Non-profit organisation (NPO) abuse
NPOAlso called charity abuse for terrorist financing, misuse of non-profit organisations
Non-profit organisation abuse is the misuse of charities and other non-profits to raise, move or hide funds for terrorism. It covers sham charities, legitimate charities diverted by insiders or partners, and donations raised under false pretences. FATF Recommendation 8 requires countries to protect the at-risk part of the sector proportionately.
How it works
Abuse takes several forms. A terrorist group may set up an organisation that appears charitable, divert funds from a genuine charity through staff, partners or local agents, or use a charity's name and payment routes to raise money. Charities working in or near conflict zones carry the most exposure, because cash use, local intermediaries and limited oversight make diversion harder to detect.
Countries assess which NPOs are at risk and apply focused measures to them, not to the whole sector. Banks apply a risk-based approach to NPO customers: they understand the charity's purpose, governance, funding sources and where its money is spent, and monitor for payments that do not fit. FATF's 2023 revision warns against blanket de-risking of NPOs, which cuts off legitimate charities from banking.
The rules
Requires countries to identify NPOs at risk of terrorist financing abuse and apply focused, proportionate, risk-based measures without disrupting legitimate charitable activity.
Countries, and through them NPOs and financial institutionsMakes it an offence to raise, use, possess or arrange funds for terrorism, or to launder terrorist property, including through charitable channels.
Everyone, including charities, trustees and banksAllows designation of persons, including charities, that support terrorism, freezes their property in US jurisdiction and bars US persons from dealing with them.
US persons, including banksCommon questions
Are all charities high risk for terrorist financing?
No. FATF says most NPOs face little or no terrorist financing risk. Risk concentrates in organisations working in or near areas of terrorist activity, so measures must be targeted.
What should banks check on charity customers?
Banks check registration, trustees, purpose, sources of funds and where money is spent, especially in high-risk areas. They monitor payments against the charity's stated activities and partners.
Why did FATF revise Recommendation 8?
Some countries and banks applied the old standard too broadly, restricting legitimate charities and closing their accounts. The 2023 revision requires risk-based, proportionate measures and warns against de-risking.
