Non-profit de-risking is a practice in which bank close, freeze, or restrict the bank accounts of civil society organisations due to the perceived risks related to anti-money-laundering and counter-terrorism-financing (AML/CFT) regulations. Even though banks have an obligation to assess risks and manage them proportionately, many choose to pre-emptively de-risk rather than manage risks on a case-by-case basis.
The EU's incoming Corporate Sustainability Due Diligence Directive (CSDDD) may soon make the denial of financial services to legitimate non-profits a liability – as the disruption of CSO operations can constitute adverse human rights impact.
What should bank executives do to avoid this risk?
- Clarify what risk-based KYC means for non-profits;
- Integrate human rights into KYC decisions;
- Use existing frameworks, like the Tbilisi principles that provides guidance for high-risk geographies or conflict‑affected contexts.
Read examples of good practices and recommendations in this executive brief developed by ECNL and Nelleke Hoffs.