Counterterrorism, sanctions and financial access challenges: Course corrections to safeguard humanitarian action

Abstract

AbstractThis article provides an overview of the impact of United Nations (UN) sanctions and counterterrorism (CT) measures on humanitarian action. The mandatory requirements of UN Security Council Resolutions 1267 and 1373 on member States to prohibit the provision of “funds, financial assets or economic resources” to terrorists complicates the work of humanitarian actors delivering assistance in areas where groups designated under the 1267 regime control territory. After explaining the impact of sanctions and CT measures on humanitarian actors, the article explores three primary sets of challenges encountered by such actors: (1) lack of clarity and adequate legal protection for carrying out humanitarian activities in countries subject to sanctions or areas in which designated entities operate; (2) financial access difficulties or de-risking by financial institutions limiting the ability of non-profit organizations (NPOs) to transfer funds to higher-risk jurisdictions due to banks’ risk aversion or fear of regulatory scrutiny of such transactions; and (3) conditions placed in funding contracts by donors effectively offloading CT and sanctions risks onto beneficiaries. The article analyzes experience with UN humanitarian carve-outs (exceptions as employed in the Somalia sanctions regime and case-by-case exemptions utilized in the North Korea regime), explaining why exceptions are the optimal solution for humanitarian actors. New data are presented indicating that the scope and scale of financial access difficulties experienced by NPOs have grown. Financial institutions, concerned about regulatory requirements to counter terrorism financing, are increasingly reluctant to provide banking services to NPOs working in highly sanctioned jurisdictions, and the resulting de-risking by banks results in significant problems for humanitarian organizations needing to move funds abroad. Additionally, contractual conditions related to CT and sanctions compliance are routinely employed by donors, resulting in an offloading of risk onto recipients without appropriate clarity and guidance from donors. Numerous initiatives in recent years have called attention to the challenges that humanitarians face: stakeholder dialogues, high-level meetings and other discussion fora promote broader understanding among participants and acknowledgement of the impacts that these polices have on humanitarian action. UN action to renew the 1267 regime's mandate and the consideration of a humanitarian carve-out in Afghanistan in the aftermath of the Taliban's takeover represent opportunities to reform sanctions in order to better protect humanitarian action. Recommendations are presented for each of the three sets of challenges, with an urgent call for the Security Council to embrace the opportunity for reform and more effectively balance the equally critical objectives of countering terrorism and safeguarding humanitarian action.