Tightening the Purse Strings: What Countering Terrorism Financing costs Gender Equality and Security
Restricting funding to women’s rights organizing, women’s rights organizations, and the promotion of gender equality stands in stark contradiction to governments’ policy objectives and commitments that recognize the core importance of these local and grassroots actors and activities in achieving human rights and peaceful societies, particularly in conflict and post-conflict settings. While women and women’s rights organizations are already often on the frontlines in their communities combatting all forms of violence—including that posed by terrorist and violent extremist groups—rules to combat terrorism financing make it difficult to support these essential and grassroots groups and efforts. Increasing efforts to mainstream gender and promote women’s participation in efforts to counter-terrorism and P/CVE therefore also come up against the challenge of countering terrorism financing rules. The ultimate impact of these countering terrorism financing measures has been to circumscribe how, where, and in some cases, even if, women’s rights organizations can undertake their core work on mobilizing human rights, gender equality, and advancing the women, peace, and security agenda.
This Report outlines the five main categories of adverse impacts that resonated most profoundly with all interlocutors, including grassroots women’s organizations, inter-governmental actors, non-governmental organizations, governmental agencies, donors (including women’s funders groups), and financial institutions.
The first impact concerns the ways in which States have at times imposed financial restrictions that reduce access to funding and overall operating space for women’s rights organizing and organizations under the guise of ensuring national security.
Secondly, countering terrorism financing policies have resulted in multiple impacts on the partners, programs, and beneficiaries of women’s rights organizing and organizations.
The third key impact relates to the gender effects of financial de-risking, which, broadly defined, encompasses the financial risk management practices by which institutions reduce or lower risk exposure and which can, in practice, curtail a range of financial services to certain sectors or geographic areas.
Fourth, women’s rights organizing and organizations reported increased administrative burdens and reporting requirements that threaten their operational capacity and, amongst surveyed women’s organizations, this has led 41.67 percent to not apply for much-needed funds and 16.67 percent to actually refuse offered grants.
The final observed impact reflects the cumulative effect of all the above-mentioned factors on the safety and security of women’s rights organizing and organizations.
KEY RECOMMENDAITONS:
Multilateral institutions:
1. Support the development of an inclusive banking system, including through enhanced guidance and support to countries and financial institutions in ensuring that the design and implementation of CTF measures is consistent with ensuring financial inclusion, including to address gendered financial exclusion gaps. This includes emphasizing that the risk-based approach should be interpreted consistently with a gender and human rights-based approach.
2. Provide detailed guidance to international, regional, and national bodies on how to identify existing, and anticipate future, adverse impacts in the implementation of CTF policies and safeguard the diversity of civil society space, including to recognize the crucial role of women’s rights organizing and women’s organizations in ensuring stable, safe, and peaceful societies. This includes providing gender and human rights-informed trainings to regulatory authorities on how to anticipate and assess the impacts of CTF on different sectors of civil society and their financial inclusion.
3. Ensure gender and human rights expertise (e.g. through dedicated personnel) within multilateral counter-terrorism entities (e.g., the U.N. Counter-Terrorism Executive Directorate (CTED), Counter-Terrorism Implementation Task Force (CTITF), and Office on Drugs and Crime (UNODC)).
4. Ensure substantive engagement with civil society organizations—including grassroots women’s groups— on an inclusive and diverse basis, in the design, implementation, and assessment of CTF measures. This includes, for example, ensuring the participation of women’s rights organizations in processes at FATF Secretariat and regional bodies and in peer-to-peer FATF evaluation processes and in CTED assessments of national-level measures designed to address terrorism financing.
5. Realize obligations to promote human rights (including gender equality) and the women, peace, and security agenda, including in the mainstreaming of gender and promoting the role of women in P/CVE, recognizing that in many contexts, CTF measures in practice can operate in contradiction to these obligations.
6. Ensure evaluations of CTF measures (e.g., in FATF’s mutual evaluation methodologies that inter alia address the implementation of revised Recommendation No.8) measure compliance with a State’s human rights obligations, including non-discrimination and equality. This might include the adoption of a human rights compatibility assessment and the presence of a human rights and/or gender rights expert in evaluation processes.
Member States:
1. Ensure measures on countering terrorism financing— including, e.g., criminalization of terrorism financing, sanctions and freezing of assets, and the implementation of international standards such as FATF Rec. 8—are fully compliant with international human rights and humanitarian law, including non-discrimination and equality.
2. Ensure counter-terrorism measures, including CTF, are consistent with creating an enabling environment essential to civil society (e.g., by guaranteeing the freedom of association and assembly, including by ensuring that associations can seek, receive and use funding), with particular attention to ensuring the diversity of the civil society sector and enabling conditions for women’s rights organizing and women’s rights organizations. In particular, States should recognize fundamental distinctions between civil society and the commercial sector and civil society organizations should not face greater restrictions on financial access than the private sector (e.g., when there are no restrictions on businesses for foreign funding, the same should be for civil society organizations).
