63838 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 

DEPARTMENT OF TRANSPORTATION 

Federal Transit Administration 

[Docket No. FTA–2006–24037] 

Clarification for Fiscal Year (FY) 2007 

Implementation for the Elderly 

Individuals and Individuals With 

Disabilities, Job Access and Reverse 

Commute (JARC), and New Freedom 

Programs 

AGENCY: Federal Transit Administration 

(FTA), Department of Transportation 

(DOT). 

ACTION: Interim guidance for FY 2007 

implementation. 

SUMMARY: The Federal Transit 

Administration (FTA) published a 

Federal Register notice on September 6, 

2006 (71FR52610) announcing proposed 

guidance in the form of circulars to 

assist grantees in implementing the 

Elderly Individuals and Individuals 

with Disabilities (Section 5310), JARC, 

and New Freedom programs. By this 

notice, FTA clarifies interim guidance 

for FY 2007 included in the notice 

published on September 6, 2006, and 

provides additional interim guidance for 

FY 2007. 

DATES: This clarification is effective on 

October 31, 2006. 

ADDRESSES: FTA continues to invite 

public comment on the proposed 

circulars for these programs through 

November 6, 2006 via the Web site: 

http://dms.dot.gov (Docket Number 

FTA–2006–24037); fax at 202–493–

2251; or mail: Docket Management 

Facility; U.S. Department of 

Transportation, 400 Seventh Street, 

SW., Nassif Building, PL–401, 

Washington, DC 20590–0001. 

FOR FURTHER INFORMATION CONTACT: 

Henrika Buchanan-Smith, Office of 

Program Management, Federal Transit 

Administration, 400 Seventh Street, 

SW., Room 9114, Washington, DC 

20590, phone: (202) 366–4020, fax: (202) 

366–7951, or e-mail, 

Henrika.Buchanan-Smith@dot.gov. 

SUPPLEMENTARY INFORMATION: FTA 

published a Federal Register notice and 

proposed program guidance circulars on 

September 6, 2006 for the Elderly 

Individuals and Individuals with 

Disabilities (Section 5310), JARC, and 

New Freedom programs. In the notice, 

FTA included ‘‘Guidance for the 

Coordinated Planning Process for FY 

2007,’’ phasing in the requirements for 

the locally developed coordinated 

public transit–human service 

transportation plan. 

This notice clarifies that applicants 

should follow this interim guidance 

regarding the planning process for all 

grants awarded under these three 

programs in FY 2007, including funds 

appropriated and apportioned in both 

FY 2006 and FY 2007. 

An earlier Federal Register notice 

published March 15, 2006, included 

‘‘Interim Guidance for the Elderly 

Individuals and Individuals with 

Disabilities, JARC, and New Freedom 

Grants for FY 2006.’’ At the time FTA 

published that Interim Guidance, we 

expected to issue final guidance before 

FY 2007, and the interim guidance was 

only made applicable to FY 2006 grants. 

The interim guidance for FY 2007 in the 

September 6, 2006 notice, however, 

applied only to the coordinated plan, 

not to other topics addressed in the FY 

2006 interim guidance. The three 

proposed circulars include guidance for 

other areas such as designated recipient, 

competitive selection, project eligibility, 

and subrecipient eligibility. The 

proposed requirements in these 

circulars are based on provisions in the 

Safe, Accountable, Flexible, Efficient 

Transportation Equity Act: A Legacy for 

Users (SAFETEA–LU) as well as issues 

raised and commented on during the 

public comment period. The proposed 

circulars reflect FTA’s current 

interpretation of SAFETEA–LU. 

The guidance contained in the 

proposed circulars should be used for 

applications submitted during FY 2007, 

to the extent possible. However, FTA 

recognizes that some designated 

recipients may have proceeded in good 

faith based on the interim guidance for 

FY 2006 in the March 15, 2006, notice, 

which stated that in the event FTA 

subsequently established more specific 

criteria for the coordinated planning or 

competitive selection process, or for 

project eligibility, the requirements 

would not be applied retroactively to 

grants awarded prior to the issuance of 

the guidance. 

FTA will continue to apply this ‘‘hold 

harmless’’ principle to applications 

submitted in FY 2007 based on 

coordinated planning or competitive 

selection processes substantially 

complete before the issuance of final 

guidance. Designated recipients should 

be aware that projects awarded funding 

prior to the issuance of final guidance 

may not be eligible for continuation 

funding in future years if they do not 

meet the eligibility criteria in the final 

guidance. When FTA subsequently 

issues final guidance it will be effective 

in FY 2008. 

Issued in Washington, DC, this 23rd day of 

October, 2006. 

James S. Simpson, 

Administrator. 

[FR Doc. E6–18259 Filed 10–30–06; 8:45 am] 

BILLING CODE 4910–57–P 

DEPARTMENT OF THE TREASURY 

Anti-Terrorist Financing Guidelines: 

Voluntary Best Practices for U.S.- 

Based Charities 

AGENCY: Office of Terrorism and 

Financial Crime, Treasury. 

ACTION: Notice of updated guidelines. 

SUMMARY: The U.S. Department of 

Treasury (‘‘Treasury’’) is publishing an 

updated version of its Anti-Terrorist 

Financing Guidelines: Voluntary Best 

Practices for U.S.-Based Charities 

(‘‘Guidelines’’) along with a new Annex. 

The Guidelines were originally released 

in November 2002. A revised version of 

the Guidelines was published for public 

comment on December 5, 2005. 

Treasury received nine (9) comments on 

the revised Guidelines and, as explained 

below, made a number of additional 

revisions in response to those 

comments. 

DATES: Effective Date: The updated 

Guidelines were published on 

Treasury’s Web site on September 29, 

2006. 

FOR FURTHER INFORMATION CONTACT: 

Office of Terrorist Financing and 

Financial Crime, Department of the 

Treasury, Washington, DC 20220: (202) 

622–3786 (not a toll-free call). 

SUPPLEMENTARY INFORMATION: The 

Guidelines, the Response to Comments 

Submitted on the U.S. Department of 

the Treasury Anti-Terrorist Financing 

Guidelines: Voluntary Best Practices for 

U.S.-Based Charities (‘‘Response’’), and 

additional information concerning the 

protection of charities are available on 

the Treasury’s Web site at http:// 

www.treas.gov/gov/offices/enforcement/ 

key-issues/protecting/. 

The Response and Guidelines are 

reprinted below. 

Dated: October 16, 2006. 

