The FATF dedicates significant resources to examining and mitigating de-risking and financial
exclusion, as well as ensuring that countries’ measures to protect non-profit organisations (NPOs) from terrorist financing abuse are focussed and proportionate. These efforts include amendments to the FATF Standards in 2012 and 2016 to ensure that they are in line with the risk-based approach (RBA), including measures aimed at protecting NPOs vulnerable to terrorist financing abuse; as well as multiple guidance and best practices papers and continuous engagement with relevant external stakeholders.
Despite these efforts, de-risking and financial exclusion remain challenges for many sectors and run contrary to the RBA promoted by the FATF and core philosophy of the RBA. Moreover, international commentary on these unintended consequences indicate that the FATF Standards and/or their incorrect implementation have an impact in furthering and sustaining these phenomena.
In February 2021, the FAFT agreed to analyse and understand better the unintended consequences resulting from the FATF Standards and their implementation. This project examines the unintended consequences related to four broad themes: (1) De-risking; (2) Financial Exclusion; (3) Undue targeting of NPOs; and (4) Curtailment of Human Rights (with a focus on Due Process and Procedural Rights). This resource is a synopsis of the stocktake of these unintended consequences conducted by the project team, informed by existing FATF analysis and significant external input.