Information and tips for associations and foundations

Certain countries are more vulnerable to money laundering, financing of terrorism or other financial crime. These countries are on higher risk country lists. These lists are made by the European Commission or FATF.

ABN AMRO takes these lists and their risk rating into account. We also assesses whether the NPO is registered in, or operates from, a foreign country. This includes foreign bank relationships. But also board members resident in a foreign country. And transactions from or to foreign countries. We also adhere to international sanction legislation and monitor for possible violations of these sanctions.

Please consider the following points:

• Does the name of your organisation include a higher risk or sanctioned country? This may raise questions.
• Does funding come from conflict or post-conflict countries? Or from higher risk countries or sanctioned countries? The European Commission and FATF designates certain countries as higher risk. Illustrate the measures your organisation takes to ensure funding does not originate from an illegitimate source in these countries.
• Do you fund activities in conflict or post-conflict areas, higher risk or sanctioned countries? Have you undertaken steps to mitigate risks related to those?
• Are attendees from high-risk countries? Even if their activities are conducted outside of conflict or high-risk countries.
• Are you contracting services from third parties in conflict, higher risk or sanctioned countries/areas?
• Are your beneficiaries, board members, or staff from areas controlled by designated terrorist groups?
• Are foreign elements present? Why does the NGO want to start a banking relationship with ABN AMRO in the Netherlands?

ABN AMRO needs to understand the activities engaged in by the NPO. Some activities can be particularly vulnerable to money laundering or financing of terrorism. For example when a lot of cash is involved.

Please consider the following points:

• Is there a coherent link between your stated mission and actual activities? Coherency is important. Organisations such as CBF have tools (link to page in Dutch) to improve the coherency between your mission and activities.
• Do you have evidence of your activities, such as an Annual report? Quality reporting helps in our assessment. An established track record of the NPO gives us a better idea of the types your activities. Think of benchmarks, references or a reference to previous activities. Make your track record visible through media links, project summaries, references and brief case descriptions.
• Do you have an online presence? For instance social media or a website? We are aware that organisations mainly working with volunteers have less capacity and resources to develop websites and public reports. And that these types of organisations normally don't seek media coverage. Similarly, NPOs focusing on human rights issues in authoritarian regimes sometimes work under the radar. They will purposefully not seek media attention and/or profile themselves.
• How long is your organization active? What is your (expected) turnover and income, funding sources and who are your beneficiaries? Are these logic and consistent in relation to your activities.
• Has your organisation had any negative media attention in the past? Or any of its partners, beneficiaries and board members? It helps to give background information and a further explanation.

The organizational structure of the NPO needs to be transparent. Certain legal structures can create anonymity and conceal the persons who are actually in control. This can increase the risk of money laundering and financing of terrorism. CBF has guidelines (link in Dutch, see page 15) on risk factors to consider in the governance of NPOs.

Foundation (stichting)

Is the NPO a foundation (stichting)? Then you must register the foundation with the Chamber of Commerce (KVK). However you don't have any legal obligation to deposit financial statements. In general, a foundation has a board existing of different private individuals.

When a foundation has only one board member this may pose a potential higher risk of misuse of the foundation. This is because this one private individual has ultimate control over the foundation. A foundation may operate a business, but its profits must be allocated to the foundation's cause or purpose. The foundation's board membership is voluntary, without financial compensation.

Politically Exposed Person

Is a Politically Exposed Person (PEP) linked to the NPO? For instance a board member? Then this can lead to additional questions during the risk assessment. PEPs have a prominent political function. This increases the risk of money laundering, corruption and embezzlement. They could misuse their official position and use the NPO to conceal funds or assets resulting from bribery or corruption.

