The Financial Action Task Force (FATF) is considering proposals for draft amendment text to Recommendation 8 of the FATF Standards and its Interpretive Note (R.8/INR.8), which aims to protect NPOs from potential terrorist financing abuse.
In June 2022, the FATF Plenary agreed to consider amending R.8/INR.8 and established a Project Team to consider the necessary changes and gather relevant information.
The draft amendment text to R.8/INR.8 proposed for public consultation reflects the work and discussion of the Project Team. The revisions seek to address the problem of over-application of preventive measures to the NPO sector in some countries, recognising the negative impact this can have on legitimate NPO activities.
The FATF is consulting all interested stakeholders in advance of finalising the amendment text to R.8/INR.8. Views from practitioners, experts and stakeholders from the NPO sector and the financial institutions are welcome.
Of particular interest, comments and additional input is welcome regarding the issue flagged below:
Currently, para. 7(b)(iii) of the Interpretative Note to Recommendation 8 lists examples of measures that countries can apply to NPOs according to their terrorist financing risks exposure. However, in view of their inclusion in the body of the Interpretative Note 8, these examples may have been perceived by some countries or jurisdictions as compulsory. In order to remedy these unintended consequences and ensure that the examples serve the purpose of providing assistance to countries whilst avoiding creating new requirements, please indicate which of the following four options would in your view be best suited and explain the reason for their preference:
i. Remove all examples of INR in 7(b)(iii) and insert them in the Best Practices papers (see box 5 of the Best Practice Paper); or
ii. Remove all examples from INR in 7(b)(iii) and transfer them in their entirety to a footnote to 7(b)(i); or
iii. Remove all examples from the INR in 7(b)(iii) and insert a footnote that mentions them in summary form (mirroring what is done in footnote 6 for sanctions), as follow: “Examples of measures that countries could decide to apply to NPOs according to identified risks include: registering or licensing NPOs, requiring NPOs to maintain specific information and publish financial statements, have in place internal controls and take reasonable measures to confirm information on beneficiaries and associate NPOs”; or
iv. Leave the current wording unchanged and keep the examples in their entirety in para 7(b)(iii) of INR.8.
Please provide your response, including any drafting proposals to: FATF.Publicconsultation@fatf-gafi.org with the subject-line “Comments of [author] on the draft FATF R.8/INR.8 amendments”, by 18 August 2023 (18h00 CET). This consultation is now closed.
While submitting your response, please indicate the name of your organisation, the nature of your activity, and your contact details. Please note that all submissions received during public consultation will be shared with FATF delegations.
You may insert any specific drafting proposals directly in the attached text of the draft in tracked changes. We will use your contact information only for the purpose of this public consultation and for further engagement with you on this issue.
At this stage, the FATF has not approved the draft amendment text to R.8/INR.8 and will consider the views received to revise the text before its proposal for adoption at the FATF October 2023 Plenary.
The draft text is available here.
We thank you for your input in advance.