Patrick M. O’Brien, 

Assistant Secretary of the Treasury. 

Response to Comments Submitted on 

the U.S. Department of the Treasury 

Anti-Terrorist Financing Guidelines: 

Voluntary Best Practices for U.S.-Based 

Charities 

In response to the threat of terrorist 

financing in the charitable sector and to 

assist charities in protecting themselves 

from such abuse, Treasury initially 


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released its Anti-Terrorist Financing 

Guidelines: Voluntary Best Practices for 

U.S.-Based Charities (Guidelines) in 

November 2002. After receiving 

numerous comments from the sector 

regarding these Guidelines, Treasury 

hosted an Initial Outreach Event in 

April 2004, at which time Secretary 

Snow committed that Treasury would 

continue to work with the sector to 

amend and revise the Guidelines to 

improve their utility for the sector in 

protecting against terrorist abuse. On 

December 5, 2005, after extensive 

discussions with other government 

authorities and the charitable sector, 

Treasury released a draft revised version 

of the Guidelines and invited public 

comment on the revisions. 

Treasury received a total of nine 

submissions during the comment period 

from a wide range of organizations. A 

number of organizations prefaced their 

comments with a general 

recommendation that Treasury 

withdraw the Guidelines based on their 

perception that the Guidelines are 

potentially harmful to the charitable 

sector given existing regulations 

governing the operations of charities. 

We do not believe that the voluntary 

adoption of the Guidelines—whereby 

charities with a higher risk of 

vulnerability to terrorist financing 

should consider adopting the best 

practices to better defend against that 

risk—would adversely affect the 

financial health, or obstruct the day-today operations, of the charitable sector. 

Treasury is uniquely positioned to 

provide recommended measures to the 

charitable sector that are particularly 

relevant for combating the ongoing and 

pervasive terrorist abuse and 

exploitation of charities. Such voluntary 

measures are intended to assist charities 

build upon pre-existing controls and 

protective measures by adopting and 

applying appropriate counter-terrorist 

financing safeguards. Treasury also 

believes the sector is better served 

through ongoing dialogue regarding the 

evolving nature of the terrorist threat, 

particularly with respect to the 

charitable sector, and effective 

voluntary protective measures that the 

sector can adopt to combat this threat. 

Treasury initially conceived the 

Guidelines as a direct response to 

requests from the sector for policies and 

practices to protect against potential 

terrorist abuse and assist in compliance 

with new terrorist financing authorities, 

including Executive Order 13224. The 

Guidelines not only provide such 

measures in the form of voluntary ‘‘best 

practices,’’ but their release initiated a 

strong and ongoing dialogue with the 

charitable sector. This dialogue has led 

to a greater awareness of the risks of 

terrorist abuse in the charitable sector, 

and as a result, charities have adopted 

more proactive approaches to protect 

their assets and the integrity of their 

operations. Treasury’s engagement with 

the sector has also resulted in the 

evolution of the Guidelines into a more 

effective, relevant, and applicable 

resource for the sector. In addition, we 

encourage charities to consult other 

available publications or materials on 

good governance and sound charitable 

practices. We hope that the adoption of 

the policies and procedures contained 

in the Guidelines serve to strengthen 

donor confidence and contribute to the 

charitable sector’s continued vitality. 

For the above reasons, Treasury has 

not withdrawn the Guidelines. Instead, 

after careful consideration of all 

comments and recommendations, 

Treasury has further amended the 

Guidelines to enhance their usefulness 

for the charitable sector in adopting 

practices that better protect it from the 

risks of terrorist abuse. The purpose of 

this document is to summarize the 

content of the comments received and 

describe our response, including any 

changes to the Guidelines and the 

reasoning supporting those changes. 

The summary of the comment 

submissions has been organized 

according to the layout of the 

Guidelines. 

1. Title 

Comments: Many commenters 

indicated that part of the title of the 

Guidelines, ‘‘Voluntary Best Practices,’’

is a misrepresentation for two reasons. 

First, the commenters stressed that it is 

inaccurate to suggest that the Guidelines 

are a compilation of the charitable 

sector’s best practices. Due to the 

diversity within the charitable sector, 

there is not a commonly agreed upon set 

of best practices that applies to all 

charities. Second, many commenters 

expressed the belief that the Guidelines 

are not voluntary. Their concern is 

based primarily upon the recent 

incorporation of the Guidelines into the 

memorandum accompanying the 

regulations for the 2006 Combined 

Federal Campaign (CFC), issued by the 

Office of Personnel Management (OPM). 

Moreover, concern exists that other 

federal agencies will adopt the 

recommendations included in the 

Guidelines as requirements, thus 

conferring upon the Guidelines de facto 

legal authority. A few commenters 

suggested that Treasury should change 

the title of the Guidelines to 

‘‘Suggestions for Complying with AntiTerrorist Financing Laws.’’ 

Treasury Response: Although we 

acknowledge the concerns of the 

commenters, the title of the Guidelines 

remains unchanged, because it does not 

misrepresent the purpose and intent of 

the Guidelines. We believe the 

Guidelines represent sound best 

practices that help to prevent terrorist 

abuse of charitable organizations, and 

were, in fact, conceived after reviewing 

a wide spectrum of existing due 

diligence best practices employed by the 

sector. To address the concerns of the 

commenters, we have revised the 

Introduction to the Guidelines to state 

more clearly that these best practices are 

neither exhaustive nor comprehensive. 

Rather, the Guidelines represent one set 

of best practices specifically aimed at 

combating terrorist financing. Other best 

practices may exist that would be more 

suitable for combating other abuses that 

charities may face, but which may also 

be relevant or helpful in protecting 

charities from terrorist abuse. 

Nonetheless, the Guidelines contain 

many best practices that will help 

charities in adopting an appropriate 

risk-based approach to protect their 

assets and operations from terrorist 

financing abuse and facilitate their 

compliance with existing U.S. legal 

obligations, including the Office of 

Foreign Assets Control (OFAC) 

administered sanctions programs. 

Similarly, we disagree that the 

Guidelines may become de facto legal 

requirements. We have been clear both 

in the Introduction to the Guidelines, as 

well in our public discourse regarding 

the Guidelines, that they are voluntary 

and do not create, modify, or supersede 

any existing U.S. legal requirements. In 

addition to the title, their voluntary 

nature is reiterated throughout the text 

of the Guidelines. We have also 

amended Footnote 1 (formerly Footnote 

3) to make clear that non-adherence to 

the Guidelines does not, in and of itself, 

constitute a violation of existing U.S. 

law. Moreover, the incorporation of the 

Guidelines into the CFC commentary 

does not indicate the evolution of the 

Guidelines from a voluntary 

undertaking to a legal requirement, but, 

in fact, speaks to their usefulness as 

practical advice to protect charities from 

abuse. The incorporation of the 

Guidelines by other federal agencies 

encourages consistency across the U.S. 

