Contentious reforms

September 13, 2020

Civil society organisations decry FATF legislation for “squeezing space” rather than enabling transparency

Civil society organisations are widely recognized across the world as engines of development. They are active in several sectors of society including health, education, protection, capacity building, women empowerment and human rights, and employ a large number of workers.

Over the last decade, however, the Financial Action Task Force (FATF) has raised concerns regarding risk of terrorist financing through non-governmental organisations (NGOs). According to various FATF reports, “NGOs and terrorist organisations, though they have very different objectives, often rely on similar logistic capabilities.”

Therefore, FATF asserts that states should apply focused and proportionate measures, in line with a risk-based approach, to such non-profit organisations to protect them from terrorist financing. FATF’s Recommendation 8 states, “Countries should review the adequacy of laws and regulations that relate to non-profit organisations which the country has identified as being vulnerable to terrorist financing abuse.”

Since Pakistan has been placed in FATF’s grey list, new laws and amendments in existing laws have been introduced to curb money laundering and terror financing by regulating funding mechanisms. The National Assembly recently passed five bills that include The Companies (Amendment) Bill 2020’and The Anti-terrorism (Amendment) Bill, 2020 which have suggested various amendments to the existing laws to ensure compliance with FATF recommendations.

Government officials and security experts say such amendments are necessary for Pakistan to avoid FATF’s blacklist. However, human rights activists and members of civil society organisations have been expressing serious concerns on increasing number of laws and regulations.

Mohammad Zia-ur-Rehman, the chief executive of AWAZ CDS (Centre for Development Studies) Pakistan, says that federal and provincial governments have already activated more than a dozen institutional mechanisms and legal frameworks to regulate the work of NGOs, non-profit organisations (NPOs), civil society groups, and charities.

These bodies/organisations are principally registered and regulated under The Companies Act 2017, The Societies Registration Act, 1860, The Trusts Act, 1882, The Charitable Endowments Act, 1890, Voluntary Social Welfare Agencies (Registration and Control Ordinance), 1961, Local Government Ordinance, 2001, The Cooperative Societies Act, 1925, and The Religious Endowment Act, 1863.

The new proposed legislations are part of compliance with FATF’s requirements but the government must consider that there are some flaws in its scrutiny system, Rehman tells TNS.

“Every country has laws to regulate NPOs/NGOs and charity groups. But, at the same time, the processes are made to facilitate civil society groups, not to squeeze space for them. Unfortunately, our system is not an enabling environment for the civil society sector”, he adds.

The SECP has issued detailed regulations titled Securities and Exchange Commission of Pakistan (Anti Money Laundering and Countering Financing of Terrorism) Regulations, 2018. These guidelines are intended to assist NPOs licensed and registered as ‘associations not for profit’ under Section 42 of the Companies Act, 2017 to serve as a tool for prevention from money laundry/terror financing (ML/TF).

“We demand a sophisticated system in place to identify individuals and groups involved in any kind of illegal affairs without creating hiccups for others abiding by the laws,” says Bushra Khaliq.

In November 2019, Pakistan cancelled licences of more than 25,000 NPOs/NGOs and placed 170 in the terror financing category. Besides, over 1,000 properties and assets of listed individuals and entities have been seized. The Punjab cancelled the registration/ licence of over 9,000 NGOs, Sindh over 7,000, Khyber Pakhtunkhwa around 4,000.

The SECP document states that such entities are “vulnerable to terrorism and other criminal abuse, because they enjoy high levels of public trust and confidence, which is crucial to their success, and these entities often rely on goodwill and voluntary support from donors in one form or another. These platforms are powerful vehicles for bringing people together for a common purpose and collective action, and may inadvertently provide a ready-made social network and platform of legitimacy for terrorists or terrorist sentiments”.

“We have been told that the reasons behind cancelling registration of over 25,000 organisations are not sharing their financial records, including sources of funding, audit reports, and activities with authorities as required under the relevant laws”, says Bushra Khaliq, the executive director of WISE (Women in Struggle for Empowerment).

Serious concerns have been raised in the last few months by the civil society organisations on rapidly squeezing space for work.

Registrations process at federal and provincial level is already very complex, she adds, “every organisation has to comply with various laws and regulations under different acts off and on. Besides, some have to go through a very complex procedure of obtaining certificates from the federal government’s Economic Affair Division (EAD) to implement a project with foreign funding. Moreover, under some circumstances, some organisations have to acquire clearance from the Home Department, which is not an easy task.”

Apart from these, the NGOs’ registration and the No Objection Certificate (NOC) issuance process at the district level is another lengthy procedure, she says.

In the backdrop of increased government scrutiny, NGOs have been demanding a user-friendly mechanism to facilitate the required registration, and liaising with the government departments. “Undoubtedly, we are in favour of accountability and scrutiny, but we demand a sophisticated system in place to identify individuals and groups involved in any kind of illegal affairs but without creating hiccups for others that are abiding by the laws”, she says.

In a recent development, charity commissions have been constituted in all provinces. It has been made mandatory for all NPOs/NGOs, charity organisations, and other civil society groups to register with their relevant commissions. Some organisations in Sindh and the Punjab have filed petitions in High Courts against this policy.

“It is understandable that government wants to establish more checks on foreign funding but opening a new window will make working conditions more challenging”, says Ghulam Sughra Solangi, the chief executive officer of MRDO (Marvi Rural Development Organisation).

“In addition to this, all organisations are being clubbed in one category of ‘charity’ which is unjustified. Organisations like ours neither accept charities nor offer such service,” he says.

Solangi thinks that space for civil society organisations seems to be dwindling amidst governance challenges. “Surely, national initiatives for combating money laundering and terrorist financing is significant but it is also the government’s responsibility to create a healthy environment for those that are serving society and contributing towards Sustainable Development Goals (SDGs)”, she says.

The author is a staff member. He can be reached at [email protected]

Contentious reforms