The British Council and the European Union Agents for Citizens-driven Transformation (EU-ACT) have emphasized that Civil Society Organizations (CSOs) must adhere to legal requirements in order to avoid engaging in unethical behavior.
In order to increase CSOs’ awareness of key rules (CAMA, taxation, anti-terrorism and money laundering, and pension) and how they affect their operations, a two-day workshop on civil society regulatory frameworks and compliance was held for CSOs.
Prof. Adedeji Adekunle, the head of Jury Trust’s faculty, made a suggestion that in order to prevent the financing of terrorism and money laundering in Nigeria, national and foreign NGOs operating there must adhere to certain regulatory compliance requirements.
He continued by saying that the National Risk Assessment Report in 2016 identified NGOs as Designated Non-Financial Institutions (DFNIs) at risk of money laundering and financing terrorism, leading to the quasi-regulation and monitoring of NGOs’ financial activities to ensure compliance with pertinent AML/CFT laws.
According to him, it’s critical that NGOs take the necessary precautions to avoid becoming conduits for the financing of terrorism and/or money laundering.
The don pointed out that as DNFIs are not allowed to conduct business with fake or anonymous parties, they must have Customer Due Diligence/Know-Your-Customer (CDD/KYC) practices that reveal the names and risk profiles of their contributors and recipients.
“The CDD is a once-only exercise that should be carried out when establishing a new business relationship, or carrying out transactions above $1,000 or suspicious transactions; or when in doubt about the validity of previously obtained information.”
He continued, “CDD measures require NGOs to identify donors, beneficiaries, and partners using valid identification documents; verify the identities of donors, beneficiaries, and partners from trustworthy independent sources; identify and verify the identity of the beneficial owner, if applicable; and make sure that the donor, beneficiary, or other party is not listed on the Consolidated or Nigeria List, as mentioned in Regulation 28 of the Terrorism Prevention (Freezing of International Terrorist Fund).
When appropriate, he continued, it was crucial for NGOs to recognize and confirm the identity of the person operating on behalf of a donor or beneficiary, as well as to recognize the legal person’s structure and natural ownership composition.
“NGOs must conduct risk-based assessments to determine their risk exposure in a given transaction in addition to identifying donors and recipients.
According to regulatory and advisory organizations like the Financial Action Task Force (FATF), the Office of Foreign Assets Control (OFAC), and the United Nations, “Some Countries have been identified as high-risk countries given their level of stability, corruption rate, lack of adequate AML/CTF systems, existing sanctions, rate of terrorism support, and rate of criminal activities such as narcotics/arms dealing, human trafficking, illicit diamond trading, etc.”
He further said that NGOs are required to report suspicious transactions to the NFIU without alerting or informing the client or donor when a transaction seems questionable.
The NGO must also carry out an immediate internal inquiry, which will be included in the report regardless of the level of the internal investigation, and do enhanced due diligence (EDD), unless doing so would reveal information to the client.
Idem Udoekong, the Component 2 Manager of the EU-ACT, claimed that the issue of CSOs’ poor compliance with the legal framework was caused by a dearth of the necessary expertise and information on legislation.
Tolulope Sonaike of the Corporate Affairs Commission (CAC) indicated that the issue of CSOs’ poor compliance with current civil society legislation can be ascribed to a number of issues, including CSOs’ lack of the necessary knowledge and information.