Government and signals the acceptance 

of the central tenet of the Guidelines—

charities should apply a risk-based 

approach in adopting appropriate 

measures to protect themselves against 

the threat of terrorist abuse. For these 

reasons, we have not changed the title 

to the Guidelines. 


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2. Introduction 

Comments: Many commenters 

expressed concern that the introductory 

paragraphs broadly overstate the extent 

of diversion of charitable assets to 

terrorist organizations and their support 

networks. In particular, several 

comments singled out the following 

sentence: ‘‘Investigations have revealed 

terrorist abuse of charitable 

organizations, both in the United States 

and worldwide, often through the 

diversion of donations intended for 

humanitarian purposes but funneled 

instead to terrorists, their support 

networks, and their operations.’’ The 

commenters recommended that 

Treasury include data and other 

information to support these statements. 

Treasury Response: We have taken 

this comment under advisement and 

have revised the sentence quoted above 

by including an Annex that describes 

and references the various indicators of 

terrorist financing in the charitable 

sector. There exists a large library of 

open source information describing the 

use of charities by terrorists and their 

supporters that is available to the 

public. Terrorist financing risk in the 

sector is evidenced by: (i) open source 

media reports; (ii) designations of 

charities; (iii) results of investigations 

and prosecutions of charities and 

individuals associated with charities; 

and (iv) international actions. The 

Annex also notes that much of the 

information evidencing the terrorist 

financing risk in the charitable sector is 

available on Treasury’s Web site at 

http://www.treas.gov/offices/ 

enforcement/key-issues/protecting/ 

index.shtml. 

3. Fundamental Principles 

Comments: Several commenters noted 

that the Guidelines do not include two 

principles from Principles of 

International Charity, which was 

developed by the Treasury Guidelines 

Working Group of Charitable Sector 

Organizations and Advisors and 

released in March 2005. The first 

principle asserts that charitable 

organizations are non-governmental 

entities and are not agents for 

enforcement of U.S. or foreign laws or 

their policies. The second principle 

states that each charity ‘‘must safeguard 

its relationship with the communities it 

serves in order to deliver effective 

programs. This relationship is founded 

on local understanding and acceptance 

of the independence of the charitable 

organization.’’

Treasury Response: We agree with 

both of these principles. Therefore, we 

have revised the first principle in 

Fundamental Principles to state: 

‘‘Charities are independent entities and 

are not part of the U.S. Government. 

Like all U.S. persons, charitable 

organizations must comply with the 

laws of the United States, which 

include, but are not limited to, all OFAC 

administered sanctions programs.’’ With 

this revision, we recognize the necessity 

of independence for charities to perform 

their work effectively. We also 

acknowledge that charities, by virtue of 

their separation from the government, 

are not agents for the enforcement of 

U.S. or foreign laws or their respective 

policies. Moreover, we do not believe 

that charities become agents of the 

government by virtue of their obligation 

to abide by U.S. law, or by applying any 

of the best practices within the 

Guidelines. Based on this revision, we 

do not think it is necessary to revise the 

Fundamental Principles further to 

include the second principle, because 

our revision captures the meaning, and 

is consistent with, the second principle. 

The recognition of the independence of 

charities ensures that the foundation 

forming a charity’s relationship with the 

community it serves will not be shaken. 

4. Governance, Financial Practice, and 

Disclosure/Transparency 

Comments: This section will group 

together comments falling under the 

sections for Governance, Financial 

Practice, and Disclosure/Transparency 

in Governance and Finances, due to the 

interrelated nature of those comments. 

Several commenters suggested 

combining the Financial Practice 

section with the Disclosure/ 

Transparency section into one section, 

entitled ‘‘Accountability.’’ The 

commenters felt that such a section, 

dealing only with financial practices, 

would be more applicable to Treasury’s 

expertise. 

In the event that Treasury should 

choose to keep the practices pertaining 

to governance in the Guidelines, the 

commenters recommended the 

following specific changes: 

• Section III.B: A few commenters 

noted the need for an appropriate 

exception to the suggestion that the 

governing board of a charity consist of 

at least three members. They explained 

that this provision does not take into 

account certain trusts, religious 

organizations, and corporation soles, 

which may not be able to have more 

than one member on the board. 

• Section III.B.4: Many commenters 

expressed concern with the provision 

recommending that governing board 

records be immediately turned over to 

appropriate law enforcement 

authorities, stating that such a provision 

goes beyond federal and state disclosure 

laws and constitutional protections. 

• Section V.B: Two commenters 

noted that the definition of ‘‘key 

employees’’ expands on the definition 

contained in Form 990 from the Internal 

Revenue Service (IRS), and it could be 

interpreted to include people who exert 

influence over charitable activities, but 

who are not directly related to the 

charitable projects. 

• Section V.A.3: One commenter 

remarked on the lack of a definition for 

subsidiaries or affiliates and cited the 

need for clarification. 

• Section IV.C: One commenter stated 

that the provision in the Guidelines 

recommending independent audits for 

charitable organizations if the charity’s 

annual gross income exceeds $250,000 

is inconsistent with the auditing 

standards issued by OMB Circular A–

133. 

Treasury Response: Based on the 

comments received, we extensively 

reorganized these three sections to 

clarify the objectives of each section: 

• We changed the original section, 

‘‘Governance,’’ to ‘‘Governance 

Accountability and Transparency.’’

Within this section, we incorporated all 

provisions relating to governance from 

the original ‘‘Disclosure/Transparency’’

section. 

• We renamed the original ‘‘Financial 

Practice/Accountability’’ section to 

‘‘Financial Accountability and 

Transparency’’ and incorporated all 

provisions relating to financial practice 

from the original ‘‘Disclosure/ 

Transparency’’ section. 

• We revised the original 

‘‘Disclosure/Transparency’’ section and 

renamed it ‘‘Programmatic 

Verification,’’ which conveys the 

purpose of its remaining provisions 

more clearly, and aligns more closely 

with existing international best 

practices for non-profit organizations. It 

also incorporates the provisions on how 

charities should best review the 

programmatic operations of their 

grantees, which were originally located 

in the final section on anti-terrorist 

financing best practices. 