Please consider the following points:

• Do you have a clear organisational structure? Provide ABN AMRO with an organizational chart. Also explain the responsibilities of each of the parties. And the separation between the functions of the director and finances of the NPO.
• Are the majority of your supervisory members of the board independent? Too much distance between the board members and the daily operation of the NPO can be a risk factor. This is because the members might not be able to detect risks and act accordingly. It is also important that the majority of the board members lives in the Netherlands.
• Does your organisation have 3 or more board members? Is there an equal ‘involvement or control'? This means that one board member cannot dominate decision making.
• Is one of your staff or board members a PEP? The Dutch tax authorities/Belastingdienst published a Guide on identifying PEPs. Sometimes family members or close associates of a PEP can get additional questions during the risk assessment.
• Does the involved PEP have any control over the transactions of the NPO?
• The articles or charter of the organisation show what happens to its remaining funds after it dissolves. These funds should be used for a non-profit organisation (NPO) with a similar goal.

The right person should be identified as the Ultimate Beneficial Owner (UBO). This means the person who ultimately owns or controls the NPO. FATF defines UBO as “the natural person(s) who ultimately owns or controls a customer and/or the natural person on whose behalf a transaction is being conducted. It also includes those persons who exercise ultimate effective control over a legal person or arrangement.”

Please consider the list below to define if someone is a UBO. This goes for Dutch foundations, associations, mutual benefit associations and cooperatives:

1. A private individual who is the beneficial owner of, or has control over the legal entity via:
   The (in)direct holding of more than 25% of the ownership interest in the legal entity AND/OR the (in)direct holding of more than 25% of the voting rights regarding amendments to the articles of association of the legal entity;
2. A private individual who otherwise exercises effective control of the customer, based on the responsibility for the strategic decisions that fundamentally affect the daily or regular affairs/ business of the customer. Examples incl. the chairman, the secretary and the treasurer
3. If the situations described in points 1. or 2. are not applicable, and when there are no grounds for suspicion that there is an UBO as defined in points 1. or 2., all private individuals who hold the position of senior managing official (being in general the directors of the entity);
4. If we don't know if the individual(s) identified is in fact an UBO, then we see the entire senior management as UBO.

Please consider the following points:

1. Is it clear who the UBO of the NPO is? You should also report this information to the Chamber of Commerce.
2. Is the UBO of the NPO also a PEP? Do the funds of this UBO come from a credible, legitimate source?
3. The following information of the UBO is required: surname(s), first name, date of birth, country of permanent residence

The funds of the NPO need to be coherent with the NPO’s mission. This also applies to the (expected) transactions. There are several things that might raise questions during a risk assessment. For instance a lot of transactions to and from foreign countries. Or negative media attention on the funds of the NPO. Or inconsistent funding. The key question is how the organisation ensures that funds, goods, or activities reach the intended beneficiaries. It is also important to know how this information is reported back to the Dutch organisation. Additionally, checks and balances used in this process are crucial.

Transactions are sometimes blocked or delayed. This occurs when there is an unclear description of the transaction or incomplete information. It can also happen if the correspondent bank (often a foreign bank) requests additional information.

Please consider the following points:

• What types of transactions are you expecting to make? Explain the different types of transactions.
• Can you demonstrate that your transactions logically flow from your activities? Do you have supporting material for your payments and donations? Think of receipts, quotations, invoices? If you are a new organisation, indicate how you're planning to arrange this.
• Can you demonstrate that you have a clear understanding of the origin of your funds? And of the ultimate destination/beneficiary? Provide examples of the aid-chain in conflict and high-risk areas. And explain downward and upward accountability and transparency.
• Can you explain the link between the funding source of your organization, the type of organization and its activities? Provide a coherent link between these three elements. Do you expect that this might be difficult to understand? Then think about ways to give better understanding. Like examples from well-established NPOs. Or develop some case examples.
• Do you receive domestic funding from religious constituencies? Or from individuals that are considered a PEP? This is especially important for your major donors. Not for small donations. Major meaning your biggest donors proportionally to your total donors.
• Does your organisation engage in crowdfunding online? Does the crowdfunding platform have an AFM license (Autoriteit Financiele Markten)? If the platform needs an AFM license but doesn't have this, ABN AMRO cannot open a bank account until the platform fulfils its legal requirements.
• Especially smaller and volunteer organisations that work project-based deal with irregular sources of funding. Indicate this clearly towards the bank and make the intention and periods for funding transparent.