Mitigating Financial Access Challenges

Nonprofit organizations (NPOs) operating in regions subject to sanctions and other financial regulations experience significant difficulties transferring funds to support humanitarian and peacebuilding activities. Financial institutions (FIs) often choose to forego processing NPO transactions due to concerns related to anti-money laundering (AML), combating the financing of terrorism (CFT), and sanctions regulations. FIs’ compliance standards also can result in severe delays in processing NPO funds. Financial access challenges faced by NPOs impact vulnerable populations, delaying or limiting access to critical lifesaving services. Regulatory authorities emphasize that de-risking is a misapplication of the risk-based approach, is inconsistent with official guidance, and is driven as much by concerns about profitability as it is by law or policy. FIs believe there is an absence of clear policies and instructions, a disconnect between regulatory and oversight agencies, a lack of incentives to bank NPOs, and little guidance delineating the extent of FIs’ due diligence obligations.

To reconcile the knowledge and interests of key stakeholders, the CSIS Humanitarian Agenda convened the Multi-stakeholder Working Group (MSWG) on Financial Access to build a shared understanding of the various regulatory, compliance, and risk-related issues and explore practical solutions to promote financial access for NPOs carrying out vital programming. This report provides an overview of contemporary financial access challenges and sets forth wide-ranging proposals for stakeholders within the nonprofit, financial, and governmental sectors to resolve this critical issue and ensure financial access for nonprofit organizations and civilian populations.

This report was made possible through the generous support of the U.S. Agency for International Development (USAID). The contents of this report are the sole responsibility of CSIS and do not necessarily reflect the views of USAID or the United States government.