The Big Impact of the Little-Known “Recommendation 8”

Most people have never heard of “Recommendation 8,” the regulation intended to protect the nonprofit sector from abuse through terrorist financing. It’s a technical section of an esoteric regulatory system that governs the global flow of money.

Until this month, it was also a flawed regulation that left civil society vulnerable to illegitimate government crackdowns.

Created by the Financial Action Task Force (FATF), the regulatory body established to combat money laundering and funding for terror, the aim of Recommendation 8 may have been well intentioned. But its actual impact has been insidious, as governments have used it to justify undue restrictions on civil society, from increased state surveillance to restrictions on foreign funding for development, conflict resolution, and human rights work.

Its use as a tool for limiting civic space may soon end, however. Earlier this month, the FATF adopted a rewritten version of the standard, the culmination of an almost three-year effort by the Non Profit Platform on the FATF, a coalition of Open Society Foundations grantees that engaged and worked with the task force.

According to the FATF, “The revised standard aims to ensure that the implementation of Recommendation 8 … does not disrupt or discourage legitimate nonprofit activities.” The European Center for Not-for-Profit Law, a coalition member, hailed the revisions as a victory for the nonprofit sector, saying it removes the argument for misusing or misinterpreting the FATF standard for the purpose of closing civic space.

These revisions were sorely needed. The regulation’s old language branded the entire nonprofit sector as a “particularly vulnerable” channel for terrorist financing, even though no evidence supports this claim. The new language tightens the focus to only organizations found to be legitimately at risk—sham charities, for example. The revisions also call on countries to ensure that responses to at-risk organizations are proportionate, effective, and respectful of international human rights law.

Because of the FATF’s far-reaching influence, the impact of the revisions will be significant. According to the coalition, over 180 jurisdictions worldwide are committed to implementing the FATF’s standards, including Recommendation 8.

Implementing the rewritten standard will require careful monitoring and guidance. The FATF must make national governments aware of the changes to Recommendation 8, so that laws and regulations that unfairly restrict civil society in the name of national security and counterterrorism are brought in line or avoided in the first place. Civil society organizations must also be involved in FATF evaluation processes, and work with the regional bodies responsible for implementing FATF standards and evaluations.

At the country level, national coalitions of civil society organizations and other stakeholders—including human rights, development, and humanitarian actors—will need to help governments implement the revised Recommendation 8 in rights-respecting ways, and challenge proposed or existing legislation where governments persist in using FATF standards to defend crackdowns on the nonprofit sector.

At the local level, too many civil society organizations are unaware of the impact that the FATF and Recommendation 8 have on their day-to-day work. Raising awareness will require resources, including comprehensive trainings, effective tools, and comprehensible briefings on what are complex and often arcane-seeming topics.

Civil society must also engage with the FATF on revisions of its anti–money laundering standards, which are separate from Recommendation 8. These standards have also had a negative and disproportionate impact on civil society. In Mexico, for example, civil society organizations claim the directives aimed at drug trafficking are inadvertently resulting in the repression of human rights groups and the closing down of civil society space.

More must be done to raise awareness about the FATF among civil society actors and to document the unintended impact of anti–money laundering measures on civil society. The failure to distinguish between organizations legitimately at risk of being used for money laundering and organizations with no links to organized crime must be accounted for.

The revisions of Recommendation 8 are a good start. Now, the work to translate this win into broader action and greater impact at all levels begins—locally, nationally, and globally.