Tomorrow the Committee on Legal Affairs (JURI) of the European Parliament (EP) will amongst others discuss a draft EP-resolution regarding a statute for European cross-border associations and non-profit organisations and opinions by two other committees (LIBE and EMPL) on the same matter.
In the draft resolution it is considered that cross-border associations and non-profit organisations are important for society. The Commission in the draft resolution is requested:
- to submit a proposal for a Directive on common measures for NPOs in the EU, creating a level playing field for associations and NPOs by establishing minimum standards,
- to submit a Regulation establishing a statute for a European Association,
following the recommendations set out in the resolution and in Annex I (in regard of the Directive) and in Annex II (in regard of the Regulation).
AML and CFT in the draft Regulation
In the draft Regulation attention is paid to the negative effects of anti-money laundering measures, e.g. in the preamble:
(8) According to the judgment of the Court of Justice , Article 63 of the Treaty on the Functioning of the European Union (TFEU) and Articles 7, 8 and 12 of the Charter of Fundamental Rights of the European Union (the ‘Charter’) protect non-profit organisations against discriminatory, unnecessary and unjustified restrictions to access to resources and the free movement of capital within the Union. This also concerns the ability to seek, secure and use resources of both domestic and foreign origin, which is essential to the existence and operation of any legal entity. Restrictions can be imposed for legitimate aims, such as in the interests of national security, public safety or public order, but should be proportionate to the objective of protecting such interests, and the least intrusive means of achieving the desired objective. This concerns, among others, restrictions deriving from rules on combating money laundering and terrorist financing, which are applied in accordance with the principles of necessity and proportionality, having regard in particular to risk-assessment obligations under international and Union law. Therefore, Member States cannot apply unreasonable, overly intrusive or disruptive measures, including reporting requirements placing an excessive or costly burden on organisations.
 Judgment of the Court of Justice of 18 June 2020, European Commission v Hungary, C-78/18, ECLI:EU:C:2020:476.
According to Article 22 of the draft Regulation provisions of Union and national law concerning money laundering and terrorist financing will apply, apparently including the provisions regarding the ‘beneficial owner’ (that associations do not have).
Minimum standards for non-profit organisations
In Annex II minimum standards for non-profit organisations are proposed. It includes non-discrimination (Article 5), simplification of administrative rules (Article 6), principle of good administration (Article 7) and right to an effective remedy (Article 8). The draft introduces a ‘public benefit status’ (Article 14).
Regarding AML and CFT Article 25, paragraph 2 says:
2. For the purpose of paragraph 1, Member States shall take the measures necessary to ensure that reporting and transparency obligations applicable to non-profit organisations pursuant to national laws, regulations and administrative practices on countering money laundering and terrorist financing, including those implementing Union and international obligations, are based on a targeted and up-to-date risk-based assessment of the sector and of the organisations concerned and do not result in disproportionate requirements or in the undue limitation of non-profit organisations’ access to financial services.
It is interesting to see if this will improve the position of non-profit organisations in the EU.
- Draft agenda of the JURI meeting of 30 September 2021, webstreamed during the meeting, agendapunt JURI/9/02511.
- JURI draft report of 15 September 2021, regarding a resolution on a statute for European cross-border associations and non-profit organisations (2020/2026(INL)).
- Draft opinion Committee on Civil Liberties, Justice and Home Affairs (LIBE) for JURI, 28 September 2021.
- Draft opinion Committee on Employment and Social Affairs (EMPL) for JURI, 1 August 2021.
- Procedure file European Parliament.
- The study ‘A statute for European cross-border associations and non-profit organisations – European added value assessment‘, prepared by Klaus Müller and Meenakshi Fernandes for the European Parliamentary Research Service (EPRS).
- My article on the study by the European Parliament Think Tank.
European Center for Not-for-profit Law (ECNL) on the problems faced by non-profit organisations :
- Page on European policies.
- How can CSOs push back against AML/CT/CFT overregulation? Februari 2021.
- Analysis on the European Court of Justice ruling on the Hungarian Transparency Law and its ground-breaking implications for CSOs, individuals and legal entities within and outside the EU, June 2020.
- Research report on bank de-risking and how the issues of financial access affects civil society organisations, May 2018.