Working together always works
While I have always believed that what we do in the AML community makes a difference, the past two years (at least) have seen the expansion of challenges that demand proactivity. When we work together with groups outside of AML toward a common goal, our impact can be immeasurable.
A perfect example is a webinar I participated in this week with the Charity & Security Network on “Tips for Successful Banking Relationships for NPO’s.”
Our goal was two-fold; to cover the key points in our newly released paper Banking Nonprofit Organizations-The Way Forward and to simply show the audience how much the AML community can learn from the NPOs and vice versa. The paper was developed by a group of financial institutions and NPO representatives that formed the “Consortium for Financial Access.”
The AML community began this type of outreach with organizations such as Polaris to address the horrific crime of human trafficking and we are currently working with the Antiquities Coalition on another Financial Crimes Task Force to address how stolen art and cultural artifacts is being used by organized crime and terrorists to launder money. All of these efforts have a common theme—outreach and education.
For the webinar, I was pleased to be able to join the C&SN officials as they explained their community’s need to be proactive. I echoed that direction to the relationship managers and compliance officials in financial institutions to do several basic things: have a point of contact with their NPO clients, learn about the NPO’s clear differences, and question negative news reports when necessary.
Our NPO partners (and that’s what they need to be) stressed what they need to know about banking: the requirements for due diligence, monitoring and the potential filing of suspicious activity reports. Their community polices itself by pointing out that NPOs should provide their financial institution with information on:
- The history, size, and location of the NPO, as well as the name of trustee/board members, and a description of the specific sector the NPO serves
- The nature and purpose of the NPO
- The projected use of the requested account
- The nature and size of the projected transaction activity
- An explanation of the regulatory oversight of the NPO, as well as the internal controls, good governance and due diligence the NPO employs
The bottom line was the recommendation that if there were issues or false accusations regarding the NPO, the community says – provide the financial institution with all of the information necessary to prove the NPO case.
Our community is big and includes (and needs) our regulatory partners
The program, the paper, and the debate on de-risking shows us that we need the participation of our regulatory overseers. As discussed during the webinar (and it is in the paper), governments and the financial sector regulators can clearly take steps to address the issue of de-risking and actually encourage institutions to consider providing financial services to NPOs.
An important point for regulators and law enforcement is that they can (and should) emphasize that NPOs are different and not inherently risky. Maybe as important, is that policy objectives of combating illicit finance, and supporting humanitarian assistance are actually complementary goals.
What needs to be mentioned is that the regulators have been part of many of our meetings that resulted in the paper by the Consortium. They have asked for and sought input on oversight, whether in the FFIEC AML examination manual or how safe harbors could be considered, but they need to acknowledge that they can learn more, need training, and accept that they are not always correct.
What have we learned?
The paper and the webinar are only the beginning of how to improve financial access for NPOs and many other inappropriately categorized high risk entities. What we need is to expand stakeholder dialogues and have everyone at the “table.” It won’t be easy; sure, there may be arguments, but all in, we can change the world.
*Graham Nash on 1971’s “Songs for Beginners” used the refrain from his song “Chicago” as a separate song. Simply—We can change the world… Saw Nash this year and he hasn’t lost a step…