Jersey's non-profit organisations have been assessed to determine the risk they face of being abused or misused for terrorist financing (TF).
The Bailiwick of Jersey: National Risk Assessment of Non-Profit Organisations is the first assessment of the risk to be published.
National Risk Assessment of Non-Profit Organisations
It concludes that, while overall Jersey's non-profit sector presents medium to low risk, around 11% have a heightened risk and greater vulnerability to TF.
The report is part of the requirements of the international standard-setter on financial crime, the Financial Action Task Force (FATF), and follows the publication of Jersey's:
Overall the non-profit sector in Jersey presents medium to low risk. However, there is a subsector of around 11% of Jersey's NPOs that present heightened risk and greater vulnerablilty to terrorist financing (TF) abuse and misuse. These NPOs, being both Registered NPOs and Regulated NPOs, tend to:
- operate in higher risk jurisdictions, such as conflict zones, failed states and disaster areas where support such as humanitarian aid and disaster relief is desperately needed, and which, equally, are areas where terrorists also tend to undertake activities
- use partners with the aim to seek to reduce risk, however this practice may also bring additional transfer risk, requiring careful management
- use money remittance methods, such as cash, which may render the tracing of funds to legitimate beneficiaries more challenging
Information provided in the National Risk Assessment suggests that the sub-section of vulnerable NPOs, in the main, has a high risk tolerance and a low systems and control environment, rendering them more vulnerable to terrorist financing misuse and abuse.
Since the risk of proliferation financing (PF) also benefits from robust systems and controls and displays some similarities in terms of vulnerabilities to those of TF misuse and abuse, it is also anticipated that some of the non-profit sector equally presents a higher risk to PF misuse and abuse.
It is vital that the non-profit sector in Jersey remains a thriving, diverse and important part of our economy. Safeguards need to be put in place in order to ensure that Jersey continues to comply with international standards, and to reduce the level of TF risk exposure overall. In order for us to successfully manage TF risks and remain a responsible international citizen, Vulnerable NPOs will need to enhance their controls to demonstrate that they are effectively identifying, assessing, managing and mitigating TF risks.
Further work will also be required during 2022 to ensure that the regulatory framework is developed in a way that is supportive of the non-profit sector. This will include establishing in law the criteria that define a higher risk NPO for TF abuse purposes (Prescribed NPO).
Outreach, engagement and guidance will also be crucial components in this endeavour, working collaboratively across agencies, the non-profit and the TCSP sectors
National Risk Assessment for Non-Profit Organisations