CONCLUSION

The importance of the NPO sector to domestic and international

communities cannot be overstated. It is a vibrant sector, providing
innumerable services to millions of people. However, after nearly 20 years Republic of Mauritius
since the abuse of NPOs by terrorists and terrorist organisations was
formally recognised as a concern, the threat of terrorist financing abuse to
the sector remains and NPOs continue to be misused and exploited by
terrorist entities. The exploitation of a sector devoted to good works by
entities intent on harming innocents is a particularly egregious form of
abuse that fundamentally undermines public trust in the sector.

Governments are challenged to develop appropriate and risk-based

mechanisms of oversight to protect NPOs from terrorist financing abuse.

This guidance is focused on raising awareness of the threat so that NPOs

in Mauritius can put their own operational safeguards in place to ensure
resilience to terrorist financing abuse.

A Guide to
Protecting Non-Profit Organisations
from the Threat of
This guidance document was put together by relying on the:
Terrorism Financing Abuse
(i) FATF’s typologies report on the Risk of Terrorist Abuse in Non-Profit
Organisations – June 2014; and
(ii) FATF’s Best Practices paper on Combating the Abuse of
Non-Profit Organisations (Recommendations 8) – June 2015
Ministry of Financial Services and Good Governance

November 2019
 INTRODUCTION RISK INDICATORS
Terrorist abuse indicators
An aspect of an NPO’s activities that suggests abuse or a risk of abuse that
Non Profit Organisations (NPO) are a vibrant and integral part of our society
is directly related to terrorist activity. The presence of these indicators
and provide countless services to millions of people across the globe. The would lead to a stronger certainty that the abuse or risk is terrorism-related,
wide range geographic reach and operational endurance of their activities as opposed to alternative explanations, such as:
make NPOs unique among national and international players. A recent
study of the Financial Action Task Force (FATF), an inter-governmental • NPO funds are transferred to other entities believed to be engaged in,
organisation which sets international standards for combatting money or supporting, terrorist activities.
laundering and terrorism financing, found that the terrorism threat to the
NPO sector continues to be a concern, and the sector is still being misused • NPO receives funds from entities believed to support terrorist activities.
and exploited by terrorist organisations through a variety of means.
• Resources of an NPO are transferred to an entity known to be engaged
in, or supporting, terrorist activity.
While the activities of the vast majority of NPOs are aimed at provid-
ing assistance to those in distress around the world, a small number of • NPO receives resources from an entity believed to support or be
unscrupulous entities has taken advantage of the NPO sector to raise and engaged in terrorist activities.
move funds, provide logistical support, encourage terrorist recruitment, or
provide other forms of support to terrorists and terrorist organisations. • NPO shares property with another organisation believed to support
terrorist activity.
The purpose of this guidance document is to raise awareness within
the NPO sector in Mauritius. By so doing, NPOs can be more vigilant and • The identities of terrorist entities are found to match the identities of
take appropriate measures to protect themselves against threats posed to NPO-directing officials or employees.
them by those terrorist entities that seek to abuse and undermine the
• Directing officials of an NPO are, or have been, directing officials of
important contributions they make to society.
other organisations believed to support terrorist activity.

• NPO suffers from an internal conflict, where one faction is known to be

sympathetic or actively supportive towards terrorist entities.

• Directing officials or employees of an NPO engage in activities that

support recruitment to violence.

• Criminal activities consistent with terrorist operations are concealed in

NPO facilities.

• NPO directing officials or employees are engaged in other criminal

activities consistent with terrorist operations.

Please Note: These are not exhaustive lists of Risk Indicators and Terrorist Abuse
Indicators. For a more comprehensive list, please refer to the FATF typologies
report entitled Risk of Terrorist Abuse in Non-Profit Organisations – June 2014.

2 11
 RISK INDICATORS RISK
Indicators can increase forewarning, helping to mitigate risks before they The following ‘Risk Equation’ model illustrates the relationship between a
become reality, or help to detect existing abuse. Not all indicators, however, threat or threats, vulnerabilities, and the resulting risk posed to NPOs both
carry an equally strong certainty of a terrorism-related risk. at the Organisational and the Sectoral levels.

