Certified Anti-Money Laundering Specialist Certification (CAMS) Practice Exam

According to FATF SR Eight, what must entities, particularly non-profit organizations, ensure?

1. They cannot be misused to finance terrorism

2. They are subject to less regulatory scrutiny

3. They have adequate funding to operate

4. They are actively engaged in public fundraising

The correct answer is: They cannot be misused to finance terrorism

Entities, particularly non-profit organizations, must ensure that they cannot be misused to finance terrorism. This responsibility is rooted in the FATF's Special Recommendation Eight (SR VIII), which addresses the vulnerabilities of non-profit organizations in terms of terrorist financing. Non-profits can be attractive targets for misuse by those seeking to divert funds for illicit purposes, so it is crucial for these organizations to implement measures to assess and mitigate their risk and to ensure that their resources are directed towards legitimate activities. This requirement emphasizes the importance of maintaining rigorous governance practices, monitoring financial flows, and conducting due diligence on donors and beneficiaries to prevent any potential exploitation of their charitable missions. By ensuring that they are not misused, non-profit organizations can contribute to the overall integrity of the financial system and the prevention of terrorism financing.