SEC tight­ens scru­tiny of non-profit or­ga­ni­za­tions with new guide­lines

Business World - - Corporate News - Arra B. Fran­cia

THE Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) has is­sued guide­lines to pre­vent regis­tered non-profit or­ga­ni­za­tions (NPO) from be­ing used as ve­hi­cles for money laun­der­ing or ter­ror­ist fi­nanc­ing.

Mem­o­ran­dum Cir­cu­lar No. 15 Series 2018 cov­ers non-stock cor­po­ra­tions regis­tered with the com­mis­sion, de­fined as groups that en­gage in “rais­ing or dis­burs­ing funds for pur­poses such as char­i­ta­ble, re­li­gious, cul­tural, ed­u­ca­tional, so­cial, or fra­ter­nal pur­poses, or for the pur­pose of car­ry­ing out other types of good works.”

The SEC seeks to en­sure that NPOs will not be used by ter­ror­ist or­ga­ni­za­tions in the guise of le­git­i­mate en­ti­ties, or be ex­ploited for ter­ror­ist fi­nanc­ing in­clud­ing es­cap­ing as­set freez­ing mea­sures.

Based on Sec­tion 2.1 of the guide­lines, the SEC will adopt a risk-based ap­proach to ad­dress these con­cerns. It will iden­tify threats of ter­ror­ist fi­nanc­ing based on the Anti-Money Laun­der­ing Coun­cil’s na­tional risk as­sess­ment. It will also look at vul­ner­a­bil­i­ties in NPOs based on their types and char­ac­ter­is­tics, as well as the con­se­quences of such threats.

“In the event that the com­mis­sion iden­ti­fies cer­tain NPOs as be­ing at risk, it shall adopt en­hanced mon­i­tor­ing and su­per­vi­sion mea­sures and re­quire NPOs the en­hanced com­pli­ance re­quire­ments un­der Sec­tion 3.1 of these guide­lines,” ac­cord­ing to Sec­tion 2.4 of the guide­lines. —

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