SECP to Regulate Non-Profit Organisations to Prevent Terrorist Financing

The Securities and Exchange Commission of Pakistan (SECP) has taken measures to regulate non-profit organizations (NPOs) to enhance transparency in the sector, as a large segment of the NPO sector is seen as having a significant inherent vulnerability for terrorist financing (TF).

According to the report by a local English newspaper, SECP’s top priority is to improve regulations of the NPOs through proper assessment of the said sector. The assessment of the NPOs has been done to check cash-based source of funding, social media funding and unregistered charities.

The ultimate objective of the NPOs regulation is to enhance the transparency of the sector, the people in-charge of NPOs, their source of funds and particularly the way those funds are spent, stated the report by the SECP.

Financial Action Task Force (FATF) Recommendation No 8 defines NPO as a legal person or arrangement or organization that primarily engages in raising or disbursing funds for purposes such as charitable, religious, cultural, educational, social or fraternal purposes, or for carrying out other types of-good works.

This recommendation only applies to those NPOs which fall within this definition of an NPO. It does not apply to the entire universe of NPOs, stated the report.

More than half of the functionally active NPOs in Pakistan fall under the FATF defined NPOs as they are involved in service-type activity, and are also involved in raising or disbursing charitable funds. Based on the data collected through the mapping exercise of the NPO sector of Pakistan, 55% of NPOs operate in the services sector.

Overall, a large segment of the NPO sector in Pakistan is seen as having a significant inherent vulnerability for Terrorist Financing. Given the significant TF threats in Pakistan the overall TF risk is also very significant, SECP report added.

An expert said that the SECP cannot legally regulate and monitor all non-profit organizations (NPOs) as most,  i.e. around 15,000 NPOs, are registered and governed under the provincial laws.

In line with the SOPs of National Counter Terrorism Authority (NACTA), the SECP is following procedures to regulate the NPOs but most of them are registered with the provincial governments, said the report.

  • The problem is not NGOs. The problem is terrorist organisations. Problem is that few NGOs are working as tube for them

  • Govt. should first look into its own sleeves for terrorists in the guise of counter terrorism specialists.
    One such outfit is working under the umbrella of Ministry of Information and Broadcasting in Islamabad that has anti Pak agenda with funding coming from the UK.
    FIA and another agency have raided its office in the past but it still continues to collect and send out sensitive information to our enemies.

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