The webinar was held on the 26th of September, 2023 by 11am on virtual conference platform, Zoom. The meeting had participants from the EU-ACT, CATI and members of various Non-Governmental Organizations (NGOs).
Mr. Newton Otsemaye, the moderator started the meeting with a welcome message to all active participants and gave a brief insight on the meeting. He introduced to the panel Ms. Winifred Achu-Egbuson (The Program Manager responsible for civil society, human rights and youth)
The meeting was focused on the current measures that has been put in place by Financial Regulatory body, EFCC to stop the fraudulent actions relating to finance especially by Non-Profit Organizations (NPOs)
The Objectives of these regulations include;
a) Provide guidelines for the effective implementation of the provisions of Terrorism (Prevention and Prohibition) Act. 2022 and the Countering Financing of Terrorism regime in general relating to the monitoring and supervision of Non-Profit Organizations (NPOs) that are at risk of terrorism financing abuse.
b) Develop and apply Counter Financing of Terrorism measures consistent with the Nigerian security imperatives, the Constitution of the Federal Republic of Nigeria, 1999 (as amended) and international obligations, particularly in accordance with the provisions of the United Nations Security Council Resolution (UNSCR) 2462, that all states shall prevent and suppress the financing of terrorist acts and to refrain from providing support to those involved in them.
c) Provide guidance for NPOs that are at risk of terrorism financing abuse on the implementation of Targeted Financial Sanctions related to Terrorism and Terrorist Financing.
Advantages of incorporating AML practices within NGOs:
While Anti-Money Laundering (AML) agencies are typically associated with government entities, Non-Governmental Organizations (NGOs) can benefit from the establishment and implementation of AML measures.
Enhanced Credibility and Trust:
Implementing robust AML measures demonstrates a commitment to transparency, ethical practices, and financial integrity. This, in turn, enhances an NGO’s credibility and builds trust among donors, partners, and the public.
Compliance with Regulations:
Many jurisdictions have regulations that apply to NGOs to prevent money laundering and terrorist financing. Adhering to these regulations not only helps NGOs avoid legal consequences, but also ensures alignment with international standards and best practices.
Access to Funding:
Many funding sources, including government agencies, foundations, and private donors, may require NGOs to have effective AML measures in place as a condition for receiving grants or donations. Compliance with AML standards can broaden the range of available funding opportunities.
Global Collaboration:
NGOs often work on international projects and collaborate with entities across borders. Implementing AML measures enables NGOs to engage in global partnerships more effectively by demonstrating a commitment to financial integrity and compliance.
Efficient Financial Management:
AML practices involve clear financial management procedures, including record-keeping and due diligence. This contributes to efficient financial management within NGOs, ensuring that funds are used for their intended purposes and reducing the risk of financial mismanagement.
Prevention of Fraud and Misappropriation:
AML measures include monitoring and reporting suspicious financial activities. This helps in the early detection and prevention of fraud or misappropriation of funds within an NGO.
Protection of Beneficiaries:
AML practices contribute to ensuring that funds intended for beneficiaries are not diverted for criminal purposes. This protection is crucial for the success and impact of NGO projects.
Adherence to Ethical Standards:
AML measures align with broader ethical standards and principles. By implementing these measures, NGOs demonstrate their commitment to ethical conduct and responsible financial management.
Professionalism and Governance:
Implementing AML measures reflects a commitment to professionalism and good governance within an NGO. This can enhance the organization’s standing within the sector and attract skilled professionals and volunteers.
While the regulatory landscape for NGOs may vary, incorporating AML practices can be a proactive and responsible approach to managing financial activities and ensuring the long-term sustainability and impact of the organization’s mission. It also helps NGOs contribute to the broader efforts to combat financial crimes and maintain the integrity of the non-profit sector.
These Regulations shall apply to all identified Financial Action Task Force (FATF) NPOs in Nigeria that have been assessed to be “At-Risk of Terrorism Financing abuse under the National Non-Profit Organization Risk Assessment Report, 2022” and the subsequent assessments that may be conducted by the Special Control Unit Against Money Laundering (SCUML), pursuant to section 5(2)(e) of the Terrorism Prevention and Prohibition Act, 2022 or the National Counter Terrorism Centre pursuant to its role under section 6(2)(g) of the Terrorism Prevention and Prohibition Act, 2022 with the full participation of the Civil Society Organizations.
Obligations of SCUML and the National Counter Terrorism Center
1) The Special Control Unit against Money Laundering (SCUML)
a) Collaborate with relevant authorities including the private sector to reassess the NPO sector every two years to determine the subset that are at risk of Terrorism Financial abuse;
b) Develop a risk-based framework for the supervision of at risk NPOs
c) Register and keep a database of NPOs operating in Nigeria
d) Maintain a register of Non-Profit Organizations that are at risk of terrorism Financing abuse which may be made available to competent authorities and the public where necessary
e) Develop and implement outreach programmes and create forums to develop and refine best practices to address terrorist financing risks and vulnerabilities to protect at risk NPOs from terrorist financing abuse and
f) Be the focal point for information exchange on international requests in relation to NPOs that are at risk of Terrorism Financing abuse
2) SCUML shall establish appropriate mechanisms to ensure that, when there is suspicion or reasonable grounds to suspect that a particular NPO is:
a) Involved in terrorist financing abuse or is a front for fundraising by a terrorist organization;
b) Being exploited as a conduit for terrorist financing, including for the purpose of escaping asset freezing measures, or other forms of terrorist support; or
c) Concealing or obscuring the clandestine diversion of funds intended for legitimate purposes, but redirected for the benefit of terrorists or terrorist organizations.
