“AML/CFT regulations are an open door for abuse” – Lyudmyla Kozlovska at the FATF Global Conference

29 September 2023 | Author: Natalia Melnychenko

Between March and July 2023, the EU AML/CFT Global Facility co-hosted and sponsored a series of regional consultations for nonprofit organisations (NPOs), FATF Regional Style Bodies, and Financial Intelligence Units with the aim of collecting, documenting, and analysing practices of meaningful engagement between the NPO sector and relevant (inter)governmental stakeholders.

On 26-27 September 2023 in Bonn, Germany, the Final Global Conference was co-organised under the title “Risk and Consequence: The Future of FATF Recommendation 8 for Financial Integrity and Civil Society”. It was attended by representatives of the Open Dialogue Foundation (ODF) — its President Lyudmyla Kozlovska, Katarzyna Szczypska and Bota Jardemalie.

During the event, discussions focused on the following issues:

an approach that is proportionate to the terrorism financing risk;
the supervision of only those NPOs that are potentially at high risk for terrorism financing abuse;
the prevention of wholesale bank de-risking of NPOs;
the necessity of meaningful engagement between NPOs and all relevant stakeholders within the AML/CFT sphere.

The Head of ODF recounted how she experienced financial exclusion in Brussels, dubbed the ‘capital of Europe’, first-hand, after ODF and its management became the target of propaganda attacks by authoritarian regimes.

“From 2019, financial institutions started to see us as a high-risk customer. As a result, our bank accounts in Belgium were closed and the attacks on ODF also led to the closure of our personal accounts and the termination of all contracts”, Lyudmyla explained. Specifically, “Between 2019 and 2021, two Belgian banks, KBC and BNP Paribas Fortis, terminated contracts with us and put the Foundation on their blacklists, while practically all other banks in Belgium (ING, Belfius, Beobank, Crelan, Keytrade, Argenta, AXA, Aion) rejected our application. In addition, the personal accounts of ODF colleagues, as well as my and my husband’s company KL Solutions, were closed. In 2020, the UK company Revolut did the same. None of the banks motivated their decisions, as they were not obliged to do so. In 2022, the money transfer platform Wise closed the Foundation’s account, presumably because of our activities to help Ukraine, which raised concerns about our associations with the armed conflict there. It was only Bitcoin that proved to be the solution — it was the only way for us to continue supporting activists in authoritarian states and organising humanitarian aid for Ukraine just two days after the Russian invasion”.

Since then, Kozlovska said, the ODF has not been able to open accounts in other Belgian or foreign banks (after applying to banks in Poland, Estonia and Malta), thus being effectively financially excluded. Despite seeking legal remedies, no effective solution to this problem had been found in Belgium.

The Head of ODF cited the rules of the European Banking Authority, according to which this practice is contrary to the provisions of Directive 2015/849 dated 20 May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing. This is why it is so important, in her view, for the FATF authorities — in cooperation with the civil society — to create such standards for global financial policy so that non-governmental and nonprofit organisations are not perceived as high-risk by financial institutions and, as a result, are not financially excluded. “This is because it is an open door for authoritarian regimes to abuse AML/CFT rules”, Kozlovska concluded.

We encourage you to watch a recap of the event: