FATF ¦ R.8 Non-Prof­it Or­ga­ni­sa­tions

Recommendation 8: Protecting Non-Profit Organisations from Terrorist Financing Abuse

Recommendation 8 of the FATF Standards focuses on preventing the misuse of non-profit organisations (NPOs) for terrorist financing. Rather than defining every organisation that operates on a not-for-profit basis, the FATF uses a functional definition: NPOs are legal persons, arrangements or organisations that primarily raise or disburse funds for charitable, religious, cultural, educational, social, fraternal or similar “good works”. The purpose of Recommendation 8 is to make sure these entities are not exploited to raise or move funds, provide logistical support, recruit for terrorist causes, or mask diversion of legitimate funds to terrorist ends, while preserving their ability to carry out legitimate humanitarian and social missions.

Core principles and balanced approach

The interpretive note lays out several core principles that should guide national responses. Measures must be focused, proportionate and risk-based: they should address identified threats without imposing blanket rules that would hamper legitimate activity. Flexibility is important so responses can evolve as threats change. The FATF emphasises that protecting NPOs is not simply a law-enforcement task; it is essential to maintain public trust, donor confidence and the integrity of the sector. States should aim to prevent and, when appropriate, prosecute abuse, but must do so in ways that respect the rule of law and minimise harm to innocent beneficiaries.

Risk identification and tailored measures

Recommendation 8 requires countries to identify which organisations fall within the FATF’s NPO definition and to conduct a risk assessment of those entities to understand how terrorist financing risks manifest in that jurisdiction. Risk assessments should use relevant, reliable information and may be done in different formats; they should also be periodically reviewed. Where risks are low, outreach and awareness-raising may be sufficient; where risks are higher, targeted measures are required. Crucially, NPOs are not to be treated as typical reporting entities under anti-money laundering/customer due diligence frameworks, and measures that go beyond the FATF definition or are disproportionate to assessed risks are discouraged.

Bastian Schwind-Wagner _Follow

"Recommendation 8 balances the imperative to prevent terrorist financing with the need to protect legitimate NPO activity. A risk-based, proportionate approach ensures measures target real vulnerabilities without creating unnecessary burdens.

Effective implementation depends on collaboration, information-sharing and adequate resourcing of oversight bodies. Transparent governance and the use of regulated financial channels strengthen trust among donors, financial institutions and the public."

Operational pillars for an effective national response

The interpretive note describes four complementary elements that form an effective approach to protecting NPOs:

Sustained outreach and capacity building

States should promote accountability, integrity and public confidence in NPO governance. Outreach and education for NPOs and donors should explain the vulnerabilities to terrorist financing and practical safeguards. Authorities should work with the sector to develop best practices and encourage the use of regulated financial and payment channels where feasible, while recognising constraints in certain jurisdictions.

Focused, proportionate oversight and monitoring

Oversight should be risk-based, avoiding one-size-fits-all regulation. Authorities must be able to demonstrate that measures are targeted and proportionate, and where internal controls, self-regulation or existing legal requirements already mitigate risk, additional burdens may be unnecessary. Appropriate authorities should monitor compliance and be able to apply effective, proportionate and dissuasive sanctions when violations occur.

Effective information gathering and investigation

Cooperation and information-sharing among regulators, tax authorities, financial intelligence units, law enforcement, intelligence services and accrediting bodies are essential. States should have the investigative capacity to examine NPOs suspected of exploitation or support for terrorism and to access relevant financial and programmatic information during investigations. Mechanisms should exist to ensure timely sharing of suspicions so preventative or investigative action can be taken.

International cooperation

Given the cross-border nature of many NPOs and terrorist networks, countries must be able to respond to international requests for information about NPOs of concern, with clear points of contact and procedures consistent with FATF standards on international cooperation.

Resourcing and implementation

Recommendation 8 explicitly requires states to provide adequate financial, human and technical resources to the authorities responsible for oversight, monitoring and investigation of NPOs. Effective implementation depends on sustained investment in capacity: regulatory bodies need funding and staffing; FIUs and law enforcement require analytical and investigative tools; and outreach programmes demand resources to engage the sector meaningfully.

Safeguards and proportionality

The FATF stresses that measures must respect international law, including human rights, refugee and humanitarian law. Actions taken against NPOs suspected of terrorist financing should prioritise halting illicit activity but also aim to minimise collateral harm to legitimate beneficiaries and organisations. Sanctions may range from freezing accounts and removing trustees to fines, de-registration or de-licensing, and can be pursued alongside civil or criminal proceedings where appropriate.

Practical implications for practitioners and NPOs

For regulators and policymakers, Recommendation 8 means developing clear, evidence-based mapping of the NPO sector, conducting periodic risk assessments, establishing targeted oversight and ensuring investigative and international cooperation mechanisms are in place. For NPOs, the guidance underlines the value of transparent governance, robust internal controls, documented policies on fundraising and disbursement, and the preferential use of regulated financial channels. Donors and financial institutions benefit from the increased accountability and public confidence that result from proportionate, risk-based measures.

Conclusion

Recommendation 8 seeks to protect both security and the humanitarian mission of the non-profit sector. Its risk-based, proportionate framework is designed to close vulnerabilities without undermining legitimate activity. Effective implementation requires collaboration between authorities, NPOs, donors and financial institutions, backed by adequate resources and strong information-sharing and investigative capabilities. When applied thoughtfully, these standards help ensure that NPOs continue to deliver critical services while being shielded from terrorist financing abuse.

Dive deeper

• FATF ¦ The FATF Recommendations ¦ Link
• FATF ¦ Luxembourg’s measures to combat money laundering and terrorist financing ¦ Link