We also considered the specific 

comments received on these three 

sections and made the following 

revisions (the section numbers 

correspond with the current sections in 

the Guidelines). 

• Section III.B: We deleted the 

provision calling for a minimum of 

three members on the governing board 

of a charity. We agreed with the 

commenters that this provision did not 

adequately take into account the 

existence of certain types of 

organizations that would not be able to 


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meet this recommendation. Thus, we 

revised the section that originally 

discussed best practices for a charity’s 

board of directors, renaming it, 

‘‘Independent Oversight.’’ Within this 

section, we added a preamble conveying 

the importance of both independent 

oversight of charitable organizations and 

flexibility for an organization to choose 

the oversight structure that best fits its 

needs. We have also included the 

acknowledgement that independent 

oversight may be unfeasible for certain 

charitable organizations, such as houses 

of worship and corporation soles. The 

remaining provisions within this 

oversight section merely highlight 

certain basic principles that are 

hallmarks of good governance: (i) 

Independence of the governing board; 

(ii) development of conflict of interest 

policies and procedures; (iii) 

accountability of the governing board; 

and (iv) recordkeeping. 

• Section III.B.2: We agreed with one 

commenter’s concern about the 

confusion caused by a governance 

provision calling for the board to adopt, 

implement, and oversee practices 

consistent with the principles contained 

in the Guidelines. We understand that 

some may interpret the provision to 

mean that the best practices provided in 

the Guidelines are either mandatory or 

represent a comprehensive list of best 

practices to protect against terrorist 

financing in the charitable sector. As 

stated earlier, the Guidelines do not 

purport to be an exhaustive compilation 

of best practices, and are voluntary. 

Therefore, we have changed this 

provision to clarify that members of a 

charity’s governing board are 

responsible for the oversight of practices 

that will effectively safeguard charitable 

assets. 

• Section III.B.6: We have added a 

footnote (Footnote 6) defining 

subsidiaries and affiliates, as the terms 

are used in the Guidelines. The 

definition is similar to the one used by 

Form 990: ‘‘Subsidiaries or affiliates are 

organizations that are subject to the 

general supervision or control of a 

parent or central organization.’’

• Section III.B.7: In response to some 

commenters’ concern with the provision 

governing the disclosure of records, we 

revised the provision to state the 

following: ‘‘When served with process 

or when other appropriate authorization 

exists, charities should produce 

requested records maintained in 

accordance with these Guidelines to the 

appropriate regulatory/supervisory and 

law enforcement authorities in a timely 

fashion.’’

• Section III.C: We agreed with the 

commenters who noted the difference 

between the definition of key employees 

in the Guidelines and the definition 

used by the IRS. We amended the 

definition of key employees to mirror 

the definition used by the IRS in Form 

990. 

• Section IV.C: We disagree that the 

Guidelines are inconsistent with the 

audit standards set forth by OMB 

Circular A–133. First, OMB Circular A–

133 only applies to audits performed on 

expenditures of federal grants or 

awards. While many charities may 

receive federal grants, the Guidelines 

are intended to provide best practices 

that charities may apply regardless of 

whether they receive federal funds or 

private donations. Second, while 

Circular A–133 sets standards among 

Federal and State governments 

regarding the audits of non-profit 

organizations expending federal awards, 

it does not preclude charities from 

having additional independent audits 

performed if they wish. Third, as stated 

in the eighth footnote of the Guidelines, 

the $250,000 threshold figure is drawn 

from the June 2005 final report to 

Congress of the Panel on the Nonprofit 

Sector, convened by Independent 

Sector, and is thereby consistent with 

industry’s suggested threshold. Finally, 

the Guidelines are not obligatory, but 

voluntary steps that charities may 

choose to take as additional protective 

measures. Thus, the provision on 

financial audits remains unchanged in 

the Guidelines. 

5. Anti-Terrorist Financing Best 

Practices 

Comments: The majority of the 

comment submissions expressed 

concerns with various provisions in this 

section. The following summarizes the 

specific comments: 

• Section VI: One commenter noted 

the difficulty of assessing risk pursuant 

to the Guidelines’ risk-based approach 

without any corresponding advice. 

• Sections VI.A and B: Several 

comments focused on the amount of 

information-collection provisions, 

regarding them as onerous, unrealistic, 

and having limited value in protecting 

against terrorist financing. 

• Sections VI.B.1 and 4: Many 

commenters objected to the inclusion of 

the publicly available information, 

including the Internet, as a means to vet 

grantees or employees. They argued that 

Internet searches would yield widely 

varying and unverified information 

about certain organizations or 

individuals. 

• Section VI.B.3: A few commenters 

objected to the incorporation of other 

government lists of designated parties 

created pursuant to UNSCR 1373. They 

claimed that Treasury is inadvertently 

legitimizing these other lists by citing to 

them. 

• Section VI.B.5: A few comments 

focused on the provision suggesting that 

charities request certifications from 

grantees with whom they contract or 

work. They suggested deleting the 

provision or at least revising the 

certification to adopt the approach of 

the 2006 CFC. This approach would 

involve a grantee certifying its 

compliance with U.S. law, as opposed 

to certifying that it has checked certain 

lists. 

• Section VI.D: Some commenters 

recommended deleting the voluntary 

reporting provision in its entirety, 

arguing that it creates the impression 

that charitable organizations are agents 

of the U.S. Government. 

• One commenter suggested the 

Guidelines should explicitly state that it 

is permissible for a charity to engage in 

normally prohibited transactions with a 

group, entity, or individual on the 

Specially Designated Nationals and 

Blocked Persons List (SDN List) if OFAC 

issues a license to charities for such 

transactions. 

Treasury Response: We have made the 

following revisions to the anti-terrorist 

financing best practices section based 

on the comments (the section numbers 

correspond with the current sections in 

the Guidelines): 

• Section VI: In response to the 

comment requesting further assistance 

in assessing the risk of terrorist abuse or 

exploitation, Treasury continues to 

produce information and engage in 

outreach to assist charities in 

understanding the nature of ongoing 

terrorist abuse. Such materials and 

outreach are available on or through the 

Treasury Web site and are further 

described or referenced in the Annex to 

the Guidelines. 

