Dr Jeanne Nel
Senior Lecturer, Monash University
South Africa’s non-profit (NPO) sector is essential for social cohesion and for the development of South Africa’s economy. However, the crucial work of the sector is at risk of disruption due to financial integrity expectations and compliance. NPOs now face the dual challenge of advancing their mission while also safeguarding their access to financial services to remain operationally sustainable.
FATF Standards: Opportunities and Risks
Since 2001, the Financial Action Task Force (FATF), the global standard-setter for combating money laundering and terrorist financing, has had specific standards related to NPOs. Although aimed at preventing terrorist abuse of charities, these measures have sometimes led to unintended outcomes, with NPOs worldwide facing “de-risking”, where banks refuse or withdraw services from the sector, due to a perception that all NPOs are vulnerable to financial crime.
The principles of financial and social accountability themselves are not new. For centuries, charitable regulation has required that entrusted resources be appropriately used for their intended purposes. What is changing is the global and local context: compliance today is not only about honouring donor intent but also about meeting the expectations of regulators and financial institutions.
In South Africa, the FATF’s recent greylisting has intensified scrutiny of the sector. The Department of Social Development (DSD) has signalled changes to strengthen registration, reporting, and governance frameworks for NPOs, in line with the FATF’s requirements. While intended to enhance transparency and accountability, these measures may leave many organisations battling to comply and finding themselves unfairly locked out of essential financial channels. This is not merely an administrative inconvenience: debanking severely impedes NPOs’ ability to raise funds, pay staff, or deliver services to those most in need.
A Shift Toward Proportionality and Inclusion
Recognising that misapplication of its standards causes unintended consequences, including NPO-related de-banking and other oppressive measures, the FATF clarified its expectations. The FATF 2023 Best Practices Paper on NPOs, for example, emphasised that only a small fraction of NPOs pose elevated risk and that a “one-size-fits-all” approach is inconsistent with global standards.
In February 2025, FATF updated its Standards to emphasise proportionality and to require countries to allow and encourage simplified measures in lower-risk cases. The June 2025 FATF Guidance on Financial Inclusion explicitly reaffirmed that wholesale de-risking is contrary to a risk-based approach. The Guidance underscores that humanitarian assistance, remittances, and legitimate NPO activity should not be unduly disrupted. These updates mean that global standards now align with what NPOs have long called for: proportionate, risk-based regulation that enables rather than stifles legitimate work.
Building Resilience Through Governance
South African NPOs should now focus on what is within their control: governance. Strong internal governance is a powerful shield against financial exclusion and an effective way to build donor and public confidence.
Key measures include:
- Robust Oversight Structures – A competent and engaged board that provides direction and ensures compliance with laws.
- Consistent Recordkeeping and Transparent Financial Management – Maintaining proper books, preparing audited financial statements where feasible, and reporting clearly to regulators and donors.
- Risk Management Policies – Identifying and mitigating risks such as fraud, misuse of funds, and reputational damage.
- Due Diligence and Beneficiary Vetting – Taking reasonable steps to ensure funds are directed appropriately and not misused.
- Compliance with Legal Requirements – Keeping registrations up to date with DSD, SARS and other authorities, and submitting reports on time.
These steps do not need to be resource heavy. For smaller NPOs, even modest, context-appropriate measures can
demonstrate integrity and reduce the likelihood of financial exclusion.
Dealing with Denial or Limitation of Services
Despite best efforts, some organisations may still face account closures or restrictions. Rather than accepting exclusion as unavoidable, NPOs should consider these actions:
- Request Written Reasons: Request banks to provide reasons for refusing or restricting services. Transparency is the first step in addressing unfair treatment.
- Engage with Regulators: Raise concerns with the Financial Intelligence Centre (FIC) or DSD.FATF guidance now makes it clear that treating all NPOs as higher risk is inconsistent with a proper risk-based approach. Regulators are expected to help prevent over-compliance by financial institutions and to ensure proportionate treatment.
- Collective Advocacy: Work through NPO and sector associations to raise systemic concerns. The FATF encourages multi-stakeholder dialogue, such as the NPO Working Group, chaired by Inyathelo, to reduce de-risking.
A Shared Responsibility
Ultimately, the resilience of South Africa’s NPO sector is a shared responsibility. NPOs must embrace good
governance as a foundation for credibility and sustainability. Donors need to recognise that compliance has costsand support capacity-building, not just programme delivery. Regulators and banks must balance vigilance against
abuse with recognition of the sector’s vital social role, applying risk-based measures proportionately rather than indiscriminately. Only through this collaborative effort can the sector continue serving those who need it most.
