29 August 2023

Philanthropy sector welcomes envisaged FATF revision of NPO policy

In a consultation contribution over the summer, Philea and WINGS have welcomed proposed revisions to FATF global counter-financing of terrorism policy on non-profit organisations (NPOs).

Representing the philanthropy sector in the Global NPO Coalition on FATF, we consider this a significant step in reducing unintended consequences of this policy and securing the space for public-benefit and philanthropy action.

We have been advocating for a clearer wording of this policy for many years with a view to mitigating the chilling effect that the implementation of FATF policy unfortunately has had on the philanthropy sector, and civil society more widely, in several countries. As a member of the core group of the NPO coalition on FATF, we have jointly worked on concrete suggestions for amending the wording of the draft texts. We have also submitted a philanthropy-focused briefing note highlighting our key comments.

The 10 key points of our submission included the following:

  1. The standards should only be applied to NPOs that fall under the FATF definition (not all NPOs) and that have been identified to be at risk. The wording should clarify that countries should also look at existing hard and soft law, which may already lower the risk.
  2. In addition, we suggest that countries should use empirical evidence rather than perceptions of the sector to determine risk.
  3. The term “clandestine diversion” of funds as used in the Recommendation is often politicised and should hence be removed.
  4. We suggest to explicitly clarify that governments must reach out to the NPO sector throughout the risk assessment and risk mitigation process.
  5. We recommend that concrete examples of good government and NPO practice should be included in the Best Practices Paper (BPP) to clarify that they are not binding practices .
  6. Good country practices in the BPP should not list measures that regulate the entire NPO sector, since such regulations are not targeted TF measures.
  7. Grantmaking NPOs or philanthropic organisations are distinct and have different challenges than other NPOs. We recommend referring to them specifically and also distinguishing them from public donors.
  8. It’s important to stress in the standards that working internationally is not per se creating higher risks for terrorism-financing.
  9. A lot of restrictions are put on the NPO and philanthropy sector (including foreign funding restrictions), whereas business can operate freely, which raises a concern of sectoral equity.
  10. Overall we would like to see more foundation/donor principles of good practice referred to as we have listed.

Let’s keep fingers crossed that the FATF October plenary will approve the new policy, taking into account the Philea and WINGS suggestions and those of the wider NPO coalition.


Hanna Surmatz
Head of Policy