Back in November 2020, the Agencies issued a Joint Fact Sheet on Bank Secrecy Act Due Diligence Requirements for Charities and Non-Profit Organizations. It indicated that while the U.S. government does not view the charitable sector as a whole as presenting a uniform
or unacceptably high risk of being used or exploited for money laundering, terrorist financing (ML/TF), or sanctions violations…institutions are reminded that charities vary in their risk profiles and should be treated according to such profiles. Banks should apply the risk-based approach and evaluate charities according to their particular characteristics to determine whether they can effectively mitigate the potential risk some charities may pose. This approach helps to minimize illicit finance risks.
This Fact Sheet is still relevant today and while the overall risk is still not considered unacceptably high, there has been an increase in non-profits and charitable organizations being used to facilitate money laundering and/or other illicit activities. For instance, these organizations are often exploited by terrorist groups, not only as a means to raise funds but also to transfer money discretely. Staying on top of your customer due diligence and documentation processes is crucial to mitigate the risk the charities and non-profits present.
Kevin discussed non-profit and charitable organizations during the February meeting of our BSA/AML/CFT Group. Give it a listen!
Published
2025/03/11