Unpacking the EU AML/CFT Package: Philea and ECNL explore implications for philanthropy sector
Philea and the European Center for Not-for-Profit Law (ECNL) have published a new report “Unpacking the EU AML/CFT Package: Impacts on the non-profit sector” exploring the implications of the new AML package adopted in 2024.
The philanthropy sector as well as the wider non-profit organisations (NPOs) ecosystem are increasingly affected by policies and security measures designed to combat money laundering and the financing of terrorism (AML/CFT) adopted by global bodies, governments and the private sector. In May 2024, the Council of the EU and the European Parliament adopted a new Anti-Money Laundering / Countering the Financing of Terrorism package that will significantly affect the non-profit sector. However, we are concerned that the sector’s specific needs and nuances were not sufficiently considered in the design of the package.
The report outlines the key challenges, including:
- Unclear definition of beneficial ownership: Although the new regulation clarifies that beneficial ownership is based on both ownership and control, it remains unclear who should be listed as the beneficial owner of an NPO. Those public-benefit foundations and NPOs that are similar to express trusts and constituted as express trusts and similar legal arrangements may have to list a series of individuals who do not own or control the organisation, including founders and grant recipients. This could create a heavy administrative burden and raise privacy concerns, especially when thousands of individual beneficiaries must be named. Clarification is hence needed that public-benefit foundations are not similar to express trusts.
- Increased challenges with banks or payment service providers: Non-profits, especially smaller organisations or foundations operating in high-risk third countries, will face greater difficulty in their relationships with financial institutions due to the extended regulatory framework.
- Higher compliance burden for crowdfunding platforms: Crowdfunding platforms will now be considered “obliged entities,” resulting in increased and significant reporting compliance obligations. These platforms may need to raise commission fees to cover the cost of compliance, which could deter donations or make donation-based crowdfunding less viable.
- Challenges using virtual currencies: It will become even more difficult – and likely impossible – for NPOs and activists operating in restrictive contexts to use virtual currencies as an alternative to regular transfers and banking services. This is because all crypto-asset service providers will be subject to the obligations for obliged entities, including customer due diligence measures. The threshold for applying customer due diligence measures for occasional transactions will be €1,000 instead of €10,000.
As the Package now moves into the implementation phase, ECNL and Philea, together with a wider coalition of European NPOs, continue engaging with representatives from the European Commission and the new EU AML Authority to ensure that the impacts on the non-profit sector are proportionate and aligned with international human rights law and FATF recommendations.
For example, in June 2025 Philea and ECNL contributed to the consultation on technical standards and guidelines being developed by the public consultation by the European Banking Authority on four draft Regulatory Technical Standards.
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