• Sections VI.A and B: We disagree 

with the comment that the informationcollection procedures are burdensome 

and of little utility. We recognize that 

the information-collection practices are 

expansive and are purposefully 

designed so that a charity can gather as 

much information as possible to ensure 

the greatest transparency and 

accountability over charitable 

operations. This type of informationgathering is essential for the charity to 

know its grantees and to be assured that 

its assets will not be diverted to terrorist 

organizations or their support networks. 

Moreover, the general risk-based 

approach governing the Guidelines 

affords charities the opportunity to 

tailor the scope of these informationcollection procedures to the terrorist 

financing risk they face. A charity 


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should perform its own terrorist 

financing risk assessment based on its 

particular operations and projects. 

Depending on its particular risk profile, 

a charity should then choose 

appropriate protective measures that 

will adequately safeguard its assets from 

terrorist financing abuse and ensure 

their delivery to legitimate beneficiaries. 

As stated above, the best practices of the 

Guidelines are not a comprehensive or 

exhaustive listing of all best practices. 

Charities are free to apply other 

measures that they believe will protect 

their assets from diversion. 

In order to lessen any perceived 

administrative burden on charities, we 

have amended the Guidelines by 

replacing the word ‘‘recipient’’ with 

‘‘grantee’’ throughout the document and 

defining ‘‘grantee’’. This revision is 

intended to clarify the informationcollection recommendations by 

explaining what charities should do for 

immediate grantees versus downstream 

grantees. ‘‘Grantee’’ is defined as an 

immediate grantee of charitable 

resources or services. To the extent 

reasonably practicable, charitable 

organizations should also apply or 

ensure the existence of applicable 

safeguards in any downstream subgrantees or recipients to protect 

charitable resources from diversion. 

Finally, we caution charities against 

entering into a relationship with a 

grantee where any doubts exist about 

the grantee’s ability to ensure safe 

delivery of charitable resources. 

• Sections VI.B.1 and 5: We agree 

with commenters that the Internet often 

provides information that may be false 

or unverified. For this reason, we have 

removed the clause suggesting that 

charities look to the Internet for further 

information about potential grantees or 

employees. However, the Guidelines 

still encourage charities to employ all 

reasonably available means, including 

publicly available information, to 

determine the level of risk 

accompanying a particular charitable 

operation or when engaging in 

appropriate vetting procedures. Listchecking alone does not guarantee the 

safe delivery of charitable assets to 

intended beneficiaries. Properly using 

publicly available resources, such as 

open source media reports or other 

federal agency lists and information, can 

provide a charity with adequate and 

comprehensive information from which 

to make informed decisions about the 

kinds of protective measures it should 

take. 

• Section VI.B.4: We do not agree 

with commenters that Treasury is 

legitimizing the UNSCR 1373 lists 

adopted by other governments by 

merely providing information that such 

lists exist. The purpose of including 

information on UNSCR 1373 lists in the 

Guidelines is not to endorse such lists, 

but to provide charities with an 

understanding of the varying laws under 

which they may operate in other 

jurisdictions. However, in response to 

the objections raised in some comments 

and to clarify the purpose of the 

information, we have added the 

following sentence to Footnote 14: ‘‘The 

Guidelines do not legitimize or endorse 

the UNSCR 1373 lists adopted by 

foreign jurisdictions.’’

• Section VI.B.6: We agree with the 

importance of carrying a consistent 

message throughout the U.S. 

Government. For that reason, we have 

accepted the suggestion of one 

commenter to align the certification 

more closely with the one adopted in 

the 2006 CFC. The new provision also 

delineates different certifications for 

U.S. and foreign grantees. Instead of 

having grantees certify that they 

checked the SDN List, the new 

certification suggests that U.S. grantees 

certify that they are in compliance with 

all laws restricting U.S. persons from 

dealing with parties subject to OFAC 

sanctions. With regard to foreign 

grantees, they should certify that they 

do not deal with parties subject to 

OFAC sanctions or anyone else known 

to support terrorism. 

• Section VI.D: We disagree with the 

notion that the voluntary reporting 

provision creates the impression that 

charities are agents of the U.S. 

Government. As with all parts of the 

Guidelines, this provision is voluntary 

and charities are not under any 

obligation to report any information. 

This provision is also consistent with 

U.S. guidance to other sectors regarding 

terrorist financing or other illicit finance 

risks. In addition, we have clearly 

acknowledged in the Fundamental 

Principles of the Guidelines that 

charitable organizations are 

independent entities and are not a part 

of the U.S. Government. The voluntary 

reporting measure explains what steps a 

charity may proactively take to assist in 

protecting itself from abuse by terrorists 

and their support networks. Since 

charities occasionally have direct access 

to evidence of terrorist activities in the 

course of their operations, voluntarily 

reporting such evidence provides the 

appropriate authorities with the 

opportunity to conduct further 

investigations, and helps reduce the 

threat that terrorist financing poses to 

the charitable sector. Thus, the 

provision is an important component of 

anti-terrorist financing best practices, 

and it remains in the Guidelines with 

only minor changes. 

• While the comment regarding 

OFAC’s licensing authority is accurate, 

we believe that the Guidelines make 

sufficient reference to this authority in 

Footnote 2 (formerly Footnote 8), which 

states: ‘‘OFAC can issue licenses to U.S. 

persons to engage in transactions that 

would otherwise be prohibited, if there 

is a policy-permissible reason to do so, 

and if permitted by statute.’’ In addition, 

the footnote refers to further 

information, available on OFAC’s Web 

site, regarding licensing procedures for 

non-profit organizations wishing to 

undertake humanitarian activities in 

sanctioned countries. To provide more 

information on licensing, we have 

added the link to OFAC’s Web site, 

which has information about the types 

of available licenses and the process for 

requesting a license. 

Conclusion 

As the Annex to the Guidelines 

illustrates, the risk of terrorist abuse of 

the charitable sector is both ongoing and 

significant. Recognition of this reality is 

the first step in finding ways to protect 

both donors and charities. 

Treasury is sensitive to the concerns 

raised by the charitable sector and 

appreciates the insightful comments 

submitted. The release of these revised 

Guidelines reflects a further positive 

development in the ongoing dialogue 

between the charitable sector and 

Treasury. Treasury believes that the 

Guidelines offer a framework of 

voluntary best practices that is attuned 

to the unique challenges and risks 

facing charities. These best practices 

provide the necessary framework to 

safeguard against terrorist abuse of the 

charitable sector by offering protective 

measures to help ensure that the vital 

services provided by charities are not 

exploited by terrorists or their 

organizations. 

