Cyan Regulatory’s Post

The FATF dedicates significant resources to examining and mitigating de-risking and financial exclusion, as well as ensuring that countries’ measures to protect NPOs from terrorist financing abuse are focussed and proportionate. These efforts include amendments to the FATF Standards in 2012 and 2016 to ensure that they are in line with the risk-based approach (RBA), including measures aimed at protecting NPOs vulnerable to terrorist financing abuse; as well as multiple guidance and best practices papers and continuous engagement with relevant external stakeholders. Despite these efforts, de-risking and financial exclusion remain challenges for many sectors and run contrary to the RBA promoted by the FATF and core philosophy of the RBA. Moreover, international commentary on these unintended consequences indicate that the FATF Standards and/or their incorrect implementation have an impact in furthering and sustaining these phenomena. https://lnkd.in/gG3F8bW2

HOW NPOs CAN MITIGATE THE RISK OF FUNDS BEING DIVERTED The Jersey Financial Services Commission has announced that the theme for its examinations of prescribed non profit organisations (“NPOs”) in 2024 is diversion mitigation. To assist prescribed NPOs in assessing relevant controls in preparation for these examinations, we’ve posted an article on our website with some thoughts as to how they can mitigate the risk of their funds being diverted to terrorist or other criminal organisations and comply with the requirements of the Non-Profit Organisations Order and the JFSC Handbook, with reference to the following controls: ·      Assess exposure to terrorist financing risks, including diversion risk ·      Maintain a culture of integrity and ethical conduct ·      Adopt AML and CFT controls ·      Strengthen financial controls and oversight ·      Monitor and evaluate the effectiveness of controls ·      Educate staff and volunteers ·      Promote ethical fundraising practices ·      Engage in collaboration and information sharing If you work at an NPO and would like to understand more about how your organisation can strengthen its resilience against diversion risk and prepare for a JFSC examination, please get in touch. #NPO #terroristfinancing #JerseyCI

Diversion risk is probably the most significant financial crime risk facing NPOs, so to try to help Jersey's prescribed NPOs mitigate that risk and prepare for a possible Jersey Financial Services Commission themed examination, we've set out some thoughts on relevant controls. #terroristfinancing #NPO

Key outcomes of the FATF Plenary held in February 2024 include increasing transparency in beneficial ownership and payment systems globally, protecting non-profit organizations from potential terrorist financing abuse, and supporting jurisdictions with virtual asset activity in implementing FATF requirements. Additionally, Barbados, Gibraltar, Uganda, and UAE have been removed from the list of jurisdictions subject to increased monitoring, with Kenya and Namibia added. Learn more about the outcomes in the attached link. #FATF #transparency #regulation

This is a thorough, comprehensive analysis of how the Treasury Department assesses and characterizes the risks of terrorist financing and money laundering. It's not short, but it's worth bookmarking as a resource. Huge thanks to Ashleigh Subramanian-Montgomery It is also a huge piece in the puzzle that is financial access and fairness for so many life-saving organizations. The needle is moving, slowly, toward a better environment for these NPOs. But until private sector financial institutions "get the memo" (i.e.- banks) there is only so much that policy progress can do.

Non-profit organizations (NPOs) are required to work in destabilized contexts, war zones, and other areas where people are in need of immediate, life-saving support. Unfortunately, many of these contexts are considered "high risk" by financial institutions who are fearful of breaking overly broad #NationalSecurity regulations. As a result, some banks "de-risk" their NPO clients working in regions like Syria - hindering #humanitarian, #peacebuilding, and other #development work serving communities in need - rather than manage risk through a "risk-based approach". The U.S. Treasury's National Terrorist Financing Risk Assessment (NTFRA) is the first step the U.S. government takes in implementing the risk-based approach, which influences how financial institutions regulate their clients. The 2024 NTFRA, published earlier this year, found that “[T]reasury and other U.S. government agencies note that the vast majority of U.S.-based tax-exempt charitable organizations face little or no risk of being abused for [terrorist financing] TF”. C&SN notes that, encouragingly, the 2024 NTFRA praises NPOs' risk mitigation and due diligence measures; acknowledges that repressive measures, such as misinformation campaigns targeting certain NPOs, negatively impact their access to financial services and relationships; and highlights how de-risking and financial access challenges “interfere[] with essential, lifesaving services”. C&SN is appreciative of Treasury’s continued engagement with NPOs and encourages Treasury to continue this progress in a meaningful and impactful way. Read C&SN's full analysis of Treasury's 2024 NTFRA 👉 https://lnkd.in/e88jvQYB

💰 💸 💬 "One is left to conclude that the lack of specific CTF regulations and practices is either due to a lack of understanding of terror financing – or simply negligence. One way or another, poor CTF controls, or lack of specific CTF controls altogether, allow terror financiers to abuse OFPs." I could not agree more. Another good reading from Illicit Edge analyzing how a well-known terrorist group funnel its funds through various platforms, navigating through AML regulations loopholes, and benefiting from State sponsors. The chapter on #crowdfunding for charities should echo to some regulators extending the humanitarian exception, and pushing back all the boundaries protecting our people from this disease. This is because local populations suffer that stringent #KYC, #duediligence should be applied by the public organisations spreading public money in these geographies, not the opposite. On this regard, having control over a territory appears as key for the terror industry. Cercle K2 #aml_tf #finance #VASPS #banking #moneylaundering https://lnkd.in/dZRQJFip

A step in the right direction as the latest Moneyval report found #Cyprus to have improved its compliance with the Financial Action Task Force’s new technologies. It also noted progress towards improving its level of #compliance with non-profit organisations. According to the report, since November 2022, Cyprus has improved the virtual asset service providers regime with only a few minor deficiencies remaining. “Overall, Cyprus has made progress in addressing most of the technical compliance shortcomings identified in its 2019 Mutual Evaluation Report,” Moneyval found. Out of 40 recommendations, Cyprus currently has 16 rated as compliant, 21 rated as largely compliant, and three are partially compliant. https://lnkd.in/ddDJ3B3D

A report on a terrorist financing risk assessment for the non-profit organisation (NPO) sector has been jointly published by the South African government and private sector partners. This collaborative effort involves government entities such as the Financial Intelligence Centre (FIC), the South African Revenue Service (SARS) and the Department of Social Development (DSD), along with private sector organizations, NPOs and umbrella organisations. The aim is to implement focused, proportionate and risk-based measures to address identified risks. This initiative demonstrates the country's commitment to FATF Recommendation 8 and represents a significant step towards a more informed and balanced approach to risk mitigation and aligns with FATF's best practices. Related links: Media Release - https://lnkd.in/eAtB-D6u Terrorist Financing Risk Assessment - NPO (SA) - https://lnkd.in/ek2DGyeV Kashnie Naidoo Charlotte Gamede

**AML Update: FATF Plenary February 2024** Key Updates/Areas under Review: 1) Jurisdictional risk has been updated- Law Firms please ensure you check your matter risk assessments and amend your risk rating/due diligence measures accordingly. 2) Increasing Beneficial Ownership Transparency Globally: Further guidance to follow at the end of February 2024. 3) Leveraging Digital Transformation: Virtual Assets  Many countries have yet to fully implement the FATF’s revised Recommendation 15. Given the inherently borderless nature of virtual asset activity, this lack of implementation leaves significant loopholes globally, that criminals and terrorists exploit. 4) Payment Transparency: The FATF has worked on proposed amendments to Recommendation 16, to reflect the rapid development of cross-border payment systems, and changes to industry standards in particular ISO20022. 5) Protecting Non-Profit Organisations from abuse for Terrorist Financing https://lnkd.in/eZ7DC7PR