Risk indicators identify potential support to terrorism where it is not The FATF defines a Threat as a person or group of people, object or activity,
necessarily the only possible explanation. with the potential to cause harm. A threat is dependent on actors that
possess both the capability and intent to do harm, in this case, towards the
Terrorist abuse indicators identify a smaller sub-set of indicators that NPO sector.
denote a stronger relationship with terrorism-related activities.
The FATF defines a Vulnerability as things that can be exploited by the
The presence of terrorist abuse indicators would lead to a stronger certain- threat or that may support or facilitate its activities. Vulnerabilities can exist
ty that the abuse or risk is terrorism-related, as opposed to alternative at the organisational level or at the sectoral level. Organisational
explanations. vulnerabilities are observed in cases where legitimate NPOs are abused by
external actors or deceived by internal actors. Sectoral vulnerabilities are
Risk Indicators seen in cases where illegitimate organisations (commonly referred to as
An aspect of an NPO’s activities that suggests abuse or a risk of abuse that ‘sham’ NPOs) are allowed to enter the sector and take advantage of its
may be terrorism related, but also has possible alternative explanations, benefits.
such as: Vulnerability Risk

• NPO funds are transferred to entities not associated with declared

programmes or activities. Legitimate NPO
Organisational
is exploited
• NPO transfers resources or conducts activities in an area where
terrorist entities are known to have a substantial presence. Threat
• NPO expenditures are not consistent with its programmes and Sham NPO enters
activities. Sectoral the sector

• NPO is unable to account for the final use of all of its resources.

• NPO is unable to account for the origin of its income. Mauritius has recently completed a National Money Laundering and
Terrorism Financing risk assessment (NRA). According to that assessment,
• NPO has inconsistencies in its accounting and/or mandatory reporting. the overall terrorism financing risk in Mauritius is medium given that the
terrorism financing threat is medium-low and the terrorism financing
• NPO facilities conceal criminal activities. vulnerability is medium-high.
This guidance focuses on raising awareness of NPOs in Mauritius to the
risk at the organisational level to help NPOs become resilient to the threat
of terrorist financing abuse.
10 3
 THREATS POSED BY TERRORIST ENTITIES BEST PRACTICES TO PROTECT YOURSELF
Financial Transparency and Accountability
Terrorist financiers engaged in the logistical support of terrorist
organisations use funds to meet broad logistical requirements, which NPOs can prevent financial abuse, including misuse of resources and
include but are not limited to, recruitment, travel and the acquiring of funds, by establishing strong financial controls and procedures. For example:
weapons.
• The governing board approves an annual budget and has a process in
The FATF Standards recognise this, stating that terrorist and terrorist place to monitor the use of funds.
organisations “exploit the NPO sector to raise and move funds, provide • NPOs keep adequate and complete financial records of income,
logistical support, encourage terrorist recruitment, or otherwise support expenses, and financial transactions throughout their operations,
terrorist organisations and operations”. including the end use of the funds.

The NPO sector has interconnected vulnerabilities. The threat posed by • NPOs clearly state programme goals when collecting funds and ensure
terrorist entities seeks to exploit more than one type of vulnerability. These that funds are applied as intended.
threats can be grouped into the following categories:
• Information about the activities carried out is made publicly available.

• NPOs are informed on the sources of their income and establish

DIVERSION OF FUNDS (INTERNAL) criteria to determine whether donations should be accepted or refused.

Diversion of funds (internal) occurs when an NPO, or an individual acting

on behalf of an NPO who aspires to support terrorism, diverts funds to a Programme Planning and Monitoring
known or suspected terrorist entity.
NPOs should establish internal controls and monitoring systems to ensure
that funds and services are being used as intended. For example:

• NPOs clearly define the purpose and scope of their activities, identify
beneficiary groups, and consider the risks of terrorist financing and risk
mitigation measures before undertaking projects.

• They maintain detailed budgets for each project and generate regular
reports on related purchases and expenses.

• NPOs establish procedures to trace funds, services, and equipment,

and carry out transactions through the banking system when possible
to maintain transparency of funds and mitigate the risk of terrorist
financing.

• Project performance is monitored on a regular basis by verifying the

existence of beneficiaries and ensuring the receipt of funds.

