Answer to Written Question: Involvement of NGOs in terrorist financing
(Source: European Parliament)
Answer given by Ms McGuinness
on behalf of the European Commission
Non-profit organisations (NPOs) are not obliged entities (OEs) under the 5th Anti-Money Laundering (AML) Directive or under the international standards of the Financial Action Task Force (FATF). They are, however, clients of OEs and therefore their transactions are monitored and thus subject to customer due diligence. This is the same approach as for other legal entities, foundations and legal arrangements. The Commission has already assessed the risks related to terrorist financing linked to the very diverse NPO landscape through its biennial supranational risk assessment report (SNRA) in 2017 and 2019. There is a wide range of NPO sub-sectors, including humanitarian aid, development assistance, sports, etc, each facing a different level of risk/threat. The 2019 SNRA highlighted that the risk of exposure of NPOs is impacted by the varying nature of their activities, the applicable legal framework and the national practices that provide controls and checks. The Commission will carefully reassess the threats and vulnerabilities linked to the NPO sector in its forthcoming SNRA, to be issued in 2021.
In its judgement in case C-78/18, the Court of Justice of the EU found that the Hungarian transparency obligations in question were discriminatory and unjustified, and therefore in breach of EU rules on the free movement of capital and the right to freedom of association enshrined in the EU Charter of Fundamental Rights. The Commission would like to clarify that the Hungarian transparency rules at stake are different from those implementing EU AML rules; they were imposed by the Hungarian authorities on civil society organisations receiving support from abroad on the assumption that those organisations were capable of influencing public life and public debate.
 Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (Text with EEA relevance), OJ L 156, 19.6.2018, p. 43–74.
 Report from the European Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, COM(2017) 340 final, 2017.
 Report from the European Commission to the European Parliament and the Council on the assessment of the risk of money laundering and terrorist financing affecting the internal market and relating to cross-border activities, COM(2019) 370 final, 2019.