Summary of 2005 Revisions to U.S. Department of the Treasury's Anti-Terrorist Financing Guidelines:
by Kay Guinane, 12/12/2005
On December 5, 2005 the U.S. Department of the Treasury (Treasury) released a revised version of its November 2002 Anti-Terrorist Financing Guidelines: Voluntary Best Practices for U.S.-Based Charities. The Treasury Department announcement requested public comment on the revisions by February 1, but said the revised Guidelines immediately replace the 2002 version. In other words, the revised Guidelines are now operational.
The revised Guidelines dropped some of the 2002 provisions, but added new ones as well. An expanded Introduction and a Statement of Principles (Section I and II) have also been added. Parts III-V address nonprofit governance and accountability measures. The heart of the document is in Part VI, Anti-Terrorist Financing Best Practices, which comprises over four of the document's 11 pages, contains most of the new and expanded provisions. They do not reference the Principles of International Charity, developed by a nonprofit sector working group and sent to Treasury as a proposed replacement for the 2002 Guidelines, but incorporate some elements from the Principles.
Although the Guidelines are presented as voluntary, the recommendations are stated as action charities “should” take. It leaves open the possibility that lack of compliance could trigger investigations. Thus, they carry more weight that voluntary suggestions. Moreover, they apply to all charities, including foundations and grantees.
Other highlights of the revised Guidelines include:
- A presumption that charities are conduits for terrorism, although no evidence is provided for this;
- Applies to all recipients a charity deals with, not just "foreign recipients;"
- A recipient is an entity or individual that receives not only transfers of money from a charity, but also in-kind assistance or services of any type. Thus, the Guidelines cover nearly every activity of a charity;
- Charities must comply with Treasury Department’s sanctions programs, and should check to see whether a recipient is on the Specially Designated Nationals terrorist watch list. Charities should also “conduct a reasonable search of public information” (including a host of foreign and U.S. terrorist watch lists) to determine if a recipient is “suspected” of terrorism related activities;
- Charities should report "suspicious activity" of recipients, employees or board members of recipients, or employees of the charity to the FBI, as well as report to the Treasury Department valid matches on the Specially Designated Nationals terrorist watch list maintained by the Treasury Department; and
- Charities should require recipients to certify they do not employ, provide services to, or in any way deal with any individual or group that is sanctioned by the Treasury Department or is known to support terrorism.
- Identifying information on board members of the charity and its subsidiaries or affiliates, including social security numbers
- Identifying information on its highly compensated employees or those with substantial influence over day-to-day operations, and all foreign employees.
- A list of its Board of Directors and their salaries
- Direct and indirect benefits paid to highly compensated employees or those that have substantial influence over day-to-day operations
- A list of branches, affiliates and subsidiaries that receive services
- An annual report describing its purpose, programs, structure, tax-exempt status and financial information
- Complete annual financial statements
- A statement of its goals and purposes
- Information to substantiate that its fundraising materials are true and not misleading
- A statement of justification whenever it determines funds raised for one charitable purpose should be spent for another charitable purpose.
- The recipient’s name in English and language of origin and any acronyms. A footnote indicates that charities investigate when there is reason to believe an organization has changed its name and "uncover any such prior identity or name."
- A list of the jurisdictions where the recipient has a physical presence
- All reasonably available historical information relating to the recipient’s identity and integrity, including copies of governing instruments, information on the founders and operating history
- Address and phone number of each place of business
- A statement of purpose and report on projects and goals
- Names and addresses of individuals, entities and groups that receive funds, services or material support from the recipient, to the extent possible
- Names and addresses of all subcontracting organizations
- Copies of public filings with pertinent government regulators, and
- Sources of income.
- A reasonable search of public information to see if a recipient or their board members, key employees or senior management are suspected of terrorist activity.
- Comply with programs administered by the Office of Foreign Assets Control (OFAC) and assure itself recipients and their board members, key employees and senior management at all business locations do not appear on the Specially Designated Nationals (SDN) terrorist watch list. Footnotes encourage checking other lists, including those of other countries. This could raise problems in countries that use terrorist watch lists to suppress dissent.
- Require recipients to certify that they do not employ or deal with groups or people listed or are known to support terrorism.
- Search public information to ensure its own key employees are not suspected of activity related to terrorism.