Non-profit organizations (NPOs) around the world are impacted by issues of financial access – inordinate delays in cash transfers, onerous due-diligence requirements, inability to open bank accounts and arbitrary closure of bank accounts – collectively classed as ‘de-risking’ activities by financial institutions. This study examines the drivers of this de-risking, situating it at the intersection of frameworks for security and regulation. It looks at how global regulations on money laundering and terrorism financing, for instance, permeate policymaking, influencing institutions (perversely, at times) and negatively impacting humanitarian and development work. By delving into the practices and perspectives of relevant stakeholders – NPOs, financial institutions, governments, regulators and international organizations – the study unpicks the mechanisms of governance and accountability involved in and through the chain of decision-making, underscoring the policy incoherence that is manifest along the way. The three country contexts chosen for the research – Brazil, Mexico and Ireland – help amplify the complexity of the issue and the potential search for solutions. Ongoing remedial measures addressing the financial exclusion of NPOs are highlighted and potential remedies that could challenge the current practice of de-risking are explored in detail.
In the first week of February 2018, HSC, together with the Arab Institute for Human Rights, organized a workshop in Tunis where mentors began developing human security initiatives to be implemented in neighbourhoods. The mentors had already been working with teenagers in the communities and were able to share and apply the insights gained to the initiatives they wanted to work on. Together with their mentees, the mentors acquired knowledge on the tools of conflict analysis to analyse the drivers of conflict in their own neighbourhoods and use this to identify specific problems for which might be practical solutions. They were also invited to think more practically on project ideas and how they would involve the mentees in all aspects of their initiative.
Mentors from Delft travelled to Tunisia for a week-long exchange with their Tunisian counterparts. During the week, they discussed the human security issues in their respective neighbourhoods and shared their working methods with each other. They found similarities as well as differences regarding issues at stake in their neighbourhoods and gained new insights. As a Tunisian mentor said: ‘It was hard to imagine issues like racism and discrimination in such a developed country.’ Regarding the Tunisian context, one of the Dutch youth workers said: ‘I expected that after the revolution there would have been more concrete change and improvement in the daily life of the Tunisian citizens’. During the week of exchange, Dutch and Tunisian mentors inspired each other with their experiences. Tunisian mentors, for example, started homework classes for the youth in their neighbourhood based on the example of one of the Dutch mentors. The exchange was collectively organized by the Arab Institute for Human Rights; Participe Delft and Human Security Collective.
A short film will follow soon.
Almost three years ago, the United Nations Security Council unanimously adopted a groundbreaking resolution on Youth, Peace and Security (UNSCR 2250) which recognizes that “young people play an important and positive role in the maintenance and promotion of international peace and security”. This resolution breaks with the old narrative of seeing youth only as perpetrators or victims of conflict, and recognizes their role as leaders and their work on human security in communities.
On March 1st, Human Security Collective together with the Dutch Youth Delegates to the UN hosted an interactive event which highlighted this valuable role of youth in working for sustainable peace, with youth representatives from Libya, Tunisia, Mali and The Netherlands sharing their experiences and stories. These young leaders are all involved in various projects, as partners of Human Security Collective, focusing on peace and security in their own communities. In addition, the event also heard from the Dutch Youth Delegates to the United Nations, who shared the insights they have gained from their experience in this field: over the course of this past year they have collected stories on security from thousands of young people both in the Netherlands as well as from other countries on the topic of Youth, Peace and Security. All these stories provided the content for a constructive debate. March 1st was also the day that the Netherlands took on as chair of the UN Security Council.
The aim of the evening was to engage in a debate with the youth present on what security means to/for them and how the Netherlands and the international community can further boost the positive role of youth in pursuit of human security in their communities. Read a blog here by Rahama Nantoumé of Think Peace, Mali – a participant in the event and of the workshop which preceded it.
International Stakeholder Dialogue: Ensuring Financial Services for Non-Profit Organizations
Non-profit organizations (NPOs) providing essential humanitarian and development assistance must be able to access financial services in order to carry out their activities, particularly in crisis situations and areas of conflict. Sometimes NPOs operate in high risk countries, subject to sanctions, or exposed to real and perceived terrorist financing (TF) or money laundering (ML) threats. In assessing the ML/TF/sanctions risks of their clients and related transactions, banks and other financial institutions must consider threats of criminal or terrorist activities that they are legally bound to assess and mitigate. Concerns regarding the risks associated with NPOs activities in high-risk areas, international sanctions and AML/CFT compliance requirements, and business considerations may result in refusal to on-board certain clients or to perform financial transactions, particularly international wire transfers. When legitimate parties are ‘derisked’, critical needs of refugees and others in dire need could be jeopardized. Food and medical aid are not delivered, humanitarian workers are left unpaid, and core foreign and international development policy objectives are undermined.
