Philanthropy Advocacy together with NPO partners on a quest to improve current EU AML/CFT policies

Philanthropy Advocacy submitted a contribution to the European Commission ́s consultations on the new package of legislative proposals to strengthen the EU’s anti-money laundering and combating the financing of terrorism (AML/CFT) rules together with the partners from ECNL, Human Security Collective, CSE and EFA.

In the consultation, we welcomed the opportunity to contribute as NPO coalition to the EC consultation on the July 20 EU AML package with  general reflections and specific recommendations for amendments with a view to improve current draft policy papers. You can read more on the EU AML proposal here.

We, as NPO coalition have expressed our strong belief in the important fight by the European Union and international and national policy makers against money laundering and terrorism financing. We have however observed that elements of policy developed with good intentions has had unintended consequences on the NPO sector including the philanthropic sector. We consider that, based on FATF policy and international HR standards, the policy applied to fight money laundering and terrorism financing has to be risk based, proportionate, fit for purpose and must take into account our fundamental rights.

Executive Summary bullet points – we call on the EC to:

• Ensure that the new 4 legislative proposals do not add complexity but rather simplify and streamline and are in line with subsidiarity principle  
  • Clarification is needed on when Member States, in accordance with a risk based approach can extend the scope of AML policy with regard to obliged entities – NPOs/Foundations are generally not obliged entities
  • Recommendation to exempt public benefit crowdfunding platforms from being obliged entities
• Consider excluding NPOs in line with a risk-based approach from BO policy – focus to be on private interest structures
• More clarity is needed on how BO policy applies to the NPO including philanthropy/foundation sector, need to define terms and avoid unintended consequences with regard to Beneficial Ownership definition
  • Need to define express trusts
  • Need for a clearer definition of BO ownership/benefits versus directing persons
  • Need to clarify BO concept with regard to beneficiaries/class of beneficiaries
• Allow cross-reference with company registers
• Take Fundamental rights into account
• Avoid un-intended consequences and cases of overregulation

Moreover, one of the members of NPO coalition, ECNL is organising a webinar on “AML/CTF Policies and Their Impact on Philanthropy” on Monday 29 November from 11.00 – 12.30 CET, for which you can register here. Our colleague Hanna Surmatz will be discussing together with Rana Kotan, the Secretary General of TUSEV, the EFC and Dafne member from Turkey and Nikica Kusinikova, Executive Director of Konekt, North Macedonia how anti-money laundering and counterterrorism financing policies impact CSOs’ ability to access funding and what are their potential implications on philanthropy.

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