FATF updates its terrorist charity typologies July 9, 2013
The Financial Action Task Force, an international financial watchdog, has updated its "Recommendation 8" pertaining to government oversight of nonprofit organizations. (Thanks to Arye Glozman who sent in a link to the report).
Overall, the revised recommendations show greater deference to the nonprofit sector and urge restraint by governments in regulating charities than the
2002 version. This deference is a bit strange considering that using charities as vessels for funding terrorism has not decreased since 2002 then, neither in the West as illustrated by organizations such as the Holy Land Foundation and WAMY Canada, nor in the Middle East and Northern Africa where Gulf-based charities have played a central role in funding and arming Islamist rebels of the Arab Spring.
That being said, the FATF report does present a useful set of typologies to categorize four different types of terrorist "misuse" of nonprofit groups:
Front charities, where everybody from the donors to the charity workers to the beneficiaries knows that the charity is a sham designed to fund terrorism.
Organizations defrauding donors by telling them the money is going toward legitimate programs but then redirect the proceeds to terrorism.
Branch offices of charities defrauding headquarters by misleading the leadership about the branch's actual programs.
Charity workers abusing their positions to distribute aid to militants.
The "charities" used by Osama bin Laden to funnel money from wealthy Saudi donors to Al Qaeda in the 1990s are a good example of type #1.
Jamaat-ud-Dawa in Pakistan is a good example of a front charity today, with donors and recipients understanding that the money is really for the Lashkar-e-Taiba terrorist group. Many analysts would probably say that the Holy Land Foundation fell into type #2, with donors unwittingly funding Hamas (although some donors knew that their zakat was funding "resistance"
against Israel). Islamic Relief Worldwide can be associated with types #3 and #4 by having a branch office in Gaza that passed money along to Hamas, allegedly without the knowledge of headquarters in England.
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