At the first general meeting of the Multi-stakeholder Working Group on Charities (MSWGC) held on June 14, representatives of banks, local and international non-NGOs, financial regulators, and experts converged in Lagos to discuss and propose solutions to bank derisking of non-profit organizations (NPOs) arising from the implementation of anti-money laundering and countering the financing of terrorism (AML/CFT) measures by financial institutions in Nigeria. The AML/CFT restrictions NPOs are facing in Nigeria are documented in the Banks and Civil Society in Nigeria Report. The MSWGC, initiated by Spaces for Change|S4C in collaboration with regulators, is Africa’s first tri-sector dialogue, adding to the list of nine dialogues in the world.
What are trisector dialogues? Are there lessons to learn from other jurisdictions regarding how trisector dialogues work and the added advantage to regulatory actions? An expert presentation by the Human Security Collective examined the historical context and international best practices for tri-sector dialogues in countries like the USA, UK, France, and Macedonia. The Financial Action Task Force’s (FATF’s) Recommendation 8 (R8) requires countries to conduct a terrorism financing risk assessment (TFRA) of the NPO sector. Nigeria has conducted a terrorism financing risk assessment of NPOs in 2021-2022. Beyond the overall risk spectrum identified during the assessment, financial institutions must take steps to individually assess an NPO’s risk exposure before onboarding, rather than de-risking without justification. To satisfy these requirements, constant dialogues and effective collaboration between financial institutions, NPOs, and regulators are necessary, with emphasis placed on trust, gender sensitivity, and inclusivity.
The MSWGC examined two critical issues highlighted in the “Banks and Civil Society in Nigeria” report: restrictions on private donations in Nigeria’s conflict-ravaged regions and bureaucratic onboarding procedures by financial institutions. An example is banks’ reluctance to explore digital authentication pathways and the insistence on newly-appointed trustees or directors of NPOs to be physically present for onboarding regardless of their location. These requirements, and many more, continue to place difficulties on the ability of NPOs to maintain and operate bank accounts, making it harder for them to prefer formal payment channels for their transactions. Stakeholders discussed the various examples and ways onerous onboarding processes affect NPOs and the strategies for mitigating the disruptions to legitimate charitable operations. The discussions and recommendations proffered at the meeting were further broken down into actionable steps for various sectors.
MSWGC is working to ensure that supervisory and regulatory actions align with the TFRA of NPOs conducted in 2021 in line with the FATF Recommendation 8. The aim of Recommendation 8 is not to impose burdensome restrictions, but to identify NPOs at risk and effectively mitigate those risks. This inaugural general meeting of the MSWGC, supported by the Global Centre on Cooperative Security (GCCS), marked a significant milestone in advancing collaborative efforts to ensure that NPO supervisory actions are dictated by the evidence generated from the TFRA findings.
