If your NGO receives international funding, works in high-risk areas, or partners with other nonprofits across borders, then you need to know what FATF is—and why it matters to you.
The Financial Action Task Force (FATF) is a global watchdog. Its primary focus is to combat money laundering and the financing of terrorism. While that sounds far removed from the work most NGOs do, many organizations have found themselves caught in FATF’s regulatory web.
Why Should NGOs Care?
FATF doesn’t just issue recommendations to banks and governments—it also includes non-profit organizations (NPOs) as part of its scope. Specifically, Recommendation 8 of FATF identifies NPOs as potentially vulnerable to terrorist financing abuse. As a result, countries must ensure that NPOs are not “misused” for such purposes.
This puts pressure on national governments to monitor NGOs more closely. And in turn, it puts NGOs under greater scrutiny by donors, banks, and regulators.
What Does Recommendation 8 Require?
FATF wants governments to:
- Identify which NPOs are at risk
- Promote transparency and accountability in NPO operations
- Implement proportionate measures to mitigate abuse
Importantly, FATF has moved away from a “one-size-fits-all” approach. Countries are now encouraged to apply a risk-based strategy—meaning NGOs not operating in high-risk environments may not need to face the same level of scrutiny as those working in conflict zones or with anonymous donors.
But that doesn’t mean you’re off the hook.
What FATF Compliance Looks Like for NGOs
1. Transparency in Operations
- Make your governance structure public.
- Maintain updated records of your activities, funding sources, and beneficiaries.
2. Donor and Partner Due Diligence
- Screen donors using lists like OFAC or the UN Sanctions List.
- Perform risk assessments before entering new partnerships.
3. Financial Accountability
- Conduct regular audits.
- Use secure and traceable payment channels.
- Avoid large cash disbursements, especially in fragile states.
4. Staff and Volunteer Vetting
- Have clear HR policies on recruitment.
- Background check key personnel, especially those handling funds.
5. Document Retention and Reporting
- Keep records for at least five years.
- Be ready to share reports with banks and regulators.
Real-World Examples of FATF Impact
In Pakistan, hundreds of NGOs lost their licenses due to non-compliance with anti-terror laws, a move linked directly to FATF pressures. In Nigeria, the tightening of financial rules has led to more banking restrictions for humanitarian groups.
Meanwhile, in Lebanon, FATF scrutiny has contributed to banks refusing to work with NGOs out of fear of non-compliance—a trend called “de-risking.”
How NGOs Can Stay Ahead
- Create a FATF compliance checklist customized to your work and geography.
- Train your finance and program teams in risk awareness.
- Establish a Compliance and Risk Committee within your board.
- Collaborate with umbrella bodies or associations for joint advocacy and compliance tools.
The Ethical Dimension
While FATF’s goals are about global safety, the implementation sometimes causes unintended harm. Restrictions often limit aid flows to people who need it most. That’s why NGOs must advocate not only for compliance but also for smart regulation—rules that protect both security and humanitarian principles.
NGOs don’t have to become banks—but they do have to act like responsible stewards of funds and data. FATF compliance is about protecting your mission from being misused, misunderstood, or undermined.
The more transparent and organized you are, the more trusted you’ll be—not just by regulators, but by the communities you serve.
References
- FATF (2023). Recommendation 8: Guidance for NPOs
- Human Security Collective & ECNL (2022). Understanding FATF
- InterAction (2023). NGO Risk Mitigation Toolkit
- ICNL (2024). Global Trends in Counter-Terrorism and Civil Society
- OECD (2023). Donor Risk-Based Approaches to FATF Compliance
