#UK: level of impact from #derisking is disproportionate to the actual #AML/#CFT risks facing #charities, and hampers their ability to deliver legitimate charitable activities, new @CFGtweets report finds https://t.co/BCPPZfMOo2
— ECNL (@enablingNGOlaw) April 3, 2018
The majority of international charities surveyed have experienced difficulty accessing their bank accounts due to anti-money laundering and counter-terrorism regulations, a report has found.
The Charity Finance Group (CFG) surveyed 34 NGOs last year and found that four-fifths of had experienced some kind of problem accessing mainstream banking channels, while a seventh had had their accounts closed.
Four-fifths of respondents also said that banks had become substantially more risk averse towards them.
De-risking is when banks slow down transactions, freeze or close accounts which they think could be at risk of breaches in regulation, particularly around money laundering and counter-terrorism.
NGOs treated as ‘medium risk’
Some NGOs operate in high-risk environments such as Syria or Palestine and because of this, NGOs are generally treated as “medium-risk”, which means their accounts are more likely to be de-risked by banks.
However, last year the National Risk Assessment said the level of risk for NGOs should be downgraded to “low” due to the existing safeguards in the sector.
In a recent report, the Financial Action Task Force said: “It is also possible that existing regulatory or other measures may already sufficiently address the current terrorist financing risk to the NPOs in a jurisdiction.”
‘Bank de-risking a real threat to the sector’
Andrew O’Brien, CFG’s director of policy and engagement, said: “Bank de-risking remains a real threat to our sector and the work that it does overseas.
“We welcome the government’s change of the National Risk Assessment and the efforts being taken by the Home Office to create a dialogue across government with the sector. But this engagement needs to be sustained.
“We hope the Financial Action Task Force’s evaluation of the UK’s money laundering will further consider how regulations have disproportionally impacted our sector and what can be done to improve the situation for charities.”
Article by Rob Preston for civilsociety.co.uk