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The legislative blitz that rocked the civil society community in 2017 created a host of opportunities and lessons for government, civil society and the public. Non-state actors in the country are pushing regulators and the National Assembly to fix existing laws guiding the work of nonprofits in the country.
While regulators have stepped up their game, working hard to improve compliance with existing regulatory frameworks by nonprofits, positive results and intended outcomes can only be achieved if both the regulator and the sector work together to review all regulations with a view to testing its continuing relevance. Every policy option must be carefully assessed, likely impact, costed and a range of viable alternatives considered in a transparent and accountable way against the default position of “noneregulation”, being clamoured for by the sector (civil society community or NGO).
For example, the National Risk Assessment conducted in 2016 in response to Recommendation 1 of the Financial Action Task Force’s 40 recommendations requires that all countries identify, assess and understand the money laundering and terrorist financing risk elements prevalent in their jurisdictions for the development of efficient measures to combat the crime and efficient allocation of scarce resources to do the same.
An outcome of this exercise revealed that the ML threat level for the Nigerian nonprofit sector is rated medium-high, owing to weak and ineffective monitoring measures for the regulation of nonprofit activities. The report noted that “It has become extremely difficult and elusive to track the activities of these organisations effectively; matching expenditure against their perceived income has been reported to be quite difficult. This subsector showed some significant exposure to cash transactions because, the use of electronic payments is not common in rural areas where the Nonprofits mostly offer services”.
The question is whether our organisational systems as a sector are set up today in a way that addresses the outcome of the assessment. The consequences of the findings from the NRA will be with the sector for months to come. The resulting effect could be measured, regulations targeted at the sector in ways that enable or disable the operations of nonprofits in the country. Whatever it is this, provides both an opportunity and a threat as it affords the sector an opportunity to improve confidence in its activities by showing regulators how its internal systems and structures are helping to address ML/TF risks.
The sector’s (civil society community or NGO) strength and ability to convince regulators that our systems can withstand threats around ML/TF will be measured by the cumulative evidence provided by different organisations and institutions that make up the sector — showing how as an organisation their structures and systems discourage nefarious activities. Nonprofit executives and Board must urgently review their governance systems with a view to putting in place (where they do not already exist) and strengthening appropriate measures that can disallow the use of their organisations as conduits for money laundering and terrorism financing.
In testing the relevance of regulatory measures that may arise from the NRA, nonprofit networks, associations and coalitions must ensure their members comply with relevant regulatory requirements as this way, evidence for improving the law will become readily available for policy advocacy and campaigns since actual changes and amendments to laws can only be made legislatively.
For now, at least the sector appears well-disposed to ML/TF issues as they overwhelmingly agree that the sector can be used for terrorist financing when asked in a recent survey if they agree that the nonprofit sector can be used for terrorist financing. An understanding of how this connects with their day-to-day activities is yet to be fully understood signalling an opportunity for regulators to further educate the sector on the implications of the ML/TF laws as they apply to the formation, operation and sustainability of Nigerian nonprofits.
Oyebisi B. Oluseyi, Executive Director, Nigeria Network of NGOs, Lagos, firstname.lastname@example.org