The Nonprofit Sector’s Unexpected Ally
Sarah Gardiner and Poorvika Mehra on the Financial Action Task Force and Why It Matters
The first year of the second Trump administration has been marked by mounting attacks on domestic nonprofits, ranging from labeling mutual aid networks and community groups as agents of “domestic terrorism,” to threatening nonprofits’ tax-exempt status, to freezing billions in funding for universities on the grounds of being “supportive of terrorism.” Increasingly violent tactics used by federal law enforcement and characterization of protesters murdered at the hands of the state as “domestic terrorists” tragically underscores the urgency and severity of the threats. Nonprofits working abroad are also under pressure, including through the recent designation of humanitarian and medical aid groups working in crisis zones as “terrorists.”
These attacks create new challenges for nonprofits working to protect human rights at home and abroad, and an urgent need to find new ways to push back.
In that vein, allow us to present a little-known multilateral organization—the Financial Action Task Force (FATF)—for consideration.
What is the Financial Action Task Force?
The FATF serves as the standard-setter for global regulatory policy on anti-money laundering and countering the financing of terrorism (together known by the acronym AML/CFT). FATF was originally created in 1989 with a focus on money laundering; following 9/11, it expanded to include countering terrorist financing, which gave it increased relevance and influence. Today, FATF’s core membership comprises 37 countries and two regional organizations, with more than 200 jurisdictions committed to adopting FATF standards—demonstrating an extensive global reach. FATF undertakes periodic Mutual Evaluations of member countries to assess their technical compliance with and effectiveness of their implementation of FATF recommendations, and the overall health of their AML/CFT regulations and financial system.
FATF’s Mutual Evaluations process revolves around the 40 FATF Recommendations that national governments are expected to implement and uphold. The recommendations are intended to serve as the basis on which all countries should model their domestic AML/CFT regulations. Through the Mutual Evaluations process, governments share information with FATF assessment teams on steps they have taken to address identified AML/CFT risks. Nonprofit groups can also submit input, focusing on the impact of AML/CFT regulations on their work. FATF assessment teams then conduct in-country visits in which they meet with government authorities, financial institutions, the private sector, and nonprofits, before publishing Mutual Evaluation Reports, which score countries on FATF Standards and outline any areas of concern. Countries are then mandated to report on their progress in addressing identified concerns, which creates additional opportunities for accountability and dialogue with cross-sectoral stakeholders.
Countries that score poorly in their Mutual Evaluations may be placed on a list of “jurisdictions under increased monitoring” or a list of “high risk jurisdictions subject to a call for action”—colloquially known as the FATF grey and black lists, respectively. Crucially, placement on these lists can trigger significant economic consequences, including reduced inward foreign investment, increased compliance and borrowing costs, delays in international financial transactions, declines in GDP, financial de-risking (when commercial financial service providers decide it is too risky to continue business relationships and services), and reputational damage that undermines other areas of international cooperation. For example, in 2018, Pakistan was placed on the FATF grey list, making it more difficult for the country to access funding from the World Bank and International Monetary Fund and contributing to a downgrade of the country’s creditworthiness.
As a FATF member, the United States participates in the Mutual Evaluations process, and its next Mutual Evaluation is this year. FATF assessors are scheduled to conduct their on-site assessment this spring, with results expected to be published later in the year.
Why FATF Matters for Nonprofits
What makes FATF an appealing tool for nonprofits is Recommendation 8. It states that countries should adopt a “risk-based approach” toward oversight of the nonprofit sector, in order to uphold financial integrity within the sector without disrupting legitimate nonprofit activity. The most recent version of Recommendation 8 recognizes that over-regulation of the nonprofit sector as it relates to AML/CFT has caused serious harm, including delays to “life-saving humanitarian assistance and comfort to those in need.”
In other words, Recommendation 8 says that the nonprofit sector is not inherently high-risk for terrorist financing, and that governments cannot subject the sector to blanket restrictions that are not grounded in evidence or actual risk profile. Authorities also cannot weaponize their AML/CFT infrastructure to suppress nonprofits and consolidate political control.
