The Obscure Global Organization That’s Unwittingly Undermining Civil Society

Today, laws restricting the space for civic activism are proliferating at an alarming rate. In the past three years alone, more than 60 countries proposed or have passed over 100 laws restricting freedom of assembly or the foreign funding and activities of civil society organizations.

An array of forces is driving this trend, from perceived threats to national security to suspicion of foreign funding for civil society. But one unlikely and unwitting organization that is partly to blame is largely unknown. The Financial Action Task Force (FATF), established by the countries of the G7 to combat money laundering and terrorism financing, offers its seal of approval to nations that implement its security recommendations.

That seal of approval is no small thing. Even though the FATF is not treaty-based and has no actual legal authority, more than 180 states have now signed on to what is, in practice if not in law, a global convention.

Countries in compliance with FATF recommendations are certified as safe places to do business; those not in compliance risk being shunned by the global financial system. To date, FATF recommendations and evaluations have been made largely with little scrutiny, transparency, or public accountability. Its meetings take place behind closed doors, the minutes of those meetings are incomplete, and there are no mechanisms to gain further insight into its decision-making processes.

Our main concern is that the FATF’s regulations fail to take into account human rights—there are no meaningful safeguards for freedom of association and expression. As a result, countries that implement FATF regulations risk facilitating and legitimizing the repression of NGOs and civil society.

For example, when it comes to money laundering or supporting terrorist groups, there is no evidence that nonprofits are particularly vulnerable to misuse. Yet the FATF has singled out nonprofits through a targeted regulation, Special Recommendation 8, which has had unintended consequences for the sector.

Recommendation 8 has led to increasing surveillance and state regulation, difficulties in accessing and distributing financial resources, onerous and restrictive laws and regulations, and the cutting back, in general, of civil society space. In short, it has strengthened existing state tools used to clamp down on civil society.

Even worse, the FATF has welcomed regulatory steps taken by countries that restrict civil society, from Spain and India to those with more restrictive regimes such as Colombia, Indonesia, Mexico, Saudi Arabia, and Uzbekistan.

But a recent breakthrough promises to remedy these unintended consequences. In July, a global coalition of Open Society grantees announced that the FATF had agreed to meet regularly with civil society groups and organize ad hoc exchanges on technical matters.

The FATF also committed to respect international obligations regarding freedom of association, assembly, and expression, as well as humanitarian law; implement a more targeted approach to identifying those at risk of money laundering and terrorism financing; and recognize that no additional regulations should be applied if existing legislation and self-regulation mechanisms are sufficient.

Since not all nonprofit organizations are at risk of abuse, the FATF further agreed that any counterterrorism measures should not apply to the entire nonprofit sector, and that government overregulation of the sector is not a desirable outcome of implementing FATF standards.

This breakthrough constitutes the start of the coalition’s work with the FATF. We hope to improve its regulations, policies, and assessment practices, and mitigate their negative effects, whether intentional or not, on nonprofits.

In the weeks and months to come, the coalition will push for clear rules of engagement so that NGOs can meaningfully participate in the drafting and revision of FATF recommendations. By involving civil society, instead of inadvertently hindering it, the FATF now has an opportunity to become more effective and rights-respecting, while recognizing civil society for what it is—the cornerstone of an open society.