Civil Society response to SNRA money laundering and terrorist financing

The European Commission is currently undertaking a Supra National Risk Assessment (SNRA) of money laundering and terrorist financing risks affecting the internal market. Initial findings presented by the EC in a consultation meeting organised by DG Justice last 4 October indicate 16 sectors and activities to be at risk for terrorism financing. Among those the collection and transfer of funds by not for profit organisations.

As regards the collection of funds, risk scenarios are related to the establishment of NPOs to fund raise for terrorist purposes domestically and across borders. As regards transfer of funds, possible abuse of not for profit organisations to fund localised terrorist activity, or use of NPOs to facilitate cross-border financing by sending money to areas where associations operate close to terrorist areas of activity.

While the threat and vulnerability are considered significant for terrorism financing as NPO structures could be used quite easily (easy to set up) and may give access to cash to finance  travels of terrorists, as  cash would still be the basis of a large number of transfers of funds considered. In addition presence of associations, NGOs and foundation in high risk areas and with high risk customers is considered an additional factor, as the traceability of the source and transfers of cash donations (when sent abroad) are often difficult, as well as exemptions existing for the humanitarian sector. Finally risk awareness by civil society organisations is considered low.

The existing legislative framework is currently considered to be adequate to address the specific needs of the NPO sector. Competent authorities tend to consider that controls in place are quite good concerning the collection of funds within the EU. However, some weaknesses appear when dealing with the transfer of funds or expenditures outside the EU.

Civil Society Europe together with the European Center for Not for Profit Law, the European Foundation Center and Human and Security Collective have prepared a position paper on the European Commission’s initial findings:

2016_npo_coalitioninput_ecriskassessment_december2016_final

You can find the risk scenarios for CSOs identified by the European Commission here:

risk-scenarios-npos

For further information:

http://fatfplatform.org/

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