This particular International Stakeholder Dialogue, organized by the Dutch Ministry of Finance, the World Bank and Human Security Collective in The Hague, was an initiative bringing together public- and private-sector stakeholders – banks, humanitarian organizations, government policymakers and regulators, and international organizations – to examine what each can do to reverse this phenomenon. The objective was to identify causes, and, more importantly, to share experiences, actions and strategies to ensure that access to financial services is safeguarded for NPOs. Multi-stakeholder dialogue addressing financial access challenges have been underway in the United Kingdom, the Netherlands and the United States in the past year to discuss potential solutions. This event sought to amplify these efforts, foster greater understanding and collaborative relationships between stakeholders, and, hopefully, ensure that work toward concrete solutions continues.
The meeting included plenary sessions and interactive roundtable discussions preceded by brief presentations from different perspectives to raise relevant questions and offer suggestions on possible responses. The sessions were on:
- Research on the effects of sanctions, counter-terrorist financing, and anti-money-laundering measures on financial access for NPOs, and potential solutions
- Compliance and controls: What measures would be helpful to banks in meeting due diligence requirements and approving NPO transactions to high-risk locations or recipients? Do smaller NPOs face different challenges than larger NPOs, and if so, how can they be addressed and managed? What can NPOs do to help in the due diligence process? What measures could be beneficial in overcoming financial access challenges, e.g. training, guidance, technological innovations, information-sharing? What good practices can be identified and disseminated?
- Assessing and managing risk: What impact has the revision of FATF Rec 8 had on banks’ risk assessments of NPOs? What can regulators and policymakers do to encourage a more risk-based approach by banks? How can risk be evaluated and mitigated in high-risk contexts by banks and NPOs? What measures might stakeholders take to promote humanitarian transfers into high risk jurisdictions?
- Responses and solutions: How have stakeholders responded to financial access challenges? What preliminary lessons can be drawn from dialogues, and can or should these processes be replicated in other countries/regions? What measures can international organizations take? What actions can each stakeholder group undertake take to address these challenges?
- Outcomes and next steps
Rapporteurs summarized the roundtable discussions to identify conclusions and concrete steps that can be taken in the short, medium and longer term.
We hope this multi-stakeholder meeting makes a tangible contribution to the global policy debate. A report of the meeting is forthcoming.
The Global NPO Coalition on FATF hosted a webinar on working on solutions to the problem nonprofits with international activities face in accessing banking services. This follows on from two important studies that were presented in May.
The webinar featured:
- Sue Eckert on the World Banks/ACAMS Multi-Stakeholder Dialogue on NPO Financial Access
- Six members with updates from advocacy efforts in Europe, South America and North America
- Jerry Brito, Director, Coin Center, on piloting use of cryptocurrency for grantmaking, humanitarian emergencies
- Hanna Surmatz, European Foundation Centre, with an update from the recent FATF Plenary
Dec 8-9, Bamako, Mali: HSC together with the Alliance for Rebuilding Governance in Africa (ARGA) organized a two-day workshop in Bamako on ‘Youth Engagement in Promoting Governance and Countering Violent Extremism’. For details of the programme, see here.
November 25th, Loosduinen, The Hague: People in the community came together to share innovative ideas on improving social cohesion and building community resilience in Loosduinen. The top 8 initiatives will win 1000 euros to implement the ideas presented. Watch the video of the meeting here. And to apply for funding to implement your idea for the neighbourhood, go here. The deadline for applications is Friday, 15 December 2017.
And for more on the project, see here.
A second series of workshops/meetings took place in the middle of November in six communes in Bamako district, in collaboration with ARGA as well as the mayor of the communes. These were on:
- Governance leading to the Prevention and Countering of Violent Extremism
- Multistakeholder Engagement in Governance leading to Peace Building
- Lobby and Advocacy
A proposal for building a national strategic P/CVE action plan was also discussed.
A workshop on inter/intra religious dialogue with youth networks at the G5 Sahel country/level also took place between November 17 and November 20, with the participation of the ministers of reconciliation and youth. Working groups of G5 youth networks defined action plans for themselves for the forthcoming years (2018-2020). For a news report on this, see here (in French) and here (in English).
For more on the project, go here.
November 28th, London: The World Humanitarian Action Forum (WHAF) held a roundtable discussion on ‘The Impact of De-risking on Humanitarian Organizations – Shared Risk: Shared Responsibility’. The WHAF is a one-day event organised by several humanitarian organisations and aims to encourage dialogue and action through collaboration and partnership working. This roundtable – one of three – was led by the Humanitarian Policy Group at The Overseas Development Institute (ODI) and The London School of Economics, and supported by HSC along with Islamic Relief Worldwide, Al Rayan Bank, Human Appeal, Al Khair Foundation, Charity & Security Network, The Norwegian Refugee Council and Muslim Charities Forum.
The roundtable consisted of three 90-minute sessions, and explored:
Session 1: The Problem
The implications of de-risking on humanitarian response with illustrative examples from the countries addressed in the research.
Session 2: The Practice
How humanitarian organisations are adapting to de-risking and the alternative routes of transferring funds they resort to. Available recourse (if any) within the legal system for de-risked clients.
Session 3: The Policy
Policy changes needed to ensure financial access for humanitarian organisations without exacerbating vulnerability to a common terrorist threat
For a recording of the sessions, see here.