Treasury remains deeply committed 

to working with the charitable 

community on future initiatives to 

combat terrorist abuses. While Treasury 

believes that the Guidelines represent a 

positive step in combating terrorist 

abuse of the charitable sector, the 

Guidelines also underscore the need for 

continued public outreach as a critical 

element of our comprehensive approach 

to combating terrorist abuse of the 

charitable sector. 


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1This document is a revised version of the 

original Anti-Terrorist Financing Guidelines: 

Voluntary Best Practices for U.S.-Based Charities 

released by the U.S. Department of the Treasury in 

November 2002. This revised version incorporates 

comments received in response to the issuance of 

the draft revised Guidelines released for public 

comment in December 2005. 

These Guidelines are designed to assist charities 

that attempt in good faith to protect themselves 

from terrorist abuse and are not intended to address 

the problem of organizations that use the cover of 

charitable work, whether real or perceived, to 

provide support to terrorist groups or fronts 

operating on behalf of terrorist groups. Nonadherence to these Guidelines, in and of itself, does 

not constitute a violation of existing U.S. law. 

Conversely, adherence to these Guidelines does not 

excuse any person (individual or entity) from 

compliance with any local, state, or federal law or 

regulation, nor does it release any person from or 

constitute a legal defense against any civil or 

criminal liability for violating any such law or 

regulation. In particular, adherence to these 

Guidelines shall not be construed to preclude any 

criminal charge, civil fine, or other action by 

Treasury or the Department of Justice against 

persons who engage in prohibited transactions with 

persons designated pursuant to the Antiterrorism 

and Effective Death Penalty Act of 1996, as 

amended, or with those that are designated under 

the criteria defining prohibited persons in the 

relevant Executive orders issued pursuant to 

statute, such as the International Emergency 

Economic Powers Act, as amended. Please see 

Footnote 12 for an explanation of the master list of 

Specially Designated Nationals (the ‘‘SDN List’’), 

which includes all such designated persons. These 

Guidelines are also separate and apart from 

requirements that apply to charitable organizations 

under the Internal Revenue Code (‘‘IRC’’). 

2OFAC sanctions programs include those relating 

to particular countries or regimes (country-based 

programs), as well as those relating to groups, 

individuals, or entities engaged in specific activities 

(list-based programs). Sanctions programs normally: 

(i) prohibit U.S. persons from engaging in certain 

transactions, such as trade in goods and services 

and financial transactions, and/or (ii) require U.S. 

persons to block the assets and property of persons 

designated under the relevant Executive order or 

law. The particular prohibitions and/or obligations 

of U.S. persons vary by program. OFAC can issue 

licenses to U.S. persons to engage in transactions 

Continued 

U.S. Department of the Treasury AntiTerrorist Financing Guidelines: 

Voluntary Best Practices for U.S.-Based 

Charities 1

Table of Contents 

I. Introduction 

II. Fundamental Principles of Good 

Charitable Practice 

III. Governance Accountability and 

Transparency 

IV. Financial Accountability and 

Transparency 

V. Programmatic Verification 

VI. Anti-Terrorist Financing Best Practices 

I. Introduction 

Upon issuance of Executive Order 

13224, President George W. Bush 

directed the U.S. Department of the 

Treasury (‘‘Treasury’’) to work with 

other elements of the federal 

government and the international 

community to develop a comprehensive 

and sustained campaign against the 

sources and conduits of terrorist 

financing. Investigations have revealed 

terrorist abuse of charitable 

organizations, both in the United States 

and worldwide, to raise and move 

funds, provide logistical support, 

encourage terrorist recruitment or 

otherwise cultivate support for terrorist 

organizations and operations. This 

abuse threatens to undermine donor 

confidence and jeopardizes the integrity 

of the charitable sector, whose services 

are indispensable to both national and 

world communities. 

In response to this threat, Treasury 

first released the Anti-Terrorist 

Financing Guidelines: Voluntary Best 

Practices for U.S.-Based Charities 

(‘‘Guidelines’’) in November 2002. In 

December 2005, based on extensive 

review and comment by public and 

private sector interested parties, 

Treasury revised and released the 

Guidelines in draft form for further 

public comment. Based on the 

comments received, Treasury has 

further amended the Guidelines to 

improve their utility to the charitable 

sector in adopting practices that can 

better protect it from terrorists and their 

support networks. 

The Guidelines are designed to 

enhance awareness in the donor and 

charitable communities of the kinds of 

practices that charities may adopt to 

reduce the risk of terrorist financing or 

abuse. These Guidelines are voluntary 

and do not create, supersede, or modify 

current or future legal requirements 

applicable to U.S. persons, including 

U.S. non-profit institutions. Adherence 

to these guidelines does not constitute 

a legal defense against any civil or 

criminal liability for violating any local, 

state, or federal law or regulations. In 

addition, these Guidelines do not 

represent an exhaustive or 

comprehensive compilation of best 

practices. Many charities, through their 

extensive experience and expertise in 

delivering international aid, have 

already developed effective internal 

controls and practices that lessen the 

risk of terrorist financing or abuse. In 

view of this fact, Treasury does not want 

charities to abandon proven internal 

controls and practices. Rather, the 

Guidelines are intended to assist 

charities in developing, re-evaluating, or 

strengthening a risk-based approach to 

guard against the threat of diversion of 

charitable funds or exploitation of 

charitable activity by terrorist 

organizations and their support 

networks. 

In addition, these Guidelines are 

intended to assist charities in 

understanding and facilitating 

compliance with preexisting U.S. legal 

requirements related to combating 

terrorist financing, which include, but 

are not limited to, various sanctions 

programs administered by the Office of 

Foreign Assets Control (‘‘OFAC’’). These 

preexisting legal requirements are 

clearly marked in the text of the 

Guidelines. 

The risk-based nature of these 

Guidelines reflects Treasury’s 

recognition that a ‘‘one-size-fits-all’’

approach is untenable and 

inappropriate due to the diversity of the 

charitable sector and its operations. 

Accordingly, certain aspects of the 

Guidelines will not be applicable to 

every charity, charitable activity, or 

circumstance. Moreover, Treasury 

acknowledges that certain exigent 

circumstances (such as catastrophic 

disasters) may make application of the 

Guidelines difficult. In such cases, 

charities should maintain a risk-based 

approach that includes all prudent and 

reasonable measures that are feasible 

under the circumstances. Charities and 

donors are encouraged to consult these 

Guidelines when considering protective 

measures to prevent infiltration, 

exploitation, or abuse by terrorists. 

