The bureau of the United states treasury department FINCEN has developed and released a joint fact sheet along with the Federal Reserve Board, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency that throws more light on how banks could implement a risk based approach for charities and other non profit organisations (NPO).The publication puts emphasis on application of risk based approach in terms of risk profiling and conducting CDD (Customer Due diligence) for such entities.

 The charities and several non profit organisations are often misused by money launders and racketeers and the US government doesn’t classify this sector as high risk of being abused for terrorist financing, money laundering or sanction evasion (as most of the entities under this sector are legitimate) which is in lieu with the FATF recommendation-8. There exists no regulatory/supervisory expectation for banks to have a separate due diligence pattern for charities however a risk based model would help in reducing the illicit fund movement.

The joint fact sheet ensures that the legitimate charities and NPO s should have complete access to the financial services also the risk based approach of the banks need to be in accordance with the existing policies and procedures as prescribed under BSA (Bank Secrecy Act) and comply with the underlying AML(Anti Money laundering)compliance requirements. Thus the joint fact sheet doesn’t modify BSA/AML directives but provides more clarifications on AML/CFT framework of the charity sector.

The aforementioned organisations (charities and NPO s) are playing a crucial role in the current pandemic as it offers life saving assistance to the deprived/underprivileged communities. The US treasury department is also committed to legitimate flow of humanitarian aids through transparent banking channels meanwhile the primary and core objective of the FINCEN is to safeguard the US financial system and its fellow citizens from any harm thereby attaining national security.


Author: Rajashree, MBA, CAMI

(PonSun AML Academy)



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