08
Apr
10

International charitable work and anti-terrorist financing guidelines

I have wanted to write a blog post regarding the issue of international charitable distributions and compliance with U.S. regulations to deter anti-terrorist financing for sometime now. Particularly to find out what nonprofit organizations are doing from a policy, internal control and process standpoint to comply with Executive Order 13224 and the Patriot Act .

The Treasury Department has issued the Treasury Anti-Terrorist Financing Guidelines (TATFG), which are designed to enhance awareness of practices that charities may adopt to reduce the risk of terrorist financing or abuse. These guidelines were last revised in September 2006, are voluntary and do not provide a safe harbor for organizations in the event of non-compliance. As such, many nonprofit organizations have questioned the value and necessity of complying with all the guidelines given the burdensome internal effort required to implement all the recommended procedures.

This blog post will be written in two parts. Part 1 will summarize TATFG and Part 2 (which will be posted about 3-4 weeks from now) will discuss what some organizations are doing from a policy, internal control and process standpoint to ensure compliance. The scope of Part 2 of the blog post does not extend to the unique requirements of private foundations, which are subject to equivalency determinations or expenditure responsibility as designated by Executive Order pursuant to 22 U.S.C. &288 (Treas. Reg &53.4945-5(a)). Although public charities are not subject to equivalency determinations or expenditure responsibility, they still have to be able to prove that charitable distributions (domestic or international) serve the exempt purpose of the organization.

 

Summary of Treasury Anti-Terrorist Financing Guidelines (TATFG)

 

What is it?

• Issued by Treasury Department to assist nonprofits and grantmakers in complying with the Executive Order and the Patriot Act

o Executive Order 13224 – prohibits transactions with individuals and organizations deemed by the Executive Branch to be associated with terrorism and allows the government to freeze all assets controlled by or in the possession of these entities and those who support them

o Patriot Act – contains various measures directed at strengthening the Federal government’s ability to combat terrorism

• Designed to enhance awareness of practices that charities may adopt to reduce the risk of terrorist financing or abuse
• Guidelines are voluntary

 

What must you do?

• Comply with U.S. law including administered sanction programs – Office of Foreign Asset Control (OFAC)
• Check SDN list

 

What should you do?

• Practice Governance, Accountability and Transparency best practices

• Practice Financial Accountability and Transparency

• Perform Programmatic Verification

o Determining that the grantee has capacity to carry out grant purposes and protect resources from diversion

o Written agreement signed by grantor and grantee

o Ongoing monitoring of grantee and grant purposes

o Periodic reports on use of grant funds

o Grantee should have internal controls (processes) to mitigate risk of fund diversion

o Periodic on-site audits by the grantor 

• Anti-Terrorist Financing Best Practices

o Collect basic information about grantees

o Conduct basic vetting of grantees

o Conduct basic vetting of grantor’s own key employees

 

Other Resources:

Principles of International Charity (Nonprofit Sector commentary on the TATFG)

Handbook on Counterterrorism Measures

Independent Sector

IRS

Interaction

 

Please look out for Part 2 of this blog post coming out in about 3 weeks. In the meantime, I welcome comments about some of the things your organization or clients are doing in order to comply with anti-terrorist financing legislation.

Advertisements

0 Responses to “International charitable work and anti-terrorist financing guidelines”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


Archives

April 2010
M T W T F S S
« Mar   May »
 1234
567891011
12131415161718
19202122232425
2627282930  

Categories

Awards

Online Accounting Degree blog feature

%d bloggers like this: