SEC to go after foundations, non-profit organizations

Used in money laundering

MANILA, Philippines — The Securities and Exchange Commission (SEC) has issued strict guidelines to ensure that foundations and non-profit organizations are not used by terrorists and other illegal organizations to launder money.

The commission en banc, which approved the guidelines last month, said the new rules would apply to all non-stock corporations registered with the SEC.

The move is part of SEC’s efforts to ensure that corporate entities under its supervision are not used for money laundering or terrorist financing or other unlawful purposes.

As part of the guidelines, the SEC said foundations and non-profit organizations must promote transparency, adopt good governance policies, have risk based supervision, strong financial management, robust internal and financial controls and sustained outreach programs.

The board of trustees must maintain oversight over the organization by establishing strong financial and human resource policies and conducting regular meetings, the SEC also said. 

Furthermore, the board must also ensure that proper due diligence is carried out on individuals and organizations that donate money or funds and work closely with the non-profit organizations, the SEC said.

“The board of trustees may execute agreements to outline the expectations and responsibilities with partners, including detailed information as to the application of funds and compliance with requirements for regulator reporting, audits and on-site visits,” the SEC said.

This can be done through the use of selection criteria and searches of publicly available information, including domestic blacklists and United Nations sanctions lists. 

Donors from countries with inadequate anti-money laundering measures must be subject to enhanced monitoring by the non-profit organizations and foundations, the SEC also said.

On financial accountability and transparency, the SEC said the board of trustees must monitor the use of funds.

There should also be appropriate internal controls and monitoring systems to see to it that funds and services are being used as intended. 

Thus, the SEC said the foundations and non-profit organizations must establish a system that will enable them to know who their donors are and where the funds are coming from.

They should also ensure that they know who their beneficiaries are and where they are located and that the funds actually reach their target beneficiaries or that they are used for the purpose intended.