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FATF Recommendation 8 – A threat to Civic Space in Sudan?

A news alert dated 29 May 2018 and posted on the Sudan Civic Monitor website has signalled concerns raised by civil society experts and activists following a meeting organized by the Humanitarian Aid Commission (HAC) and the Financial Intelligence Unit (FIU) to present and sensitize non-profit organizations (NPOs) to the Sudan Money Laundering and Terrorism Financing Act (MLFTA of 2014).

The introduction of the MLFTA to CSOs registered with the HAC, comes as part of the FIU’s effort to comply with recommendations issued by the Financial Action Task Force (FATF) - an intergovernmental organization founded in 1989 to combat the growing problem of money laundering[1].

The FATF Recommendations set out a comprehensive and consistent framework of measures which countries should implement to combat money laundering and terrorist financing, as well as the financing of proliferation of weapons of mass destruction. Recommendation 8 of the FATF pertains specifically to NPOs and requires member states to “review the adequacy of laws and regulations that relate to non–profit organisations which the country has identified as being vulnerable to terrorist financing abuse” and “apply focused and proportionate measures, in line with the risk–based approach, to such non-profit organisations to protect them from terrorist financing abuse…”.[2]

Mutual Evaluation Reports (MER) ….The last Mutual Evaluation Review (MER) for Sudan that was carried out in 2012, found Sudan to be Partial Compliant (PC) with regards to Recommendation 8. More specifically, findings in relation to this recommendation were –

  • There were no laws or requirements concerning countering finance for terrorism for this sector;
  • The supervision system of non-profit organizations was not effective;
  • There was no requirement of NPOs to maintain records for 5 years;
  • There was a lack of awareness for NPOs about AML/CFT;
  • Sanctions for non-compliance with the requirements of existing registration requirements were not effective or dissuasive.

Civil society experts and activists in Sudan have been quick to pick up on concerns flagged elsewhere in the African continent which point out that despite “the positive intention, ostensibly to protect innocent civilians and to protect the state regime against terrorist acts, the resulting policies have had, in many cases, undesirable impacts on the NPO working environment. A glance at the political context within the Sub-Saharan Africa region, reveals that a number of governments have generated laws that impede the work of civil society by citing the imperative to stem ML/TF”[3].

Aware of this potential for abuse by authoritarian regimes the Global NPO Coalition on FATF has been engaged in advocacy for changes in FATF recommendations affecting NPOs, particularly recommendation 8 (R8). Advocacy efforts of the coalition resulted in an interpretive note to R8 being issued by the FATF in 2016 to eliminate the unintended consequences that could result from implementation of FATF policies and recommendations pertaining to civil society.

Given the risk posed to civic space in meeting the requirements of R8 of the FATF, the following recommendations are being put forth to both government and civil society in Sudan –

  • In meeting compliance with the FATF R8 Interpretive note, the FIU should undertake a risk assessment of the sector and to Collaborate with the NPO sector in undertaking a sector risk assessment which might inform
  • Revisions and reforms to the existing Humanitarian and Voluntary Works Act of 2006 (which governs a large part of NPOs in the sector) are urgently needed, however in ensuring the law is responsive to the FATF R8, authorities are cautioned against following the previous one-size fits all approach when making these revisions/reforms. This is specifically relevant to those Articles in the law that are in violation of Sudan’s constitution as well as international human rights standards and which have been flagged by the Independent Expert on Human Rights for Sudan. Revisions should also be informed by an NPO sector risk assessment as advised by the FATF R8 Interpretive note.
  • Civil society and NPOs must take the lead to demonstrate they are aware of the threats and their vulnerabilities in relation to ML and TF, and should pursue self-regulatory measures.

[1] Sudan is a member of the Middle East and North Africa Financial Action Task Force (MENAFATF), a FATF-style regional body.

[2] International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation: The FATF Recommendations. Paris: FATF/OECD, February 2012, Updated October 2016. p.13.

[3] Yona Wanjala – Defenders Protection Initiative (DPI), Kampala Uganda.