Recently, members of the Arab American and American Muslim communities have expressed concern to the U.S. Department of the Treasury about the decline of charitable giving in their communities in the aftermath of the Treasury Department's blocking actions against three of the communities' charities. They have asked for guidance on ways to enhance future charitable giving. In response, the Treasury Department has developed voluntary best practices guidelines for the U.S.-based charities in their communities, to assist those charities in avoiding any ties to terrorist organizations that might lead to further blocking actions.
During the past year, the U.S. Department of the Treasury has blocked the assets of three U.S.-based charities deemed to be tied to organizations officially designated by the U.S. Government as foreign terrorist organizations, namely, al-Qaeda and/or Hamas. The Treasury Department has not blocked the assets of any donor to those charities. Notwithstanding, some Arab American and American Muslim organizations have reported a reduction in charitable giving in their communities and an increased apprehension among donors as a consequence of the blocking orders.
The goal of blocking orders is to prevent financial resources from getting into the hands of terrorist organizations. It is important to prevent charities from being corrupted by terrorism. The blocking orders are not in any way intended to impede, restrict or scrutinize legitimate charitable giving. Indeed, the promotion of both faith-based and secular charitable giving is a central goal of this Administration. The Arab American and American Muslim communities share this goal, especially with the beginning of Ramadan and the approach of the holiday season. President Bush has expressed a strong interest in ensuring that Arab Americans and American Muslims feel comfortable maintaining their tradition of charitable giving.
Accordingly, in response to the recent requests for guidance, the Treasury Department has developed a voluntary set of best practices guidelines for U.S.-based charities intended to reduce the likelihood that charitable funds will be diverted for violent ends. If a U.S.-based charity follows these guidelines, and commits resources to implement them effectively, there will be a corresponding reduction in the likelihood of a blocking order against any such charity or donors who contribute to such charity in good faith, absent knowledge or intent to provide financing or support to terrorist organizations.
The guidelines focus on financial controls and the vetting of potential foreign recipients. They provide for rigorous financial oversight and, importantly, high levels of disclosure and transparency that will enhance donor community confidence in the professionalism and bona fides of the domestic charity. The guidelines are consistent with the principles espoused in both the private and international public sectors – e.g., the Better Business Bureau, the Evangelical Council for Financial Accountability and, most recently, the Financial Action Task Force, an international organization dedicated to combating money laundering through enhanced transparency in international financial transactions. By implementing the guidelines with sufficient resources, diligently adhering to them in practice, and immediately severing all ties to any foreign recipient associated with a terrorist organization (whether designated as such by the U.S. Government or discovered to be such by the domestic charity exercising due diligence), the domestic charity can enhance donor confidence and significantly reduce the risk of a blocking order.
U.S. Department of the Treasury Anti-Terrorist Financing Guidelines Voluntary Best Practices for U.S. Based Charities