• NPOs take appropriate measures, based on the risks, to account for

funds and services delivered.
4 9
 BEST PRACTICES TO PROTECT YOURSELF THREATS POSED BY TERRORIST ENTITIES
Organisational Integrity
Diversion of Funds (External)
NPOs are established and operate in accordance with a governing docu-
Diversion of funds (external) occurs when third-party associates of the
ment, for example, articles of incorporation, a constitution, or bylaws that
NPO, such as external fundraisers or foreign partners, are diverting funds
outline purposes, structure, reporting practices, and guidelines for comply-
that are destined for, or provided by, an NPO.
ing with local laws.
Affiliation with a Terrorist Entity
Members of the governing board understand and act in the interest of the
organisation. The governing board maintains oversight over the organisa-
Affiliation with a Terrorist Entity occurs when an NPO, or an individual
tion by establishing strong financial and human resource polices, meeting
acting on behalf of an NPO, maintains an operational affiliation with a
on a regular basis and actively monitoring activities.
terrorist organisation or supporter of terrorism.

Abuse of Programming
Partner Relationships
Abuse of Programming occurs when NPO-funded programmes meant to
To prevent the abuse of funds by partners, NPOs carry out appropriate due
support legitimate humanitarian purposes are manipulated at the point of
diligence on those individuals and organisations from whom donations are
delivery to support terrorism.
received, to whom money is given or with whom they would work closely,
before entering into relationships or agreements.
Support for Recruitment
NPOs verify partner reputations through the use of selection criteria and
Support for recruitment occurs when NPO-funded programmes or facilities
searches of publicly available information, including domestic and United
are used to create an environment which supports and/or promotes terror-
Nations sanctions lists.
ism recruitment-related activities.
Written agreements can also be used to outline the expectations and
False Representation and Sham NPOs
responsibilities of both parties, which include detailed information on the
application of funds and requirements for regular reporting, audits and
False representation occurs when under the guise of charitable activity, an
on-site visits.
organisation or individual raises funds and/or carries out other activities in
support of terrorism.

8 5
 OPERATIONAL VULNERABILITIES OPERATIONAL VULNERABILITIES
Operational capacity
Extended logistical networks
The NPO sector also possesses high operational capacity. The FATF noted
Logistical networks are the linkages through which NPOs collect, retain, that NPOs may be vulnerable because they “have access to considerable
transfer, and deliver resources related to their operational activities. sources of funds and are often cash-intensive. Furthermore, some NPOs
Extended logistical networks give the NPO sector greater reach, allowing have a global presence that provides a framework for national and
NPOs to deliver programmes in multiple areas through multiple partners. international operations and financial transactions, often within or near
those areas that are most exposed to terrorist activity.”
Conversely, because of their scope, extended logistical networks also
increase vulnerability. With more individuals, wider ranges of activities, and The NPO sector is resource intensive and transnational in nature. These
possibly substantial geographic distances involved, it can be challenging resources and associated logistical networks are valuable to terrorist
to maintain adequate control of resources. movements if they can be exploited.

For NPOs engaged in humanitarian work, logistical networks often flow NPOs have a unique ability to reach people, particularly those in conflict
through geographic areas of conflict or low governance. Also, there is an areas or diaspora populations. Exploiting this unique access presents
increased risk that resources will have to flow through other sectors where terrorist movements with an opportunity to recruit for their movements
governance may be less stringent (for example, unregulated money service through the abuse of NPO resources and programmes. A further important
businesses). aspect of the operational capacity of NPOs is the public trust afforded to
the sector. Because the sector has generally enjoyed high public trust,
Both of these aspects increase the risk that resources can be diverted or scrutiny of NPO activities has often been less consistent and robust than
that the delivery of programmes can be corrupted. in other sectors.

For terrorist entities looking to minimise risk to their own operations and
Large transitory workforces logistical networks, piggybacking on, or mimicking, legitimate NPOs have
presented an attractive solution.
The NPO sector also relies heavily on a large transitory workforce
Volunteers make up a significant and important portion of this workforce.
Organisational culture
The nature of the NPO sector workforce can make it difficult to scrutinise The final area of vulnerability pertains to organisational culture. The
staff, particularly volunteers or foreign partners. emphasis placed on values in some NPOs could contribute to poor
decision-making and risk management.
Additionally, for small and medium-sized NPOs, this type of workforce can
make it difficult to attract and retain personnel that have technical expertise Studies have examined the importance of values in non-profit
in risk assessment, compliance and legal matters. organisations and identified that, for some organisations, value
calculations represent the real ‘bottom line.’
These personnel pressures can lead to NPO activities going forward
without adequate due diligence and safeguards in place, increasing the While this is not a consistent vulnerability, the tendency to trust external
risk of abuse. and internal actors may leave some NPOs vulnerable to abuse.

6 7