Sadly, many governments fail to adhere to Recommendation 8. For example, in Nicaragua, more than 1,500 nonprofits had their assets seized and were closed down by the government in 2024, purportedly because of financial reporting failures. Ahead of India’s Mutual Evaluation in 2023, Amnesty International documented India’s weaponization of CFT regulations to repress civil society. In 2025, Front Line Defenders pointed to criminalization as a leading threat to human rights defenders globally, who increasingly find themselves subject to asset freezes, travel bans, criminal investigations, and professional disbarment on baseless counter-terrorism grounds.
These dynamics are not accidental. Instead, they exemplify intentional, state-led misapplication and weaponization of international AML/CFT standards.
Global Concerns Coming Home
The United States’ upcoming Mutual Evaluation is occurring at a time of unprecedented domestic crackdowns on nonprofit organizations. In 2025, threats from the administration came in the form of National Security Presidential Memorandum-7 (“Countering Domestic Terrorism and Organized Political Violence”); proposed legislation targeting non-profit tax exempt status; Executive Orders designating certain U.S.-based groups as “domestic terrorist organizations;” and the White House’s “Strategy to Counter Domestic Terrorism and Organized Political Violence.”
A leaked memo from the Office of the U.S. Attorney General adopts a broad view of what constitutes a “domestic terrorism threat,” including in that definition people who harbor “extreme viewpoints on immigration, radical gender ideology, and anti-American sentiment.” The memo directs the FBI, in cooperation with state and local law enforcement, to conduct criminal investigations and prosecutions of civil society. These measures pose clear threats to protected freedoms of speech and assembly, and raise concerns that a diversion of resources toward a politically motivated crackdown on civil society leaves the United States and its financial institutions vulnerable to actual AML/CFT threats.
At the same time, the administration has significantly expanded Foreign Terrorist Organization and Specially Designated Global Terrorist designations, with a focus on transnational criminal organizations operating in the Americas. This significantly raises the legal risk for peacebuilding and humanitarian service providers (both U.S.-based and international organizations) operating in areas where newly designated organizations are active, compromising their ability to serve already vulnerable populations.
In December, the Charity & Security Network submitted an NPO Shadow Report to the FATF assessment team for the United States that outlined these concerns, urging the team to meet with nonprofits who are under pressure during their in-country visit, and encouraging them to rate the United States as only partially compliant with Recommendation 8.
The Opportunity that FAFT Creates
The fact that the Trump Administration has remained in FATF, despite leaving 66 other international organizations at the start of this year, signals that it views the institution as strategically important. Unlike other multilateral bodies, the United States cannot unilaterally exit FATF or elect not to participate in its own Mutual Evaluation without risking serious economic consequences. This situates FATF as something of a unicorn in the multilateral space: an international organization with teeth.
Therein lies the opening for American nonprofits. The upcoming Mutual Evaluation represents a rare opportunity to work with a multilateral body to address shrinking civic space, amplify civil society concerns, and move toward productive cross-sectoral cooperation on areas of legitimate AML/CFT priorities. Domestic democracy and human rights organizations should seize this moment to document how the Trump administration is using the United States’ AML/CFT architecture not to address actual security threats, but to crack down on legally protected, legitimate nonprofit activity. They should consider publicizing their findings as a means of influencing the Mutual Evaluation process, and explore ways to work with global civil society to engage FATF directly both before and after the assessment team releases the results of the Mutual Evaluation.
If they do, the Mutual Evaluation of the United States can raise awareness of urgently needed protections for domestic nonprofits, and help safeguard some semblance of shared norms in multilateral spaces. As the Trump administration turns its back on human rights institutions, FATF offers a rare opportunity to elevate freedom of association, assembly, and expression in a multilateral institution the administration can’t easily ignore.
Sarah Gardiner is a consultant with the Charity & Security Network. She has previously held leadership positions within Oxfam America and Front Line Defenders, focusing on global civil society resiliency and protections for human rights defenders. Poorvika Mehra is a policy economist specializing in AML/CFT regulations and the humanitarian impact of sanctions. She is currently the Howard S. Brembeck Fellow at the Charity & Security Network.