PORTUGAL: Problematic transposition of the EU directive against Money Laundering

In 2017, two legislations aiming at transposing EU directive 2015/849 (Fourth European Directive against Money Laundering) were passed by the Portuguese state. These new measures are on the one hand perceived as worrisome by the some NGOs in the country, on the other hand, as argued by ONGD – Plataforma Portuguesa das Organizações Não-Governamentais para o Desenvolvimento, there is still a lack of awareness on the implication of this legislation among NGOs.

The first law, 89/2017, called central registry for effective beneficiary – Registro Central do Beneficiário Efetivo, became effective in January 2019, and implies that NGOs, labelled in the legislation as “other entities”, have to register between 1st May and 30th June 2019. Sanctions for not doing so range between 1.000 and 50.000 euros. The law does not make a distinction between the non-profit sector and other realities, thus creating uncertainty among the civil society on its implementation. In a letter addressing the General inspector of ASAE, the platform ONGD wrote: “The Platform questions who should be considered beneficiaries of the NGDOs, and highlights the enormous difficulty in identifying a specific group of NGOs, and of beneficiaries of these entities.” (translated from Portuguese) In fact, civil society’s beneficiaries (e.g. the communities for whom NGOs work) do not correspond to the owners’ of an organisation.

Similar issues are also present in the law 83/2017 on the fight against terrorism and money laundering –Regulamento dos deveres especifícos de prevenção e combate ao branqamento de capitais e ao financiamento do terrorismo (FT/BC) which was passed on August 18 2017. Platforma ONGD commented: “the Portuguese NGDO Platform can only express, on a preliminary basis its extreme concern about one of the main novelties introduced by the recent the legal framework approved for the prevention and combating of the FT/BC: the inclusion of Organisations Non-Profit (OSFL) among its recipients.”(statement translated from Portoguese).

To the knowledge of Portuguese NGDO Platform, NGOs and foundations were included in the scope of this law without first carrying out a risk assessment as recommended by international standards. In fact, in regard to the situation of non-profit entities, the Financial Action Task Force (FATF), the intergovernmental organisation working to reduce money laundering and terrorism financing, highlights this step among its recommendations to evaluate the actual risks of terrorism and money laundering in the country.

The regulation for the implementation of the law on anti-money laundering is currently under discussion and several organisations among which ONGD hope it will be an opportunity to solve some of the issues emerged for civil society, including the administrative burden.

Especially burdensome and worrisome for organisations is the requirement to register personal details of donors contributing with equal or more than 100 euro, including personal address, fiscal number, sustainability guarantee, etc. with severe implications for the privacy of donors. Whether this information will be of public domain remains so far unclear.

Read the analysis by NGDO Platform (in Portuguese):