In April 2024, the Egmont Group Information Exchange Working Group (EG IEWG) developed a report to support continuous efforts in the fight against the abuse of NPOs for TF activities. This report supplements the FATF’s work by providing a refined understanding of how NPOs are exploited for TF purpose and helps to develop new knowledge on typologies and financial treats through the understanding of the NPO sector, the identification measures, updates and expansion on existing information. FIU’s play a critical role in detecting TF activities due to NPO sector’s global reach, growth and risk. The report also explores the challenges like; lack of sufficient information available on NPOs, certain jurisdictions do not require NPOs to disclose information about the identify donors, discrepancies in terms of which entities and/or individuals are listed in the various terrorism designations lists, informal methods of transferring funds, emerging technologies such as crypto-currency, virtual assets, IVTS and FinTech faced by FIU to detect and investigate TF activity. Overall, detecting the abuse of NPOs for TF is a great challenge due to the use of the low amounts of money, informal methods of transferring funds, high public trust in NPOs, and the use of cash by the terrorists and terrorist organizations. FIUs need to be proactive in their engagement with the NPO sector, regulators, reporting entities, domestic partners and LEAs, and foreign FIUs and LEAs.
The Egmont Group has made the following recommendations in order to raise awareness and to mitigate the risk of abusing NPOs for TF, based on projects findings. The below recommendations are not binding, and jurisdictions may have different models in place that warrants different approaches.
- Jurisdictions are encouraged to create and promote publicly accessible online databases for NPOs which will facilitate the general public to search for and access information related to NPO’s status, activities, finances and trustees;
- FIU’s, Supervisors and relevant authorities must educate reporting entities on all designation lists in existence and on the importance of screening those lists when investigating NPO trustees and activities;
- Educate platform moderators of social media companies on the dangers of NPO abuse for TF, the methods used, red flag indicators and importance of reporting suspicious transaction;
- NPOs are advised to maintain registered bank accounts, create financial statements and utilize regulated channels or systems to conduct financial transactions;
- The results from strategic analysis must be used to implement intelligence-based policies in order to disrupt and prevent TF through NPOs; and
- Use of multiple designation lists by the relevant stockholders is recommended when examining the activity and investigating the legitimacy of NPOs, their trustees, donors and beneficiaries.
The report is accessible here.