SEC tightens scrutiny of non-profit organizations with new guidelines

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. —