That the information is promptly shared with competent authorities, in order to take preventive or investigative action.
3) SCUML shall put all necessary measures in place to ensure effective cooperation, co-ordination and information-sharing to the extent possible among all levels of appropriate authorities or organizations that hold relevant information on NPOs.
4) SCUML recognizes the confidentiality of information provided by beneficiaries for accessing humanitarian aid or intervention.
Any request for the disclosure of beneficiary information shall be subject to the provisions of section 16(1)(a) and (b) of the Terrorism Prevention and Prohibition Act, 2022; in respect of terrorism or terrorism financing investigation; and for the purpose of establishing a criminal case against any person.
5) The National Counter Terrorism Center shall in line with its coordinating role as enshrined in the Terrorism (Prevention and Prohibition) Acts, 2022 collaborate with SCUML and ensure that Non-profit Organizations that are at risk of terrorism financing abuse are inadequately supervised.
6) The National Counter Terrorism Center shall ensure that all competent authorities share information on operations and activities of Non-Profit Organizations that are at risk of terrorism financing abuse with SCUML from time to time.
Regulation and supervision of Non-Profit Organizations (NPOs) at risk of terrorism financing offer several benefits, both for the organizations themselves and for the broader society. These measures are designed to prevent the misuse of NPOs for illicit purposes, such as financing terrorism. Here are some key benefits:
Prevention of Terrorism Financing:
The primary objective of regulating and supervising NPOs at risk of terrorism financing is to prevent these organizations from being exploited as conduits for funding terrorism. By implementing oversight measures, authorities can identify and mitigate the risk of funds being channeled to terrorist activities.
Enhanced National Security:
Effective regulation contributes to enhanced national security by reducing the risk of NPOs being unwittingly or intentionally involved in supporting terrorist groups. Preventing the flow of funds to such groups helps maintain overall national security and public safety.
Maintaining Public Trust:
Regulation and supervision foster transparency and accountability within NPOs. This, in turn, helps maintain public trust in the charitable sector. Donors are more likely to contribute to organizations that are perceived as operating with integrity and in compliance with regulations.
Global Cooperation and Compliance:
Many countries implement international standards and obligations set by organizations such as the Financial Action Task Force (FATF) to combat money laundering and terrorism financing. By regulating NPOs, countries demonstrate their commitment to global cooperation and compliance with these standards.
Risk Mitigation:
Identifying and assessing the risk of terrorism financing within NPOs allows authorities to implement targeted measures to mitigate these risks. This might include enhanced due diligence, monitoring, and reporting requirements for high-risk organizations.
Preserving Nonprofit Sector Integrity:
Regulation helps preserve the integrity of the nonprofit sector by ensuring that organizations operate within legal and ethical boundaries. This is crucial for sustaining the positive impact of NPOs on society and preventing them from being exploited for nefarious purposes.
Financial System Integrity:
Preventing terrorism financing through NPOs contributes to the overall integrity of the financial system. It helps maintain the stability and trustworthiness of financial institutions and systems by reducing the risk of illicit funds flowing through them.
Effective Resource Allocation:
By identifying and preventing misuse of funds for illicit purposes, regulatory measures ensure that resources are effectively directed toward the intended charitable and humanitarian purposes of NPOs. This contributes to the effectiveness and impact of these organizations.
Legal Compliance:
Regulatory oversight ensures that NPOs comply with relevant laws and regulations. This legal compliance is essential for the organizations to avoid legal consequences and operate within the bounds of the law.
Adherence to Ethical Standards:
Implementing regulations reinforces adherence to ethical standards within the non-profit sector. Organizations that follow ethical guidelines are more likely to attract support from donors, partners, and the public.
Capacity Building:
Regulatory frameworks often include provisions for capacity-building initiatives to help NPOs understand and comply with regulations effectively. This can empower organizations to better manage their financial activities and reduce the risk of unintended involvement in terrorism financing.
Balancing Regulation with NPO Autonomy:
Effective regulation seeks to strike a balance between preventing terrorism financing and respecting the autonomy of NPOs. Well-designed regulatory frameworks allow organizations to continue their legitimate activities while minimizing the risk of misuse.
In summary, regulating and supervising NPOs at risk of terrorism financing is a proactive approach to safeguarding national security, preserving public trust, and maintaining the integrity of the non-profit sector. It involves finding a balance between preventing illicit activities and allowing organizations to continue their essential contributions to society.