29 March 2021

European Commission discusses new AML/CFT policy with the sector

How is the new EU Anti-Money Laundering and Terrorism Financing policy (AML/CFT policy) to be potentially adopted already in May this year moving ahead? What are potential implications on the NPO and philanthropy sector? Has the input of the sector into last year’s consultation processes been taken into account?  These were some of the questions that over 60 participants discussed at a webinar on March 29th with Ms Raluca Prună, Head of Unit DG FISMA of the European Commission The event, which was moderated by Hanna Surmatz, co-lead of Philanthropy Advocacy (PA) was organized by PA together with its NPO coalition partners: Civil Society Europe, European Centre for Not-for-Profit Law (ECNL), Human Security Collective (ESC)and European Fundraising Association.

Ms Prună on behalf of the European Commission presented the key issues to be included in the new AML piece of legislation:

  • Rules: put in place a more integrated framework (Regulation + Recast Directive) – supported by both the EP and Council. Scope of the more harmonised rules should be a list of Obliged Entities (OEs – legal entities and professionals) and the clear requirements around customer due diligence beneficial ownership policy and reporting obligations.
  • Supervision: establish a new AML Authority at the centre of an EU AML supervisory system. It should have direct supervisory powers over financial institutions and oversight/coordination powers in the non-financial sector.
  • Financial Intelligence Units: set up a mechanism to coordinate and support FIU work, fully integrated in the new AML Authority. It will provide technical support but assistance to analysis produced by FIUs, including joint work.

Representatives of the wider civil society and philanthropy sector were then invited to comment and share their views:

  • Vanja Škorić from ECNL,
  • Isabel Peñalosa Esteban from the Spanish Association of Foundations (AEF),
  • Daniel Ferrell- Schweppenstedde from Charities Aid Foundation (CAF),
  • Katharina Stahlecker from Venro, and
  • Lia van Broekhoven from HSC,

Sector representatives highlighted some of the key concerns of the NPO and philanthropy sector connected with existing over implementation of the current AML/CFT legislation in some countries, such as to consider NPOs/foundations as “obliged entities” or putting the entire sector under overtight reporting requirements without taking a risk based approach, which were already addressed in the joint contribution to the Commission´s consultation in 2020. Particular focus was given to unintended consequences such as bank de-risking and a chilling effect on the important work of NPOs including philanthropy in delivering aid and benefit to the public good. Governments were also not consistent in who they considered as “beneficial owners” in the case of public benefit organisations. More clarification on those concepts were hoped for with the new AML policy approach. Participants asked questions around competences and coverage of the new EU supervisory body. Speakers also provided good examples of sector run measures such as due diligence or risk assessments which can significantly reduce the risk of terrorist financing particularly for NPOs which operate in high-risk environments. Overall, the call for the further clarification of key concepts of AML/CFT legislation as “obliged entity” and “beneficial owner” was made. The sector will only be able to assess if its comments and recommendations made during last year’s consultation process were taken into account when the draft piece of legislation is presented.

Ms Prună reassured the participants of the webinar of the openness to have a continuous dialogue with the NPO and philanthropy sector on the matter also in the context of the upcoming Supranational Risk Assessment (SNRA). The sector will remain engaged in shaping up the new policies and laws on AML/CFT, as well as their implementation and the SNRA planned for publication later this year.

The full recording of the event can be found here:

Meeting recording: https://us02web.zoom.us/rec/share/nx8N64iirHeLItOLGHAyep_PFxQbFfbK1Bu6NJrpLgOFJht-SP0v7Dfc-WZ2Xjp7.MxSOjhBDDzYaDBDi

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