The European Civic Forum (ECF) in its 2023 Civic Space Report adressed the adverse effects of anti-money laundering (AML)/countering terrorist financing (CTF) regulations on the not-for-profit sector.

In the chapter on Bulgaria they reported something that will be recognised by NGOs across the EU:

Anti-money laundering/terrorist financing (AML/TF) legislation overburdens the sector

A major issue of the legal framework concerning NGOs remains the anti-money laundering/terrorist financing (AML/TF) legislation. Despite the advocacy efforts of the CSOs sector [124], the current AML/TF legislation still does not fully comply with the international standards set by FATF regarding the nonprofit organisations:

* All NGOs in Bulgaria are subjected to extensive obligations, including collecting information about their donors and beneficiaries. This approach is not risk based as the conclusions of the National Risk Assessment published in 2019 [125] show medium risk of the CSO sector linked to religious organisations that are excluded from the scope of the law.

* The NGOs with a relatively modest annual turnover of BGN 20,000 (roughly $10,700) or more and those NGOs who consider that there is a risk for their activities to be abused for the purposes of TF have additional administrative duties – they are obliged to carry out a risk assessment and to adopt internal rules. In many cases this is an unjustified administrative burden diverting resources from the main activities of already small organisations.

In 2022, the first Sectoral Risk Assessment of the NGO Sector in connection to AML/TF was started by the Bulgarian supervisory authority. The Assessment is carried out with the assistance of NGOs [126] and the results are expected to be published in early 2023.

The AML/TF measures also affect the access of NGOs to bank services. There is a tendency amongst banks in Bulgaria to require excessive information [127] (i.e. submitting donations contracts, submitting copies of personal documents of members of their supreme governing body, etc.) and forms not tailored to the CSOs sector’s specifics (i.e. shareholders information, obligatory information about the economic activities of the legal entity etc.) in order to conduct a background check of an NGO using or wishing to use the services of a bank. Some banks also demand a fee for reviewing the application and conducting a background check for opening an account of an NGOs which often do not take into account the legal specificities of thеsе entities and are not proportional to the amount of funds which need be deposited to the account. Results of the background checks are not shared with the concerned party and there are no adequate mechanisms set up for challenging decisions of the banks to deny service, block or close an existing account.

124 See e.g. 74 organizations supported a statement on the project of the Measures against Money Laundering Act (MAMLA).
125 Conclusions of the National Risk Assessment available here: https://dans.bg/images/stories/FID/NOR/Riskovi_sabitiya.pdf
126 BCNL is part of the working group on the Sectoral Risk Assessment
127 BCNL was informed with more than 30 such cases

In the Netherlands it is clearly visible that NGOs are criminalised by the government (article); one of the few banks where NGOs can open bank accounts stopped opening accounts (article). Read the articles on this blog on not-for-profit and AML.

It shows that the concepts behind anti-money laundering, as drafted by the informal world government FATF, completely fail.