COMPLIANCE
New OFAC licenses facilitate humanitarian transfers
What began as a series of puzzling anecdotes about the inexplicable and abrupt closure of nongovernmental organizations ’ ( NGOs ’) bank accounts has ballooned into the global phenomenon known as bank “ de-risking ”— where financial institutions ( FIs ) shed , rather than manage , any perceived risk in line with a riskbased approach . 1 Its prevalence and impacts on NGOs have been well-documented . 2
It is both the stuff of dystopian fiction — Margaret Atwood ’ s book The Handmaid ’ s Tale describes the protagonist ’ s loss of her bank account as the harbinger of a frightening new world order — and the reality in which NGOs must operate .
With a new set of authorizations for NGO activities and transactions from the U . S . Department of the Treasury ’ s Office of Foreign Assets Control ( OFAC ), that narrative is poised to change . These general licenses pave the way for FIs to comfortably facilitate international funds transfers for humanitarian aid , development and peacebuilding work in some of the world ’ s most complex settings . The general licenses , which authorize a range of activity in 29 sanctions and counter-terrorist designation regimes — including Darfur , Lebanon , Somalia and Yemen — are self-executing , meaning anyone can use them without the need for an application .
“ Put simply , the new general licenses are a game changer for humanitarian organizations working in places where listed entities are present ,” said Kate Phillips-Barrasso , vice president for global policy and advocacy at Mercy Corps . “ They are an unequivocal policy statement by the U . S . government that humanitarian action is allowed despite sanctions and represent a major step forward in addressing the obstacles faced by organizations working to save lives in these countries .”
How we got here
The new general licenses are the product of years of NGO advocacy , 3 two multistakeholder dialogues in the U . S . 4 along with others around the world , a multitude of reports , the passage of the Anti-Money Laundering Act of 2020 ( AMLA ), 5 the designation of the Houthis in Yemen ( later reversed ) as a foreign terrorist organization ( FTO ), 6 the U . S . Department of the Treasury ’ s review of its sanctions programs 7 and more recently , a robust collaboration between government and the NGO sector .
While account closures and the similar problem of account refusals persist , they have been overshadowed by widespread delays or cancellations of international funds transfers . Delays typically last weeks or even months , significantly postponing or canceling lifesaving NGO programs . In one often-cited example , an NGO winterization program in rural Afghanistan was canceled , as the program funds were received by the NGO ’ s local partners after winter had concluded .
As noted in a 2017 empirical study , “ When programs are delayed or canceled because of the inability to transfer funds , peace is not brokered , children are not schooled , staff is not paid , hospitals lose power , the needs of refugees are not met and , in the worst cases , people die .” 8
When NGOs first alerted the Department of the Treasury almost a decade ago about their account closures , the Department of the Treasury was reluctant to interfere in what they viewed as business decisions . However , it became apparent that the problem was much broader , and subsequent reports , including two from the U . S . Government Accountability Office 9 ( GAO ) and a multistakeholder dialogue convened by the World Bank and ACAMS , 10 posited that among the likely drivers of de-risking was U . S . government regulation and policy around sanctions and terrorist designations .
72 acamstoday . org