The South African Department of Social Development has begun deregistering non-compliant non-profit organizations (NPOs) in an effort to bolster efforts to remove them on the FATF grey list. The nation’s commitment to resolving the concerns brought up by the Financial Action Task Force (FATF) includes this action.
Increased Criticism of the NPO Sector
The possibility of NPOs being exploited for money laundering and terrorist financing is one of the main issues that the FATF has highlighted. To lessen these risks, the FATF advised a comprehensive risk analysis of the NPO industry. In response, the Financial Intelligence Centre (FIC), SARS, and the Department of Social Development worked together to create an evaluation called “The Information on the South African Terrorist Financing Risk Assessment for Non-Profit Organizations.” According to their evaluation, the industry has a medium level of exposure to terrorist financing.
Risks that have been identified
The risk assessment listed a number of possible dangers to non-profit organizations, such as:
- Raising money or providing assistance to terrorist groups abroad.
- Allowing those engaged in terrorist activities to travel.
- Utilizing internet channels for recruitment, propaganda, and financing.
Phased Procedure for Deregistration
A phased deregistration of non-compliant NPOs is currently under progress in order to mitigate these dangers. Of the 295,052 registered NPOs in South Africa as of October 2024, 167,103 were deemed to be non-compliant. Included in the deregistration procedure are:
- Verifying compliance: involves locating non-profit organizations (NPOs) that have failed to file the required yearly reports under the Non-Profit Organizations Act (Act 71 of 1997).
- Notices of Compliance: giving non-compliant NPOs notice and giving them 30 days to turn in any unfinished reports.
- Deregistration: If a NPO does not comply with the rules within the allotted time, they are removed from the register.
- Appeal Procedure: Giving deregistered NPOs a way to file an appeal with a third-party arbitrator chosen by the Minister.
Effects on the Nonprofit Sector
Upholding strong standards of accountability, transparency, and governance within the NPO sector is the goal of this program. The Department of Social Development aims to prevent abuse and preserve the integrity of the sector by guaranteeing compliance. In addition to addressing the FATF’s concerns, this proactive strategy makes a substantial contribution to South Africa’s objective of being taken off the grey list.
