Last week, Treasury participated with other governments in the Financial
Action Task Force (FATF)’s annual consultation with the global charitable
sector. The FATF is the international
standard-setting body for anti-money laundering and counter terrorist financing
(AML/CFT), and last week’s meeting was an important opportunity to engage with
charities as the FATF works to update the FATF standard on protecting charities
from terrorist abuse.
Treasury
recognizes and strongly supports the essential role of charity in communities
worldwide. For the past 15 years, Treasury
has worked in the FATF and with partners here in the United States to promote
safe charitable giving while protecting the charitable sector from terrorist
abuse.
We take seriously recent concerns from the charitable sector
about delayed transactions to intended recipients and claims of indiscriminate
bank account closures, the former of which seem to be more prevalent. We are committed to ongoing dialogue with
relevant stakeholders on these issues.
Over the past
eighteen months, Treasury has organized several meetings with the charitable
sector to facilitate a dialogue on banks’ expectations. These sessions brought together
representatives from charities, banks, financial supervisors, and the
government to discuss the factors that banks consider related to charity
accounts and that examiners use in their review of banks’ procedures. These discussions have also covered delays in
financial transactions and banking access challenges.
As we have
conveyed at these meetings, Treasury does not view the
charitable sector as a whole as presenting a uniform or unacceptably high risk
of money laundering, terrorist financing, or sanctions violations. However, charities
delivering critical assistance in high-risk conflict zones have been, in some
cases, exploited by terrorist organizations and their support networks.
And when banks have charities as
accountholders, banks must identify and manage the risks associated with a
charity’s transactions or accounts, just as they would for any customer. To assess the risk of a charity account, a bank
should conduct adequate due diligence on the charity, including the geographic
areas it serves, its funding criteria, and its internal controls and audits, as
described in the “Bank Secrecy Act Anti-Money Laundering Examination Manual.” This Manual is used by bank examiners in
their review of banks’ internal controls and procedures.
Treasury cannot direct any bank to open or
maintain a particular account or relationship – such decisions must be made by
banks themselves. Treasury expects banks
to apply their due diligence obligations reasonably – not that they be infallible
in doing so. As Acting Under Secretary
Szubin previously said, “The United States has never advocated a
standard of perfection. Such an
environment would inhibit capital flows and financial access. It would promote neither efficiency nor
transparency.” Instead, we ask that banks establish and maintain
appropriate risk-based AML/CFT controls and compliance programs, which will
enable them to appropriately manage their accounts, detect illicit transactions,
and avoid enforcement actions. This view is consistent with the FATF international standards and
guidance on preventing terrorist abuse of charities.
The FATF has focused on
this sector for several years and has issued a review of the global terrorist
risk faced by charities and related guidance on preventing terrorist abuse in
the charitable sector. The FATF reports
from June 2014 and June 2015 are representative of this.
Protecting the charitable sector from terrorist abuse using a risk-based
approach and promoting access to financial services are complementary goals
that we all share. Treasury appreciates
the sustained dialogue with the charitable sector over the years and we look
forward to continued engagement, like the FATF consultation last week, on this
important issue.
For more information, please visit the Treasury
web page on protecting charitable organizations.
Jennifer Fowler is the Deputy Assistant Secretary for Terrorist Financing at the Department of Treasury.