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‘Zim exaggerating terrorism fears’

THE US-based International Centre for Not-for-Profit Law (ICNL) this week joined a growing number of domestic and global institutions that have condemned Zimbabwe’s Private Voluntary Organisations (PVOs) Amendment Bill, saying there could be an exaggeration of terrorism financing fears being brought out by Harare.

In its analysis of the Bill released on Wednesday, the organisation said the proposed changes would violate Recommendation 8 of the financial action task force (FATF), while undermining the right to freedom of association for PVOs.

Government gazetted the PVO Amendment Bill early this month to comply with FATF recommendations, while strengthening “technical compliance” by sector players. The government said the Bill would also address deficiencies relating to anti-money laundering and countering financing of terrorism.

The ICNL, which works to improve the legal environment for civil society, agreed that Zimbabwe was not compliant with Recommendation 8, which relates to non-profit organisations. Zimbabwe’s non-compliance was also noted by the Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) in 2016.

“ESAAMLG recommended that authorities should identify NPOs (non-profit organisations) which pose high terrorist financing risks with a view to applying proportionate mitigation controls,” ICNL said.

“In 2019, ESAAMLG re-rated Zimbabwe as partly compliant with Recommendation 8, but noted that Zimbabwe’s risk assessment of the NPO sector was not comprehensive enough to identify a subset of organisations falling within the FAFT definition of NPOs that are at risk for terrorist funding and money-laundering,” the organisation said.

Zimbabwe, according to the ICNL, remains under increased monitoring by FATF as of 2021.

According to Recommendation 8, countries must review the adequacy of laws and regulations that relate to PVOs identified as being vulnerable to terrorist financing abuse. The recommendation further states that countries must apply focused and proportionate measures, in line with a risk-based approach to non-governmental organisations.

“Over-regulation of the NPO sector on the basis of addressing ML/TF (Money Laundering and Terrorist Funding) threats manifested in several ways, including the tightening of regulations of the non-profit sector, the misuse or selective application of AML/CFT (Anti Money-Laundering and Countering the Financing of Terrorism) laws to clamp down on NPOs and their activities, and the adoption of burdensome reporting and disclosure requirements on the entire non-profit sector rather than solely for high-risk organisations,” the American legal think-tank noted.

It further states that the FATF has recognised the problem of overregulation of the non-profit by states by introducing a new workstream to specifically address the negative impact of poorly implemented AML/CFT measures.

The international organisation recommended the revision of Section 22(2) of the Bill to require the minister to consult PVOs when undertaking risk assessments for money-laundering and terrorism financing.

The FATF suggests identifying an actor as the focal point for the NPO outreach, such as, the PVO regulator, tax authority or other relevant body.

“FATF also recommends that the focal point engage in continuous, two-way dialogue with the NPO sector including organisations, coalitions, self-regulatory bodies and donor organisations,” the organisation said.

It further argued that the minister may designate any type of legal entity as at high risk without undertaking a risk assessment.

It recommended the amendment of Section 2(3) of the proposed Bill so that the government consults with relevant civil society stakeholders before designating a type of entity as vulnerable to misuse for terrorist financing. It also recommended the amendment of the same section to explicitly list the types of measures that the minister may apply to high-risk entities.

The ICNL also noted that the minister has broad discretion to control a PVO by replacing its executive committee members with provisional members. It demanded the removal or revision of Section 21 of the Bill to allow PVO members to nominate a provisional trustee.

It also recommended the removal of the proposed Section 13A of the Bill, which requires a PVO to re-register with the registrar when it has adopted a material change while calling for the expunging of Section 2(4) of the Bill saying it could lead to double registration of trusts registered by the High Court and restricting their ability to fund raise. The new Section 10(e1) prohibiting support or opposing any political party or candidate in an election, according to the ICNL, restricts PVOs’ right to the freedom of association and should also be removed.

It further argued that the imposition of monetary fines and terms of imprisonment for various offences under the Act introduces a new procedure by which the registrar may issue civil penalty orders against a PVO for violating the law.

The registrar could abuse the civil penalty order to arbitrarily burden the PVOs since the burden is on the organisation to show that it has not violated the law, the organisation said. The process, the ICNL said, further violates international best practices for the burden of proof relative to sanctions against organisations to always be on the state.

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