FATF will review recommendations regarding the activities of nonprofit organizations: how to get involved

The International Financial Action Task Force (FATF) is collecting feedback from the public to enhance its recommendations concerning the activities of non-profit organizations (NPOs) worldwide.

In recent years, nonprofit organizations have been involved in suspicious money laundering and illegal financial activities on multiple occasions. Notable humanitarian organizations, such as certain branches of the International Red Cross and Red Crescent, have faced allegations of bribery and the handling of illegal funds in the occupied areas of Ukraine. Additionally, significant scandals alleged FIFA and UEFA were implicated in the receipt and exchange of multimillion-dollar payments as bribes and influence trade.

The existing FATF recommendations and stipulations require NPOs to:

• obtain a license or registration, and provide pertinent information to competent authorities and the public;
• maintain records detailing their purpose, objectives, and individuals who oversee or manage the organization, including executives, board members, and other officials;
• submit annual financial reports that include comprehensive breakdowns of income and expenses;
• establish internal control mechanisms to ensure accurate monitoring of all funds and their intended usage.

FATF is accepting proposals from stakeholders until 18 August via email at FATF.Publicconsultation@fatf-gafi.org

With the insights gathered from the public, the organization aims to revise the recommendations. This revision might necessitate Ukraine to align its existing legal norms related to regulating the nonprofit sector or potentially adopt new regulations. Beyond proposals pertaining to NPO operational requirements, citizens of Ukraine, in particular, have the opportunity to advocate for the inclusion of russian financial institutions in the FATF "blacklist," alongside those from belarus.

Oleh Zahnitko, partner at INTEGRITES:

"Our awareness is pressured by post-truth as much as genuine civil assemblies are threatened by 'activists' and 'public figures' undercover as the ‘legal NPO’ shell to conceal their true intentions and activities. In particular, NPOs are increasingly being used as tools to bypass existing and prevent new sanctions imposed on aggressor countries such as russia and belarus. The convergence of legal systems across the continents, at the same time, inadvertently promotes NPOs as universal vehicles for hostile governments or cartel associations to finance national, regional, or even global networks of soft power influence, such as "think-tanks", "activist campaigns" to counter, deliberately, the democratic institutions and the democracy itself.

Democracy, thus, is tested by the social networks and open borders – they enable faster spread of information, empower recognition for one individual or brand and cancel the popularity of another. The weight of a person without an official position has significantly grown. We refer to them as activists, public figures, thought leaders etc.; as a result, they will need fewer resources to become politicians in future. Public organizations, political parties as well as other non-profit NPOs - charities, community groups and networks, analytical and academic centres, professional unions serve as amplifiers for these new leaders. As the social grassroots strengthen, the greater is a temptation to mimic hidden agenda as "freedom of association and expression" group, the concept trusted by the voters and the law gives immunity from political contempt."