Non Profit Organisations Sector

Whilst no one doubts that the work of Non Profit Organisations (NPOs) is important, it is worthwhile to pay attention to the Mutual Evaluation Report produced and published by the Asia Pacific Group of Anti-Money Laundering (APG) which is related to NPOs.

Basically, the APG Mutual Evaluation Report specifies that “the use of charities and NPOs continues to be the leading source of funds for money laundering and terrorism financing”. The NPOs feature a number of vulnerabilities that money launders and terrorist organisations can use. They are: 1. NPOs enjoy public trust. 2. NPOs have access to considerable sources of funds. 3. NPOs are often cash–intensive. 4. Some NPOs have a global presence that provides a framework for national and international operations and financial transactions, often within or near areas that are most exposed to terrorist activity. 5. NPOs may often be subject to little or no governmental oversight (registration, record keeping, reporting and monitoring, check of background of beneficial owners, employees, management). 6. Governmental bodies may have insufficient resources to effectively oversee the sector. 7. NPOs may have limited resources or capacity to withstand demanding regulatory requirements.

Some of the negative economic effects of money laundering and terrorism financing include firstly, they undermine the integrity and soundness of the NPO sector that is critical to economic growth. Secondly, they reduce productivity in the economy's real sector by diverting resources. Thirdly, they distort the economy's international trade and capital flows to the detriment of long-term economic development and finally, the NPO sector can inadvertently become part of the criminal network encouraging criminal activity. Future research may include developing governance framework for NPOs.