CSOs that work within humanitarian and development assistance, often in high-risk countries that can be subject to sanctions, are experiencing debilitating issues with banking. The issues stem from controls that banks are required to implement if they identify a threat related to possible criminal or terrorist activity.
CSOs carry out legitimate, urgent and necessary actions for people in dire need. When financial regulations limit these organisations, it can create situations where food and medical aid do not reach some of the most vulnerable people, or humanitarian workers are left unpaid.
International dialogue
In 2018 the Dutch Ministry of Finance, the World Bank and Human Security Collective arranged an international stakeholder dialogue in The Hague to discuss these issues. . This initiative sought to bring together public and private sector stakeholders such as banks, governmental bodies, international organisations and CSOs.
The aim of this collaboration was to look at what can be done to reverse the issues CSOs faced and make sure that they can access the financial services they require. Multistakeholder discussions on solutions had been underway in the UK, the Netherlands and the US in the year prior to this meeting and the purpose of this event was to amplify these efforts.
Some of the issues discussed:
- What measures would be helpful to banks in meeting due diligence requirements and approving CSO transactions to high-risk locations or recipients?
- Do smaller CSOs face different challenges than larger CSOs, and if so, how can they be addressed and managed?
- What impact has the revision of FATF Rec 8 had on banks’ risk assessments of CSOs?
- What can regulators and policymakers do to encourage a more risk-based approach by banks?
- How can risk be evaluated and mitigated in high-risk contexts by banks and CSOs?
- What measures might stakeholders take to promote humanitarian transfers into high risk jurisdictions?
- How have stakeholders responded to financial access challenges?
Formalised cooperation
The international dialogue resulted in the formalisation of the Dutch Stakeholder Dialogue in 2019. This is underpinned by a formal agreement that specifies the background, objectives, expected outcomes, roles, responsibilities, resources required and commitments of the participating organisations, the Ministries of Finance and Foreign Affairs, the Dutch Banking Association and the Human Security Collective. The Dutch Roundtable is held three or four times a year and is characterised by its commitment to addressing derisking-related issues that affect a wide range of CSOs, from small voluntary foundations with a social mission to large multi-mandated organisations.
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