Preventing Abuse of Non-Profit Organizations for Terrorism Financing

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According to the Financial Action Task Force (FATF) 40 Recommendations, countries should take measures to prevent non-profit organizations (NPOs) from being abused for the financing of terrorism. The FATF is an intergovernmental organization that sets standards and promotes effective implementation of legal, regulatory, and operational measures to combat money laundering, terrorist financing, and other related threats to the integrity of the international financial system.

To prevent NPOs from being abused for terrorist financing, the FATF recommends that countries should implement the following measures:

A. Allow for freezing assets of non-profit organizations: Countries should have legal mechanisms in place to allow for the freezing of assets of NPOs suspected of financing terrorism. This includes both domestic and international assets, and the freezing should be done without delay.

B. Require all non-profit organizations to register with the country's financial intelligence unit: Countries should require all NPOs to register with the country's financial intelligence unit (FIU) or a relevant authority. This registration should include information on the purpose and activities of the NPO, its legal status, and the names of its principal officers. This will help ensure that NPOs are not created solely for the purpose of financing terrorism.

C. Ensure non-profit organizations cannot be used to conceal or obscure the diversion of funds intended for legitimate purposes to terrorists' organizations: Countries should take measures to ensure that NPOs are not used to conceal or obscure the diversion of funds intended for legitimate purposes to terrorist organizations. This includes implementing effective systems for monitoring and reporting suspicious activities, and conducting risk assessments to identify high-risk NPOs.

D. Create laws that forbid non-profit organizations from completing cross-border transactions without first running them through known terrorist databases: Countries should create laws that forbid NPOs from completing cross-border transactions without first running them through known terrorist databases. This will help prevent NPOs from unwittingly financing terrorism by transferring funds to individuals or entities on terrorist lists.

Overall, these measures aim to ensure that NPOs are not abused for the financing of terrorism, while at the same time allowing legitimate NPOs to operate and provide much-needed services to their communities.