the project team and the source will be identified. Depending on the volume of input, we may not be able to follow up on each suggestion for engagement, nor are we able to provide feedback about how, or if, information received is used.