3. Investigate, document, monitor, and redress all gendered impacts of existing CTF measures and when future CTF measures are considered, assess their potential impact on women’s rights organizing, women’s rights organizations, and gender equality. This includes addressing the gender and human rights impacts of government CTF measures, as well as exercising due diligence to prevent, investigate, and punish acts of non-State actors (e.g., financial institutions) that interfere with the human rights framework relevant to women’s rights organizing, women’s rights organizations, and the achievement of gender equality. For example, where women’s rights organizations experience financial exclusion—including that which arises from the denial in access to financial services due to countering terrorism financing rules—redress must be ensured.
4. Ensure that CTF measures do not undermine humanitarian principles of neutrality, impartiality, independence, and humanity (e.g., by exempting principled humanitarian action from prosecution under CTF laws), and do not impede peacebuilding or human rights engagement with non-State armed groups that in practice circumscribe the activities of women’s rights organizations or negatively affect programs for women and girls.
5. Ensure substantive engagement with civil society organizations—including grassroots women’s groups— on an inclusive and diverse basis, in the design, implementation, and assessment of CTF measures.
6. Realize obligations to promote human rights (including gender equality) and the women, peace, and security agenda, including in the mainstreaming of gender and promoting the role of women in P/CVE, recognizing that in many contexts, CTF measures in practice can operate in contradiction to these obligations.
7. Develop a mutual understanding with civil society, financial institutions, and supervisory authorities of the appropriate implementation of a risk-based approach that is consistent with gender and human rights obligations and facilitates financial inclusion objectives. This includes emphasizing that NGOs should not be held to the same standards as financial institutions and identifying how facially gender-neutral aspects of CTF (e.g., emphasizing the importance of registration of associations) can have adverse gender and human rights impacts because of the operating environment in which they are implemented. It can also include the convening of a multi-stakeholder dialogue (e.g., between regulatory authorities, financial institutions, multilateral organizations, and civil society), ensuring that such dialogue includes a diverse range of civil society actors, including women’s rights organizations.
8. Provide regulatory clarity to financial institutions on how to approach CTF compliance in ways that ensure the provision of financial services to women’s rights organizations, promote the implementation of a riskbased approach that is gender-sensitive and human rights compliant, and reduce compliance costs. This includes in particular emphasizing that consistent with revised FATF Recommendation No. 8 NGOs are not “particularly vulnerable,” that the standard of due diligence in the RBA is not one of “zero tolerance,” and that due diligence does not require NGO clients to provide specific information on individual beneficiaries of programs. Regulatory authorities should consider incentives for financial institutions to provide financial services to women’s rights organizations (e.g., tax credits) and also conduct outreach that emphasizes the importance and benefit of financial institutions providing financial services to civil society, including women’s groups. In many contexts, in addition to regulatory clarity and incentives, the creation of “safe harbor” protections for financial institutions that bank civil society organizations in good faith might also be required.
9. Ensure that regulatory authorities recognize a broader meaning of “de-risking” that goes beyond wholesale closure of accounts to address the range of ways in which financial institutions’ reduced risk appetite limits access to financial services for women’s rights organizations and organizing, including through delays in transfers of funds, refusal (actual or constructive) to open bank accounts, and the imposition of onerous information requests that de facto can have the same effects as an account closure.
Civil Society:
1. Conduct evidence-based awareness-raising and advocacy amongst States, donors, multilateral entities, financial institutions, and the public on ways in which CTF has impeded women’s rights organizing, women’s rights organizations, and gender equality and the need to engender CTF requirements, including those related to due diligence and other compliance requirements. For example, towards States this includes advocating for changes in restrictive NGO legislation caused by CTF; towards multilateral institutions such as FATF, this includes proactively engaging with FATF mechanisms and processes (e.g., mutual evaluations at the country level and civil society consultations); towards financial institutions, this can include informing banks about the direct and indirect effects of CTF and the relationship of these effects to corporate social responsibility and financial inclusion objectives; toward donors, this includes raising awareness on the prohibitive costs of compliance, the need to engender grant requirements so that women’s rights organizations have direct access to funding rather than through sub-contracting arrangements, the importance of small and mid-size grant funding mechanisms being available, and the extent to which multi-year and core funding is necessary, including to support compliance capacity, as well as informing donors about problematic CTF clauses and negotiating for more favorable language in donor contracts; toward the public, this can include campaigns and developing a public monitoring tool that tracks how banks do or do not provide financial services to further women’s financial inclusion, including in peace and security contexts.
