News

Editor’s Note: The ACAMS moneylaundering.com legal team examines international efforts to ensure delivery of humanitarian assistance to high-risk regions.

By Junko Nozawa, Legal Writer

Delegates to the Financial Action Task Force’s plenary in Paris on Monday will discuss proposed revisions to the group’s eighth recommendation crafted to address concerns that overly robust efforts to prevent funds from reaching terrorists can impede the flow of humanitarian aid.

Together with the U.N. Security Council’s adoption of a standing humanitarian exemption to current and future sanctions programs, a decision by FATF to revise the recommendation would mark a significant step toward effectively shielding charities and other legitimate non-profit organizations, or NPOs, from the fallout of commercial and financial restrictions.

Critics claim that the recommendation, which calls on national officials to take steps to prevent NPOs from diverting or channeling funds to terrorists, has inadvertently given authoritarian governments a new tool to suppress dissent and financial institutions reason to minimize their exposure to terrorism-related risk by severing all ties to the charitable sector.

As a result, the recommendation as currently written not only threatens to stifle political opponents and expose legitimate NPOs to charges of material support, but also complicates anti-money laundering and counterterrorist financing objectives by driving payments out of the formal financial system and toward alternative platforms that defy monitoring.

The use of sanctions for counterterrorism purposes has also fallen under criticism, with opponents arguing that such restrictions almost invariably target the most vulnerable segments of society and fuel extremist narratives, all with little to no tangible benefit.

U.N. Security Council Resolution 2664 aimed to address the longstanding issues surrounding the delivery of humanitarian assistance in sanctioned environments.

Under the resolution, UN member states are obligated to exempt certain humanitarian activities from sanctions, including payments, goods, and services necessary for the timely delivery of humanitarian assistance. The resolution also ensures safeguards against aid diversion to sanctioned actors and aims to mitigate overcompliance and de-risking behavior by providing a clear, international framework for humanitarian activity.

FATF previously removed language from the eighth recommendation in June 2016 that described NPOs as “particularly vulnerable” to exploitation by terrorists and their supporters, and instead called on governments to “respect fundamental rights and humanitarian law.”

The intergovernmental group took stock of the unintended consequences of combating-the-financing-of-terrorism measures on NPOs again in October 2021, and invited the public and other interested parties to comment on the problem by Aug. 18 of this year.

Rather than advise governments to assess whether their laws and regulations for NPOs meet FATF’s standards, the group’s eighth recommendation, if adopted as currently proposed, would direct them to identify all NPOs within their borders and measure their exposure to the finances of terrorism on an individual basis.

In line with the recommended risk-based approach, FATF will continue recommending that governments implement “focused” and “proportionate” measures that take existing laws and regulations into account if the revision is approved, while newly advising them to also avoid unnecessary disruption or discouragement of legitimate humanitarian causes.

Contact Junko Nozawa at jnozawa@acams.org