Combating moneylaundering while preserving democratic freedoms Gladwell Otieno Africa Centre for Open Governance

Structure Intro: real and rising global problems of moneylaundering (ML) Concerns raised by approaches to combating potential abuse of CSOs for ML/TF Measures that have had negative impact on NPOs ability to operate Some ideas on a way forward-What non-profit organisations (NPOs) would like to see

Introduction ML major & growing global concern. In response inter-governmental (IG) efforts develop standards to be applied globally, some targeted at CSOs. CSOs both partners and targets. Terrorism is a significant threat in many countries. However the two threats are not equal in incidence and pervasiveness. Terrorism is not a significant threat to many countries. CSOs have played important role in advancing AC and AML efforts, however also seen as “subjects at risk” for criminal activities. Concerns raised by efforts to counter abuse of NPOs which have limited democratic freedoms of NPO sector without impacting on problems of AML/CFT. Most at IG level developed without meaningful participation of CSOs

Measures impacting on civil freedoms Increase in measures curtailing the freedom of operation of CSOs in many countries. Some of these measures have grown out of efforts to control ML/TF, also as unintended consequences E.g. FATF describes non-profit sector as “particularly vulnerable to be abused for terrorist financing” & calls for measures to FATF recommendations accepted by other organisations/conventions. Impact e.g. on perceptions of business climates in countries offers great incentive for their adoption. In wake of such policies and in some contexts result which were not intended by the framers of recommendations have been limitation of freedoms and operations of CSOs and increase in burden on them i.t.o. regulations, reporting, vetting, access to funding, rights of association and peaceful assembly, increase in difficulties of operating in conflict areas with vulnerable communities etc.

Concerns on impact of FATF measures UNSR Maina Kiai notes, that FATF calls for increased vigilance & stronger laws on entities that can be abused for terrorist purposes “has been followed by a wave of new restrictions worldwide on funding for civil society. Many of these restrictions, unfortunately, do nothing to legitimately advance the fight against money- laundering and terrorism. Rather, the battle against crime and terrorism has been used by some States as a cover for imposing politically motivated restrictions on civil society funding…..” and describes implementation of these measures as “posing a serious, disproportionate and unfair threat to those who have no connection with terrorism, including civil society organizations”.

Concerns on effects of some measures Exclusion/limited participation of CSOs in arenas where policies which affect them and their operations are being developed Shortage of data/thorough risk assessments on actual scope of problem to support premise that NPO sector “particularly vulnerable” to abuse and therefore needs additional control measures. Evidence suggests it is not. Indeed questions raised as to need for SR8 over & above other regulation of CSOs Danger of misuse of SR8 restricting democratic freedoms with no impact on ML/TF or counter productive impact Need for countries to protect democratic freedoms and respect international obligations on human rights etc. FATF R8 BPP should provide good practice approaches to integrate human rights obligations, risk based approach etc.

What CSOs would like to see CSOS valuable actors in originating and strengthening means to fight corruption and ML. Control of ML/TF not the proper avenue for introduction of measures on entire CSO/NPO sectors in countries. Genuine outreach and inclusion of civil society necessary also at multilateral level to develop robust sustainable measures. Targeted, risk-based proportionate measures based on proper assessments avoiding across the board profiling. Protect and promote legitimate CSOs and their beneficiaries. Suggest good practice integrating human and democratic rights in AML measures. Discourage use of AML/CTF as a pretext to repress critical CSOs or CSOs working in critical contexts were they are most needed.