Spaces for Change | S4C partnered with the South Saharan Social Development Organization, with support from Ford Foundation, to organize the two-day Regulatory Compliance Clinic (RCC) in Enugu State, Nigeria, on October 17 and 18, 2024. Organized under the auspices of the Civic Space Resource Hub (CSR-Hub) as part of a broader effort to strengthen the resilience and governance of nonprofit organizations (NPOs) across West Africa, this event drew 46 participants, including chief executives, financial officers, and program managers of 35 NPOs operating in the South-East and North-Central regions of Nigeria.
The RCC has been equipping civil society organizations in West Africa with robust self-regulatory and internal governance tools to enhance their corporate integrity, effectiveness and sustainability. Another overarching aim of the RCC is to reduce NPO’s risk exposure to illicit financial flows, especially money laundering and terrorism financing, thereby aligning with the country’s broader anti-money laundering and counter-terrorism financing (AML/CFT) objectives. Nigeria, like many jurisdictions, had previously misapplied the Financial Action Task Force Recommendation 8 (R8) by designating NPOs as reporting entities without conducting a sector-specific risk assessment. However, in 2022, the country introduced progressive reforms, removing NPOs from the list of reporting entities. Nigeria has also carried out a dedicated risk assessment of the NPO sector. This paved the way for the implementation of risk-based monitoring and outreach. The regulatory compliance clinic has remained a key platform for consolidating the gains of legal reforms in Nigeria, earning the country a full compliance rating while promoting a strong culture of compliance within the third sector.
Nine sessions of the Clinic walked participants through sector-specific regulations and risk-based monitoring mechanisms espoused in a maze of national and international legal frameworks. These include compliance requirements stratified by risk levels facing low-, medium- and high-risk organizations. They also learned how to assess, identify, and mitigate these risks by applying the enunciated compliance requirements to their organizations’ unique risk spectrums. Other sessions focused on corporate governance regimes and protocols, annual filings, annual reporting to regulatory bodies, penalty assessments, bank derisking, vendor screenings, etc.
The litany of regulations covered during the Clinic provoked heated conversations regarding the apparent overregulation on the NPO sector. The recently proposed Not-For-Profit Governance Code 2023 by the Financial Reporting Council of Nigeria introduces additional requirements, including board responsibilities and financial management practices, which many feel duplicated the provisions of existing regulations. S4C has challenged this proposed regulation advocating for synergy between regulators and streamlining regulations applicable to NPOs in Nigeria to ensure compliance requirements expected of charities remain manageable and cost-effective.
Reflecting on the sessions, participants shared real-world scenarios highlighting their newfound awareness of risks they are already exposed to. The frank discussions that ensued and the numerous examples shared buttress the importance of organizing the RCC to minimize NPO’s risk exposure to unscrupulous practices. Many confessed that their eyes were suddenly opened to serious risks often overlooked in the organization that could cause harms and reputational risks. Armed with knowledge gained from the RCC, participants are now equipped to identify and mitigate these risks, including reporting suspicious transactions to law enforcement authorities.
The RCC concluded with group exercises and case studies, allowing participants to apply the knowledge gained to their respective organizations. Wrapping up the exciting two-days, participants were taken through scenarios, AML/CFT typologies and exercises that were designed to aid them identify and understand their risk spectrum of money laundering and terrorism financing. Practical recommendations where shared to help them develop and implement AML/CFT checklist for their organizations. Some of the recommended action-points circled around strong governance, healthy financial management and internal control systems. By providing these tools, Spaces for Change advances its mission to empower NPOs to remain resilient, compliant and effective while ensuring that the sector continues to serve communities sustainably and ethically across West Africa. The RCC was conducted under the auspices of CSR Hub with the support of Ford Foundation.
