The Department of Treasury published an update to its 2015 National Terrorist Financing Risk Assessment (NTFRA) on Dec. 20, 2018 as part of a new National Strategy for Combating Terrorist and Other Illicit Financing, which also covers money laundering and nuclear proliferation. The NTRFA cited the top threats as ISIS, Hizbollah, Al Qaeda and al-Shabaab and banks and money services businesses as the most vulnerable to abuse. Cash transactions were cited as an increasing threat. The NTFRA recognized that the charitable sector overall is low risk, but noted that charities operating in areas where terrorist groups operate are face increased risk, particularly in Afghanistan, Pakistan, Somalia, Syria and Yemen. The U.S. nonprofit sector provided input to Treasury on the NTFRA, noting that increasing difficulties accessing financial services from regulator providers forces charities to use more risky methods of moving funds, including carrying cash. The NTFRA did not mention this issue.
The NTFRA’s section on charities began by noting that “The U.S. government recognizes and supports the important role charities play in delivering aid to communities worldwide” and that “the vast majority of charities fully comply with the law and properly support only charitable and humanitarian causes.” As a result, the U.S. “does not view the charitable sector as a whole as presenting a uniform or unacceptably high risk be being used or exploited for money laundering, terrorist financing, or sanctions violations.”
However, the document recognizes that terrorist financing risks “can vary dramatically depending on operations, activities, leadership and affiliations of the charitable organizations.” Those that operate solely domestically are rated as low risk while those that “operate abroad, provide funding to, or have affiliated organizations on conflict regions, can face potentially higher TF risks.”
Treasury says that a combination of enforcement, regulatory compliance (including filing IRS Form 990) and “self-regulation initiatives within the charitable sector” have reduced risk of terrorist financing abuse of U.S. charities.