The Financial Action Task Force (FATF) has recently released a guide entitled Best Practices on Combating the Abuse of Non-Profit Organizations. FATF is an important international inter-governmental group “that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction”.  The guide Best Practices on Combating the Abuse of Non-Profit Organizations provides valuable information for Canadian charities – especially those who operate in conflict areas or unstable regions on how to recognize and avoid abuse by terrorist organizations.

Best Practices on Combating the Abuse of Non-Profit Organizations discusses the FATF Recommendation 8 dealing with terrorist abuse.  The Best Practices document discusses:

  • guidance and examples of good practices for countries and NPOs;
  • understanding and mitigating the risk;
  • actions that NPOs can take to protect against terrorist financing abuse;
  • how to conduct risk analysis and follow a risk-based approach; and
  • how self-regulation can be helpful in preventing terrorist abuse.

Canada was very involved in providing feedback and examples to FATF.   I was asked and did provide feedback to the Canadian government on a draft of this document.

There are many references to Canada in the Best Practices document including:

on page 36 FATF largely reproduced CRA’s checklist on avoiding terrorist abuse;

on page 39 FATF notes in a section dealing with supervision and monitoring:

Box 15. Canada

Many registered charities in Canada fall within the scope of the FATF’s definition of NPO and are considered to be particularly vulnerable to terrorist abuse. In recognition of these inherent vulnerabilities, the national regulator of charities in Canada, the Canada Revenue Agency, has established a specialised division to support the government’s anti-terrorism legislation, and to mitigate and manage the risks of terrorism as it pertains to registered charities. This includes preventing organisations with connections to terrorism from obtaining charitable registration, which provides charities with preferential tax treatment, and detecting and revoking the registration when connections exist.

The division uses a risk based approach in reviewing the activities of applicant and registered charities, and takes into consideration factors such as the location of operation and connections to entities with links to terrorism or terrorist financing. Reviews are conducted by senior intelligence analysts, researchers and auditors with specialised training in terrorist financing, using open source information, classified intelligence from security partners, and information submitted by organisations themselves. If an applicant charity does not meet the requirements of registration for any reason, including connections to terrorism, its application will be denied. If a charity that is already registered does not comply with the requirements of registration, for any reason including connections to terrorism, the division can apply a range of regulatory interventions, including education letters, compliance agreements, monetary penalties and, in the most the serious cases, revocation of registration. If the division encounters information that is relevant to a terrorism investigation when carrying out these regulatory duties, it has the authority to share that information with national security partners and law enforcement agencies.

Monitoring applicant and registered charities in order to prevent and disrupt organisations with ties to terrorism assists the government in preventing the exploitation of charitable resources to support terrorism.

on page 42 dealing with effective investigation and information gathering the FATF notes:

Box 18. Canada
The national regulator of registered charities in Canada, the Canada Revenue Agency (CRA), has statutory authority to share information with relevant national security and law enforcement partners where there are concerns that a charity is engaged in providing support to terrorism. To facilitate the sharing of information, a secondment program between the CRA and its partners has been instituted: CRA employees are seconded to the partner agencies and employees from the partner agencies are seconded to the CRA. Employees participating in this program are fully integrated into their host agencies, bringing with them the experience and expertise required to identify risks pertaining specifically to the NPO sector. The program further assists partners in understanding each other’s roles in the whole-of-government approach to countering terrorism financing. This has enabled the CRA and its partner agencies to alert one another of situations involving NPOs that support terrorism and to take appropriate measures to protect the NPO sector.

In a section dealing with “effective mechanism for international cooperation” it notes the importance of transparency for example in providing information to the public and regulators in other jurisdictions:

Box 19. Canada, New Zealand, and United Kingdom
Several countries, including Canada, New Zealand and the United Kingdom, have independently developed online tools to make certain information about NPOs publicly available.

These countries provide access to online databases that allow the general public to search for and access information related to the status, activities, finances and governing boards of NPOs. Some of these tools allow users to display information graphically in charts and tables, make connections between NPOs, and to access copies of governing documents, by-laws and financial statements.

These tools help promote transparency and maintain public trust in the NPO sector. They also provide a means through which information can be shared internationally. Because the databases are public, international partners can access them to find information on NPOs that operate outside of their jurisdiction.

On page 47 FATF cites an example of a Code of Ethics, namely that of the CCIC.  You can read the full CCIC code at http://www.ccic.ca/about/ethics_e.php