Information and tips for associations and foundations

Certain countries are more vulnerable to money laundering, financing of terrorism or other financial crime (including production and transportation of drugs, corruption and favourable to tax evasion) and are contained in higher risk country lists from for example the European Commission or FATF .

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

Please consider the following points:

• Does the name of your organization include a higher risk or sanctioned country? This may raise red flags in the bank or with a correspondent bank necessary to facilitate transactions.
• Does funding come from conflict or post-conflict countries, higher risk countries or sanctioned countries? The European Commission and FATF designates certain countries as higher risk. Illustrate the measures your organization 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 activities conducted outside of conflict or high-risk countries but are attendees from 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?
• In case foreign elements are present: what is the reason the NGO wants 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 are known to be particularly vulnerable to money laundering or financing of terrorism, for example involving a lot of cash or a relatively large part of funding for printed promotional flyers in combination with engagement in a conflict area. 

Please consider the following points:

• Is there a coherent link between your stated mission and actual activities? Coherency is an important factor, organisations such as CBF (The Netherlands Fundraising Regulator, a Dutch NPO quality seal for charities) has 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, such as benchmarks, references or a reference to previous activities, gives us a better idea of the types of activities that are conducted. Make your track record visible through media links, project summaries, references and brief case descriptions.
• Do you have an online presence (social media or website)? We are aware that organizations mainly working with volunteers have less capacity and resources to develop websites, public reports and/or are not driven to seek media coverage. Similarly, NPOs focusing on human rights issues in authoritarian regimes sometimes work under the radar and purposefully will 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 organization (or any of its partners, beneficiaries and board members) had any negative media attention in the past? If you are aware of such attention it helps to give background information and a further explanation. Do not hide such media attention, but discuss it and be pro-active. 

The organizational structure of the NPO needs to be transparent. Certain legal structures are favoured to create anonymity and conceal the persons who are actually in control increasing the risk of criminal assets being laundered or terrorist being financed. CBF has guidelines (see page 15 'Toelichting op de normen'- link to page in Dutch) on risk factors to consider in the governance of NPOs. 

Foundation (stichting)

In case the NPO is a foundation (stichting)  (link to page in Dutch) it is mandatory to register the foundation with the Chamber of Commerce (Kamer van Koophandel), but it does not 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 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

A Politically Exposed Person (PEP) linked to the NPO (a board member, for example) may result in additional questions being asked during the risk assessment. PEPs are considered to be individuals with an increased risk of money laundering, corruption and embezzlement, due to the increased risk attached to being entrusted with a prominent political function. They may use the NPO to conceal funds or assets that have been misappropriated as a result of abuse of their official position or resulting from bribery or corruption.

Please consider the following points:

• Do you have a clear organizational structure? Provide ABN AMRO with an organizational chart, 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 (a majority must be a resident of the Netherlands) of these members to the daily operation of the NPO can be a risk factor because the members might not be sufficiently able to detect risks and act accordingly if needed.
• Does your organization have 3 or more board members? Is there an equal ‘involvement or control' – meaning that one board member cannot dominate decision making?
• Is one of your staff or board members a PEP? To help you identify this, the Belastingdienst  (link to page in Dutch) published a Guide on identifying PEPs. Please note that in some cases persons that are a family member or close associates of a PEP might also get additional questions during the risk assessment.  
• Does the PEP involved in the NPO have any control over the transactions of the NPO?
• It is evident from the articles or charter of the organization that the financial resources that remain after the dissolution of the organization will be spent on a NPO with a similar objective.

The person who ultimately owns or controls the NPO is identified as the Ultimate Beneficial Owner (UBO). 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.” For Dutch foundations, associations, mutual benefit associations and cooperatives, the following private individual is defined as the UBO:

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;
   - 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 there is uncertainty whether the individual(s) identified is in fact an UBO, all private individuals who hold the position of senior managing official.

Please consider the following points:

• Is it clear who the UBO of the NPO is? Be aware you are required to provide this information in the UBO-register (kept by the Chamber of Commerce).
• Is the UBO of the NPO also a PEP ? Do the funds of this UBO come from a credible, legitimate source?
• The following information of the UBO is required:
  
  - Surname(s)
  - First name
  - Date of birth
  - Country of permanent residence