The policies of regulators and banks to address anti-money laundering and counter-terrorism financing (AML/CFT) risks have created an additional layer of challenges for the nonprofit sector, which has also been recognized by the Financial Action Task Force (FATF), a key global standard setter on AML/CFT issues. Nonprofits are still considered as a high(er) risk sector, even though there is scarce evidence to support that. De-risking is “the phenomenon of financial institutions terminating or restricting business relationships with clients or categories of clients to avoid, rather than manage, risk.
The research aims to better understand the driving forces of de-risking. It documents practices in relation to how financial institutions based in multiple jurisdictions onboard and monitor of civil society organisations. The report also provides recommendations for further actions in tackling the root causes of financial exclusion for the nonprofit sector.
We hope that findings and recommendations of the report will contribute to an increased understanding of different sectoral positions, actions and drivers, and facilitate national level action to help bring the nonprofit sector closer to a full financial inclusion.