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The nonprofit industry in the United States accounts for one trillion dollars of annual economic activity.[1] But high-profile enforcement actions against nonprofit organizations (“NPOs”) at both the federal and state level in recent years have brought scrutiny to this sector. In addition, bad actors cast a shadow by exploiting charitable gift giving and NPOs to facilitate money laundering, terrorist financing, and evasion of sanctions.
This industry-wide concern has led to banks’ apprehension in providing services to nonprofit clients. Some legitimate charities have reported difficulty in obtaining and maintaining access to financial services.[2] Recognizing that “[h]elping those in need is a core American value, particularly in the difficult conditions caused by the COVID-19 pandemic” and that “[t]he United States is committed to ensuring that humanitarian assistance continues to reach at-risk populations through legitimate and transparent channels,” the U.S. Department of Treasury’s Financial Crimes Enforcement Network (“FinCEN”) and the Federal Banking Agencies[3] (the “Agencies”), recently took action to ensure that legitimate charities and other NPOs have the access they need to financial services, including the ability to transmit funds.