Terrorist financing risk of NPOs in SA assessed as medium

The inherent terrorist financing risk of NPOs in South Africa is assessed as medium in a report compiled by government and private sector partners. The report is part of the country’s tasks to get South Africa off the greylist.

The report on the terrorist financing risk assessment of the non-profit organisation (NPO) sector will, hopefully, result in focused, proportionate and risk-based measures to mitigate the identified risks. It was launched today.

The risk assessment is a collaborative effort led by government partners, including the Financial Intelligence Centre (FIC), South African Revenue Service (Sars) and the department of social development and public and private sector organisations, NPOs and umbrella organisations.

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Assessment of NPOs in line with FATF global standards

The sector risk assessment is in line with the Financial Action Task Force (FATF) global standards to combat money laundering and terrorist financing, as well as South Africa’s follow-up action plan to address its greylisting by the FATF in 2023.

The FATF is an intergovernmental body which sets global standards and measures for combating money laundering and terrorist financing. As a member of the FATF, South Africa is obliged to meet these standards. The FATF global standards require countries to periodically identify and assess the terrorist financing risks regarding organisations that raise or disburse funds for good works.

Pieter Smit, acting director of the Financial Intelligence Centre (FIC), says understanding and regularly assessing the particular terrorist financing risks local NPOs are exposed to remains the best measure to effectively combat their abuse and exploitation.

“The assessment will augment our understanding of the risks of terrorist financing non-profit organisations face in South Africa and the findings will help us formulate measures to prevent or mitigate the abuse of NPOs for terrorist financing purposes.”

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Key determinations about NPOs in the report

The risk assessment included a survey of 301 non-profit organisations, data submissions from various institutions, such as law enforcement, regulatory and supervisory institutions, intelligence agencies and financial institutions, made several key determinations:

• The risk assessment identified five main terrorist financing threats with the potential to exploit NPOs to raise or move funds that may support terrorist organisations or be used in the carrying out of terrorist activities. These are the Islamic State (IS) and its affiliates in Africa, Al-Shabaab and its affiliates in Africa, including Al Sunnah Wa Jama’ah, Nigerian terrorist groups, including Boko Haram and MEND, domestic right-wing extremists and Al-Qaeda (including Al-Qaeda in the Arabian Peninsula (AQAP) and Al-Qaeda in the Islamic Maghreb).
• The assessment also describes the nature of this exploitation should it happen. This includes NPOs raising funds or other support for foreign terrorist groups, establishing an NPO to support domestic terrorist activity, NPOs facilitating foreign travel for terrorist causes and using NPOs as a conduit to channel foreign funds to terrorist groups in Africa.
• The assessment describes five inherent vulnerabilities of NPOs that may be targeted for the purpose of terrorist financing abuse at varying levels of significance and prevalence. These vulnerabilities are NPOs established or operated by individuals with known terrorist sympathies, NPOs with activities in high-risk foreign areas, NPOs with links to communities with individuals sympathetic to terrorist causes (including far-right causes), NPOs receiving funds from and transferring funds to high-risk countries and NPOs using unverifiable methods for raising or transferring funds.

Among the recommendations in the report is the call for a more targeted approach to dealing with NPOs at a higher risk of terrorist financing and the inherent vulnerabilities identified.

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Cooperation of all sectors lauded

Convenor of the technical team, Bernice Bissett, says this is the first sectoral risk assessment of its kind in the South African NPO sector and lays the foundation for many other projects, future research and outreach within the sector and beyond.

Edward Kieswetter, Sars commissioner, says the report and the collaborative approach followed in its development reflects what can be achieved when we work together, not just as government regulators, but more importantly with stakeholders in civil society.

Dr Hendrietta Bogopane-Zulu, deputy minister of social development says as a department expected to regulate and supervise NPOs, this report will enable it to put in place appropriate NPO supervision measures informed by the scientific process in protecting NPOs.

“The NPO Risk Assessment will also ensure that these organisations in turn comply with measures and standards set by FATF to protect NPOs. The department has a mammoth task to popularise and create awareness to broader stakeholders and NPOs to create awareness of the vulnerabilities and threats that NPOs face.”

South Africa received technical assistance from the European Union Anti-Money Laundering/Counter Terrorist Financing Global Facility (EU AML/CFT Global Facility) on the development of the NPO terrorist financing sectoral risk assessment. The risk assessment was completed using a methodology provided by Greenacre Group.