2. Reinforce and support inclusive network- and movement-building among civil society, including through strengthening information-sharing between human rights and humanitarian groups seeking to mitigate adverse impacts of CTF. This includes, for example, ensuring the participation of women’s organizations in NGO platforms developed to address the adverse impacts of CTF to ensure the gendered impacts of CTF are recognized and addressed adequately and having larger NGOs provide compliance or other support to smaller, newer organizations seeking to meet CTF requirements imposed by regulatory authorities, financial institutions, and donors. In addition, developing shared positions (e.g., on “red lines” for organizations, such as checking of beneficiaries) and common messaging in approaches to donors can enhance such network- and movement- building, as well as the capacity to induce changed behavior of States, donors, and financial institutions.
3. Build capacity, information-sharing, peer-to-peer learning and networking amongst civil society, including women’s rights organizations, to raise awareness and address gender and human rights impacts of CTF requirements. This can include considering pooled funds and/or resources for women’s rights organizations and organizing to address CTF requirements, particularly those from donors, including through the sharing of due diligence and other compliance tools, as well as good practices. Efforts to create an NGO repository or utility that financial institutions can use to simplify due diligence should be undertaken on the basis of consultation with women’s rights organizations, with attention to ensuring the inclusion of small, grassroots organizations operating at the local level.
4. Engage in systematic independent documentation, monitoring, assessment, and advocacy concerning gender and human rights impacts of CTF, including through engaging with multilateral organizations and processes focused on human rights (e.g., treaty monitoring bodies, Charter-based bodies (e.g., the U.N. Human Rights Council and its special procedures and Universal Periodic Review (UPR)), and U.N. agencies (e.g., UN Women)), as well as financial inclusion (e.g., World Bank) and counter-terrorism and P/CVE (e.g., CTITF, CTED, FATF). This can include preparation and submission of civil society material to ensure compliance with international human rights obligations, including on non-discrimination and equality.
Donors:
1. Clarify, simplify, and standardize approaches to CTF within governments’ own agencies and across donors, moving away from a one-size-fits-all approach to compliance processes (e.g., on due diligence and reporting). This includes requiring explicit acknowledgement and consideration of the nature of women’s rights organizations and organizing and the conditions under which women’s rights organization operate (e.g., better tailoring compliance requirements based on the size of the organization and/or the size of the grant). In some contexts, in addition to clarified procedures for compliance, simplified measures providing adequate safe harbor protections for activities undertaken in good faith (e.g., waivers, indemnifying contract clauses) might also be required.
2. Invest in feminist research and data collection, network and movement building, and capacity building (e.g., on reporting) that supports the autonomy of women’s rights organizations to address and mitigate threats to their operating space and access to resources, including those caused by CTF. This includes, for example, support for independent local, national, regional, and international platforms for exchange of information on challenges and good practices in navigating the CTF legal and regulatory environment.
3. Increase responsiveness to requests for guidance on the content, scope and application of CTF measures in specific contexts to address and mitigate impacts on women’s rights organizing, women’s rights organizations, and gender equality. This includes clarifying, for example, that due diligence (including vetting) on individual beneficiaries is not required for CTF compliance purposes.
4. Increase predictable, accessible, and flexible funding for women’s civil society with simplified procedures to ensure the sustainability of women’s rights organizations and organizing at all levels (local, national, regional, and international), but with a particular focus on the local level.
5. Reject the use of “white lists” of civil society grantees approved by government(s) or multilateral institutions, including on the basis that such lists are likely to exclude those women’s rights organizations that are small, grassroots, critical of governmental policy and/or working on sensitive or controversial issues.
Financial Institutions:
1. Track patterns in de-risking effects on civil society (e.g., by sector type and by including women’s rights organizations as a category), including the reasons for account exiting, failure to onboard clients, and other interruptions in the provision of financial services to organizations. This includes consideration of the impacts of de-risking involving withdrawal from correspondent banking relationships and closure of accounts of money services businesses.
2. Review, revise, and implement practices (e.g., in procedures, manuals, and in trainings of staff) toward civil society, including women’s rights organizations, in line with enhanced regulatory clarity e.g., that NGOs are not “particularly vulnerable,” that the standard of due diligence in the RBA is not one of “zero tolerance,” and that due diligence does not require NGO clients to provide specific information on individual beneficiaries of programs.
3. Engage in closer collaborations between the banking industry, authorities (including regulatory authorities, as well as a broader range of actors, such as departments of foreign affairs and development agencies), and civil society (including women’s rights organizations) to ensure that NGOs have the banking services they need, as well as to understand emerging issues of concern in relation to CTF. This includes having dedicated staff with skills to understand and engage with NGOs and to recognize that there are limits to the steps that NGOs may take to facilitate their own access to financial services, often dictated by the contexts in which they operate.
4. Establish clear and easily accessible complaints mechanisms to increase transparency and accountability in cases where CTF affects the access to financial services of civil society entities and to ensure that civil society organizations are better able to maintain banking relationships.
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