BEST PRACTICES IN COUNTERING TERRORISM FINANCING: LESSONS FROM UGANDA

By Precious Mupenzi

• Day two of the symposium looking into the Financial Action Task Force’s Recommendation 8 on non-profit organisations and the possibility of being used to fund terrorism heard from civil society organisations.
• Chapter Four Uganda shared best practices in handling beneficial ownership disclosure requirements and their implications for NPOs and regulators.
• Representatives from funding institutions, the NPO sector, and regulatory bodies are exploring collaborative solutions to an ever-evolving financial regulatory landscape.

“Disclosing beneficial ownership is important, but we must ensure that the process does not expose individuals to undue risk,” stated Anthony Masake, Executive Director of Chapter Four Uganda.

He was addressing the multi-stakeholder symposium in Johannesburg on the Financial Action Task Force’s (FATF) Recommendation 8 required to help South Africa get off the international grey-list.

The FATF is an international organisation that monitors global money laundering and the financing of terrorism, setting standards to prevent illegal activities and the harmful impact they cause.

Masake also warned that national laws demanding excessive information beyond what is necessary could create compliance burdens for non-profit organisations (NPOs) and hinder their ability to operate effectively.

Chapter Four Uganda is a dynamic non-governmental organisation dedicated to promoting and protecting human rights, democracy, and good governance in Uganda.

Established to address challenges around civil liberties, Chapter Four Uganda works to empower individuals and communities by enhancing their awareness of human rights and fostering a stronger, more inclusive democracy.

The executive director discussed best practices in handling beneficial ownership disclosure requirements and their implications for NPOs and regulators on the second day of the symposium.

The session focused on the perspectives of civil society organisations and the implications of countering terrorism financing measures on NPOs.

Masake provided a comprehensive overview of beneficial ownership transparency, emphasising the importance of identifying individuals who ultimately own or control legal entities.

“Only a natural person can be an ultimate beneficial owner,” he explained, highlighting the distinction between legal ownership and beneficial ownership and how these concepts overlap within NPOs.

Balancing transparency with privacy

Masake outlined the evolution of FATF standards, noting that Recommendation 24 was strengthened in 2012 to address the misuse of legal entities for money laundering and terrorism financing.

While transparency is crucial, he cautioned against excessive disclosure requirements that could lead to unintended consequences, including violations of data protection laws and risks such as doxing, the malicious exposure of private information online.

“Disclosing beneficial ownership is important, but we must ensure that the process does not expose individuals to undue risk,” he stated. He also warned that national laws demanding excessive information beyond what is necessary could create compliance burdens for NPOs and hinder their ability to operate effectively.

Implications for NPOs and regulatory compliance

The discussion resonated with advocate Rene Govender of the South African Internationally Trained Health Professionals Association, who raised concerns about how funding withdrawals, particularly in the HIV/Aids sector, could have devastating consequences.

“The impact is going to cause widespread unemployment, an escalation in deaths, and an increase in child-headed households,” Govender warned.

“We are already facing a shortage of healthcare workers, and further restrictions on funding will only worsen the crisis.”

Another delegate emphasised the need for clarity and a balanced regulatory approach, stating: “We need to be specific in our intention while also considering the broader impact on NPOs and their contributions to the South African economy. This symposium is an important step in bringing all sectors together to address these challenges collaboratively.”

The presentation given by Sangeeta Goswami, Director of Human Security Collective Policy and Advocacy, looked at the effects of countering terrorism financing measures on NPOs.

She outlined best practices for applying FATF measures while ensuring that NPOs can continue their operations without unnecessary restrictions.

Goswami emphasised the importance of a risk-based approach that does not impose undue burdens on organisations that play a crucial role in humanitarian and development efforts.

Masake concluded his presentation by urging regulators to adopt a risk-based approach in applying FATF measures to NPOs.

He emphasised that while compliance with international financial standards is necessary, policies should not unintentionally stifle civil society operations or expose individuals to security risks.

As the symposium continues, delegates are expected to deliberate on practical solutions to enhance compliance, cooperation, and the sustainability of NPOs in the fight against terrorism financing.

The three-day symposium, held under the theme “Together – Countering the Financing of Terrorism in the NPO Sector: Promoting Cooperation and Compliance with Global Standards,” has brought together representatives from funding institutions, the NPO sector, and regulatory bodies to explore collaborative solutions in the ever-evolving financial regulatory landscape.