FCC RegUpdate

09 Oct

On August 18, 2023, the Wolfsberg Group published its response to the FATF Public Consultation on the draft FATF R.8/INR Amendments and Best Practice Paper to Combat the Abuse of the Non-Profit Organization (NPOs) Sector.

To know more, click here: https://www.fcctimes.com/2023/08/21/enhancing-npo-security-against-terrorist-financing-wolfsberg-groups-valuable-contribution-to-fatf-revisions/

The feedback covers the Group’s views on:

  • NPOs’ risk awareness and mitigation.
  • Access of legitimate NPOs to financial services.

Wolfsberg’s input includes the following comments on the Best Practices Paper:

  • NPOs should establish reasonable, risk-based controls to mitigate risks once they identify and assess their likelihood and impact.
  • The BPP title should emphasize TF (the FATF Best Practice Paper to Combat the TF Abuse of NPOs).
  • The FATF’s broad definition of NPOs, which includes carrying out other types of “good works,” is prone to misinterpretation and unintended consequences, requiring further qualification.
  • The reference in paragraph 33 should be expanded to include all financial transactions, not just wire transfers.
  • The inclusion of Virtual Asset Service Providers (VASPs) in the list of private sector entities acknowledges their increasing role in monetary value movement.
  • The obligation for Non-governmental organizations (NPOs) to verify fund legitimacy, separate from CDD, would be strengthened under paragraph 48.
  • The proposal suggests defining a “registered bank account” due to the rise of VASPs and the specificity of bank account references.
  • Wolfsberg suggests that incorporating Financial Institutions (FIs) in paragraph 56 and section 2.3.3 could help identify typologies and best practices for addressing TF abuse of NPOs.