Scheme could help prevent charities from having bank accounts wrongly closed

A new scheme could help prevent voluntary sector organisations from having their bank accounts withdrawn due to incorrect implementation of anti-terrorism legislation. 

The international money laundering and terrorist financing watchdog the Financial Action Task Force is calling for responses from civil society to help it understand the unintended consequences that arise from the incorrect implementation of FATF standards.

The standards aim to combat money laundering and the financing of terrorism but have affected the voluntary sector because of banks "de-risking", where they close the accounts of organisations that are deemed to be at high risk of money laundering or the financing of terrorism. 

Some charities working in unstable parts of the world have had their banking services withdrawn because of this. 

Teresa Dumasy, co-chair of the international development network Bond’s working group on counter-terrorism and sanctions and director of research at the charity Conciliation Resources, said it was an opportune time to undertake the research because this year marked 20 years since the 9/11 terrorist attacks, after which the FATF’s mandate was expanded to include terrorism financing. 

She said the work of charities and non-profit organisations operating in conflict-affected contexts could be hampered by bank de-risking and the huge compliance task of navigating complex legal regulations. 

Dumasy said that in some contexts the laws and regulations put in place by governments were being used to curtail civic space. 

She said: “We welcome the FATF study and its contribution to a long-standing issue affecting non-profit organisations working in conflict-affected contexts. 

”Bond and Conciliation Resources are actively involved in UK and international efforts to address the impact of regulations to counter terrorism financing on the sector. 

“FATF has proactively engaged with a global coalition of non-profit organisations over recent years, which has led to the amendment of related recommendations and guidance.”

But implementation remained a challenge, according to Tumasy, who said she hoped FATF would use the study to press for concrete solutions in future.

FATF is welcoming input from across civil society, academia, industry and business. Contributions must be submitted by 20 April.

For more information or to take part, click here.

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