Although adherence to these Guidelines 

does not guarantee protection from 

terrorist abuse, effective internal 

controls which incorporate the 

principles and practices set forth in 

these Guidelines can prevent the 

diversion of charitable resources from 

their proper uses, as well as identify 

situations involving terrorist financing 

or abuse. 

Treasury recognizes the vital 

importance of the charitable community 

in providing essential services around 

the world. Treasury also understands 

the difficulty of providing assistance to 

those in need, often in remote and 

inaccessible regions, and applauds the 

efforts of the charitable community to 

meet such needs. The goal of these 

Guidelines is to facilitate legitimate 

charitable efforts and protect the 

integrity of the charitable sector and 

good faith donors by offering the sector 

ways to prevent terrorist organizations 

from exploiting charitable activities for 

their own benefit. 

II. Fundamental Principles of Good 

Charitable Practice 

A. Charities are independent entities 

and are not part of the U.S. Government. 

Like all U.S. persons, charitable 

organizations must comply with the 

laws of the United States, which 

include, but are not limited to, all 

OFAC-administered sanctions 

programs.2


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that would otherwise be prohibited, if there is a 

policy-permissible reason to do so, and if permitted 

by statute. Further information on how to apply for 

specific licenses is available at http:// 

www.treas.gov/offices/enforcement/ofac/faq/ 

index.shtml#license. 

For further information on OFAC-administered 

sanctions programs and general licensing under 

these programs, please see http://www.treas.gov/ 

offices/enforcement/ofac. 

OFAC guidelines for non-governmental 

organizations wishing to undertake humanitarian 

activities in sanctioned countries are available at 

http://www.treas.gov/offices/enforcement/ofac/ 

regulations/ngo_reg.pdf. 

Other helpful guidance materials for charities 

relating to protection from terrorist abuse may be 

found at http://www.treas.gov/offices/enforcement/ 

key-issues/protecting/index.shtml. 

The United States relies on a wide array of federal 

criminal statutes in fighting the threat of terrorist 

financing. Charities should be particularly aware 

that in its efforts against the financing of terrorism, 

the U.S. relies on, among others, the federal statutes 

that prohibit: 

• the financing of terrorism (18 U.S.C. 2339C), 

• providing material support or resources to 

terrorists (18 U.S.C. 2339A), and 

• providing material support or resources to 

designated terrorist organizations (18 U.S.C. 2339B). 

In that effort, the U.S. also particularly relies 

upon the federal statutes which criminalize: 

• the laundering of monetary instruments (18 

U.S.C. 1956), and 

• engaging in monetary transactions in property 

derived from specified unlawful activity (18 U.S.C. 

1957). 

3An asset is any item of value, including, but not 

limited to, services, resources, business, equitable 

holdings, real estate, stocks, bonds, mutual funds, 

currency, certificates of deposit, bank accounts, 

trust funds, and the property and investments 

placed therein. 

4A charitable organization may never use 

charitable assets for illegal purposes; however, a 

charitable organization may accrue unrelated 

business taxable income in the course of 

legitimately doing business as a charitable 

organization. Even though an organization is 

recognized as tax exempt, it still may be liable for 

tax on its unrelated business taxable income. 

5Certain charitable organizations, such as houses 

of worship, certain trusts, and corporations sole, 

may not be able to apply this practice due to their 

varying organizational and operational structures. 

6Subsidiaries or affiliates are organizations that 

are subject to the general supervision or control of 

a parent or central organization. 

7 Key employees include not only highly 

compensated employees but employees who have 

responsibilities, powers, or influence similar to 

those of officials, directors, or trustees. Key 

employees also include chief management and 

administrative officials of a charitable organization, 

including those involved in the disbursement of 

funds. 

B. Charitable organizations are 

encouraged to adopt practices in 

addition to those required by law that 

provide additional assurances that all 

assets 3 are used exclusively for 

charitable or other legitimate purposes.4

C. Individuals acting in a fiduciary 

capacity for any charitable organization 

should exercise due care in the 

performance of their responsibilities, 

consistent with applicable common law 

as well as local, state, and federal 

statutes and regulations. 

D. Governance, fiscal and 

programmatic responsibility and 

accountability are essential components 

of charitable work and must be reflected 

at every level of a charitable 

organization and its operations. 

III. Governance Accountability and 

Transparency 

A. Governing Instruments: Charitable 

organizations should operate in 

accordance with governing instruments, 

e.g., charter, articles of incorporation, 

bylaws, etc. The governing instruments 

should: 

1. Delineate the charity’s basic goal(s) 

and purpose(s); 

2. Define the structure of the charity, 

including the composition of its 

governing body, how such body is 

selected and replaced, and the authority 

and responsibilities of the body; 

3. Set forth requirements concerning 

financial reporting, accountability, and 

practices for solicitation and 

distribution of funds; and 

4. State that the charity shall comply 

with all applicable local, state, and 

federal laws and regulations. 

B. Independent Oversight: It is 

important for charitable organizations to 

have independent oversight of 

charitable operations, and each 

charitable organization should 

determine what oversight structure best 

suits that organization and will provide 

for unbiased scrutiny of its operations. 

The following provisions set forth basic 

principles for the creation of a 

transparent and accountable oversight 

body (the ‘‘governing board’’). 

1. Members of the governing board 

ordinarily should not have an active 

role in the day-to-day management of 

the charitable organization.5

The charity should establish a conflict 

of interest policy for both members of 

the governing board and employees. 

That policy should establish procedures 

to be followed if a member of the 

governing board or employee has a 

conflict of interest or a perceived 

conflict of interest relating to the 

management or operations of the 

charity. 

2. The governing board should be 

responsible for the charitable 

organization’s compliance with relevant 

laws, its finances and accounting 

practices and for the adoption, 

implementation, and oversight of 

practices, including financial 

recordkeeping that will safeguard 

charitable assets effectively. 

3. The governing board should 

maintain records of its decisions. 

4. Charities should maintain and 

make publicly available a current list of 

members of the governing board, their 

salaries and their affiliation with any 

subsidiary or affiliate of the charitable 

organization. 

5. While fully respecting individual 

privacy rights, charities should maintain 

records of additional identifying 

information about the members of the 

governing board, such as available 

home, email and URL addresses, social 

security number, citizenship, etc. 

6. While fully respecting individual 

privacy rights, charities should maintain 

records of identifying information for 

the members of the governing boards of 

any subsidiaries or affiliates 6 receiving 

funds from them. 

