G7 task force gives governments tool against critics

The Financial Action Task Force (FATF) was established by the G7 group of advanced economies in 1989 to protect the global financial system, Reuters said in a special report and added that it found that in at least five countries – Uganda, Serbia, India, Tanzania, and Nigeria – legislation passed to meet FATF standards was used by authorities to investigate journalists, NGO workers, and lawyers.

The FATF plays a key role in shaping financial crime legislation and in dictating governments' security priorities but by pressuring nations with weak democratic frameworks to adopt and bolster laws, it has unwittingly handed a new legal instrument to authoritarian governments, according to researchers at think tanks and human rights groups.

"Its standards are increasingly not just being misunderstood, but are being purposefully abused," said Tom Keatinge, director of the Centre for Financial Crime at the Royal United Services Institute in London.
In particular, a focus at the FATF from the early 2000s on tackling terrorist financing through non-profit organizations has allowed some governments to pursue legitimate civic groups under the cover of enforcing international standards, according to researchers. "Non-profit organizations can get caught in those crosshairs," said Tracey Durner, a director at the Global Center on Cooperative Security in New York.

Countries deemed non-compliant with FATF standards are "grey-listed," or blacklisted, a tag currently held just by North Korea and Iran.

The FATF placed Serbia on the grey list in early 2018, saying its government needed to strengthen its laws so authorities could better trace individuals' financial information. After Serbia did so, the FATF de-listed it.

In July 2020, Serbia's financial intelligence unit sent a letter to local banks requesting private client data on some 50 NGOs and media outlets known for criticizing what they consider to be President Aleksandar Vučić's increasingly autocratic rule. The letter, reviewed by Reuters, sought data on their foreign currency inflows, under order of the amended law.

After news of the letter leaked, Finance Minister Siniša Mali told a local television channel the intelligence unit was "doing its job" and the data requests shouldn't be a problem for the targets "if nothing is hidden." No individuals have been charged so far.

Maja Stojanovic, director of Serbian nonprofit Civic Initiatives, which was named in the letter, told Reuters she believes the government is using the data for smear campaigns to undermine NGOs' work. She cited the example of a senior lawmaker from Vučić's party who in a speech this March attacked NGOs as foreign-funded coup-mongers and referenced transfer details which groups had not disclosed publicly.

When Stojanovic and other targeted NGOs consulted the banks about the requests, the banks said they couldn't disclose what information they shared with authorities, according to emails reviewed by Reuters. Spokespeople for three of the banks, Banca Intesa Beograd, OTP banka Srbija, and Erste Group Bank, declined to comment, citing banking secrecy laws. Serbia's Office of Media Relations did not respond to emailed questions.

The FATF told Reuters that it was aware of reports its recommendations have been misused and was monitoring governments' oversight of nonprofits and had set up a working group on the "unintended consequences of poorly implemented" measures. Advocates like Vanja Skoric, program director at the European Center for Not-for-Profit Law, say they welcome the FATF's new working group to examine abuses of its standards. But, said Skoric, "the damage is done."

Terrorist financing experts consulted by Reuters said the FATF has limited the funding of groups like al Qaeda by making banks more risk averse and giving authorities more powers to investigate an entity's finances. However, they faulted the task force's blanket approach to improving standards because it fails to take into account the political motivations of governments and the risk of misuse of the rules.

Civil groups for years have complained the FATF unfairly stigmatizes them as conduits for illegal funds. Following the 9/11 attacks on the US FATF warned that non-profit groups were "particularly vulnerable" to terrorist financing and called states states to review their laws, complicating funding for NGOs around the world as banks closed their accounts or blocked transfers.

A 2019 report by the United Nations' Special Rapporteur on Human Rights and Counter-Terrorism warned that FATF "lent a veneer of legitimacy" to states that used its provisions to regulate civil society.