Spaces for Change | S4C extended its Regulatory Compliance Clinic to 17 nonprofit organizations in Togo and Niger under its West Africa Security Advocacy Project (WASAP), supported by the Charles Stewart Mott Foundation. Held over two days in Lome from April 24th to 25th, the training enhanced the capacity of nonprofit organizations (NPOs) to comply with national and international regulatory frameworks applicable to non-profit entities, including anti-money laundering and terrorist financing legal regimes. S4C’s regulatory compliance clinic has garnered recognition from the Financial Action Task Force (FATF) as a global best practice for addressing terrorism financing abuse in the non-profit sector, as highlighted in the recently revised Recommendation 8 (R8) Best Practice Paper.
Togo and Niger have made strides toward complying with FATF R8, which mandates countries to identify the subset of NPOs susceptible to terrorist financing risks and apply targeted, proportionate regulatory measures to these entities. However, these efforts have been largely undertaken with minimal involvement from the NPO sector. In Togo, a specific risk assessment (RA) of the NPO sector was conducted in February 2021. It highlighted concerns regarding the activities of faith-based NPOs associated with high-risk foreign individuals and entities. The assessment concluded that the vulnerability of NPOs to TF is medium to high. Conversely, while Niger has not conducted a dedicated risk assessment of the sector, the country’s national risk assessment conducted in 2018 concluded that the inherent TF risk within the NPO sector is high. The assessment concluded that NPOs operating in the Middle-Eastern region of the country are particularly exposed to TF risks.
According to the last mutual evaluation reports (MER) by the Inter-Governmental Action Group against Money Laundering (GIABA) – the FATF styled regional body for West Africa–Togo and Niger received ratings of Partially Compliant and Non-Compliant on Recommendation 8 respectively. The MER for Togo highlighted a significant concern that the country has not implemented relevant and specific proportionate measures to address identified risks, particularly regarding faith-based nonprofit organizations. Among other concerns, Niger’s non-compliant rating in its second MER was based on the fact that the country is yet to undertake a specific risk assessment of the NPO sector. Consequent to the MER ratings, both countries have been placed under the FATF’s list of “jurisdictions under increased monitoring”. These countries are therefore working with the FATF to address the strategic deficiencies in their AML/CFT frameworks. While these processes are ongoing, NPOs operating in these countries continue to grind under disproportionate measures that are affecting their legitimate charitable work on multiple fronts such as blanket and cumbersome reporting requirements, steep compliance costs and financial exclusion. Equally concerning is the low awareness among NPOs of their internal and external risks exposure to terrorist financing, due to non-existent outreach from authorities. It was against this backdrop that SPACES FOR CHANGE organized the Regulatory Compliance Clinic for NPOs in the two countries.
Presentations at the clinic delved into the intricacies of NPO corporate governance, unveiling best practices for forming effective Boards, implementing strong internal AML/CFT controls, and navigating complex statutory filing requirements. Each of these interventions were customized to suit the distinct operational landscapes of NPOs in both countries. The sessions were designed to bolster organizational resilience and enhance their capacities to safeguard against the misuse of NPOs for terrorist financing.
Subsequent sessions provided participants with invaluable insights into the nature of terrorism financing risks, the legal frameworks regulating money laundering and terrorism financing in Togo and Niger, different terrorism financing typologies, and the standards for implementing a risk-based approach to combat ML/TF. The sessions also shed light on the various strategies and platforms through which they can engage with the national risk assessment in their respective countries, with a particular focus on Recommendation 8.
The Clinic helped in closing the knowledge gap among NPOs in these countries. During the concluding exercises, participants demonstrated notable enhancements in their comprehension of terrorism financing concepts, establishing AML/CFT internal controls, and ensuring compliance with pertinent statutory filings. Spaces for Change plans to extend the Regulatory Compliance Clinic to at least six additional West African countries as part of its advocacy for the proper application of the FATF R8 across the sub-region. Through collaboration with NPOs and authorities in these countries, the aim is to achieve full compliant ratings on R8, mirroring the success already achieved in Nigeria.
