The ongoing international and domestic counter terrorist financing campaign has shown that terrorists and terrorist organizations abuse non-profit sector to obtain and transfer funds, provide logistical support, encourage recruitment of terrorists or otherwise support terrorist organizations and transactions. Such abuse not only contributes to terrorist activity, but also undermines the credibility of donors and calls into question the transparency of the intentions of non-profit transactions.
According to the Financial Action Task Force (FATF) research, five main methods and risks of abuse of non-profit organizations and the risks of such abuse have been identified. These are not mutually exclusive categories; many could be seen simultaneously throughout the case studies analysed for this report.
· Diversion of funds is one of the main ways of illegal abuse of significant financial resources of the non-profit sector. Money transfer operations involve the diversion of funds by entities in which a portion of funds collected by a non-profit organization for charitable purposes is intercepted and redirected to the terrorist organizations for other purposes. Such redirection of financial resources may be carried out both by parties operating within a non-profit organization and by external parties, such as foreign counterparts.
· NPOs or directing officials maintained an affiliation with a terrorist entity, either knowingly or unknowingly. In these instances, an NPO could be abused for multiple purposes, including general logistical support to the terrorist entity.
· Abuse of non-profit organization to encourage the recruitment of new members and supporters of terrorist entities. This process can be both active and passive. Terrorist entities are trying to recruit operational staff with its help.
· Abuse of programming. In these instances, the flow of resources was legitimate, but NPO programmes were abused at the point of delivery.
· False representation. In these instances, terrorist entities started ‘sham’ NPOs or falsely represented themselves as the agents of ‘good works’ in order to deceive donors into providing support.
More detailed information is provided in the FATF Report "Risk of terrorist abuse in non-profit organizations" (http://www.fatf-gafi.org/publications/methodsandtrends/documents/risk-terrorist-abuse-non-profits.html).