7. When served with process or when 

other appropriate authorization exists, 

charities should produce requested 

records maintained in accordance with 

these Guidelines to the appropriate 

regulatory/supervisory and law 

enforcement authorities in a timely 

fashion. 

C. Key Employees 7

1. Charities should maintain and 

make publicly available a current list of 

their five highest paid or most 

influential employees (the key 

employees) and the salaries and direct 

or indirect benefits they receive. 

2. While fully respecting individual 

privacy rights, charities should maintain 

records containing identifying 

information (such as available home, 

email and URL addresses, social 

security or other identification 

number—e.g., taxpayer identification 

number, national identity, or passport 

number—citizenship, etc.) about their 

key, non-U.S. employees working 

abroad. Such information should be 

similar to that maintained by charities 

in the normal course of operations about 

all U.S. employees, wherever employed, 

and foreign employees working in the 

United States. 

3. While fully respecting individual 

privacy rights, charities should maintain 

records containing identifying 

information for the key employees of 

any subsidiaries or affiliates receiving 

funds from them. 

IV. Financial Accountability and 

Transparency 

A. The charity should have a budget, 

adopted in advance on an annual basis 

and approved and overseen by the 

governing board. 

B. The governing board should 

appoint one individual to serve as the 

financial/accounting officer who should 

be responsible for day-to-day control 

over the charity’s assets. 


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8The $250,000 figure is drawn from the June 

2005 final report to Congress of the Panel on the 

Nonprofit Sector, convened by Independent Sector. 

This report, which offers a comprehensive approach 

to improving oversight and governance of charitable 

organizations, recommends independent financial 

audits for charities that have more than $250,000 

in total annual revenue. This report is available at 

http://www.nonprofitpanel.org/final/. 

9The term ‘‘grantee,’’ as it is used throughout 

these Guidelines, means an immediate grantee of 

charitable resources or services. To the extent 

reasonably practicable, charitable organizations 

should also apply or ensure the existence of 

applicable safeguards (as described in Sections III, 

IV, V, and VI) in any downstream sub-grantees or 

recipients to protect charitable resources from 

exploitation by terrorists, terrorist organizations, or 

terrorist supporters. Charities should not enter into 

a relationship with a grantee where any doubts exist 

about the grantee’s ability to ensure safe delivery of 

charitable resources independent of influence by or 

association with any terrorist organization. 

C. If the charity’s total annual gross 

income exceeds $250,000,8 the 

governing board should select an 

independent certified public accounting 

firm to audit the finances of the charity 

and to issue a publicly available, 

audited financial statement on an 

annual basis. 

D. Solicitations for Funds 

1. The charity should clearly state its 

goals for and purposes of soliciting 

funds so that anyone examining the 

charity’s disbursement of funds can 

determine whether the charity is 

adhering to those goals. 

2. Solicitations for donations should 

accurately and transparently tell donors 

how and where their donations are 

going to be expended. 

3. The charity should substantiate on 

request that solicitations and 

informational materials, distributed by 

any means, are accurate, truthful, and 

not misleading, in whole or in part. 

4. The charity should fully, 

immediately, and publicly disclose if it 

makes a determination that 

circumstances justify applying funds for 

a charitable purpose different from the 

purpose for which such funds were 

contributed or solicited. 

E. Receipt and Disbursement of Funds 

1. The charity should account for all 

funds received and disbursed in 

accordance with generally accepted 

accounting principles and the 

requirements of the Internal Revenue 

Code. The charity should maintain 

records of the salaries it pays and the 

expenses it incurs (domestically and 

internationally). 

2. The charity should include in its 

accounting of all charitable 

disbursements the name of each 

grantee,9 the amount disbursed, the 

date, and form of payment for each 

disbursement. 

3. The charity, after recording, should 

promptly deposit all received funds into 

an account maintained by the charity at 

a financial institution. In particular, all 

currency donated should be promptly 

deposited into the charity’s financial 

institution account. 

4. The charity should make 

disbursements by check or wire transfer 

rather than in currency whenever such 

financial arrangements are reasonably 

available. Where these financial services 

do not exist or other exigencies require 

making disbursements in currency (as in 

the case of humanitarian assistance 

provided in rural areas of many 

developing countries, or in remote areas 

afflicted by natural disasters), the 

charity should disburse the currency in 

the smallest increments sufficient to 

meet immediate and short-term needs or 

specific projects/initiatives rather than 

in large sums intended to cover needs 

over an extended time frame, and it 

should exercise oversight regarding the 

use of the currency for the intended 

charitable purposes, including keeping 

detailed internal records of such 

currency disbursements. 

F. Mechanisms for Public Disclosure of 

Distribution of Resources and Services 

1. The charity should maintain and 

make publicly available a current list of 

any branches, subsidiaries, and/or 

affiliates that receive resources and/or 

services from the charity. 

2. The charity should make publicly 

available or provide to any member of 

the general public, upon request, an 

annual report. The annual report should 

describe the charity’s purpose(s), 

programs, activities, tax exempt status, 

the structure and responsibility of the 

governing board of the charity, and 

financial information. 

3. The charity should make publicly 

available or provide to any member of 

the general public, upon request, 

complete annual financial statements, 

including a summary of the results of 

the charity’s most recent audit. The 

financial statements should present the 

overall financial condition of the charity 

and its financial activities in accordance 

with generally accepted accounting 

principles and reporting practices. 

V. Programmatic Verification 

A. Supplying Resources 

When supplying charitable resources 

(monetary and in-kind contributions), 

fiscal responsibility on the part of a 

charity should include: 

1. Determining that the potential 

grantee of monetary or in-kind 

contributions has the ability to both 

accomplish the charitable purpose of 

the grant and protect the resources from 

diversion to non-charitable purposes or 

exploitation by terrorist organizations 

and/or their support networks; 

2. Reducing the terms of the grant to 

a written agreement signed by both the 

charity and the grantee; 

3. Ongoing monitoring of the grantee 

and the activities funded under the 

grant for the term of the grant; and 

4. Correcting any misuse of resources 

by the grantee and terminating the 

relationship should misuse continue. 

B. Supplying Services 

When supplying charitable services, 

fiscal responsibility on the part of a 

charity should include: 

1. Appropriate measures to reduce the 

risk that its assets would be used for 

non-charitable purposes or exploitation 

by terrorist organizations and/or their 

support networks; and 

2. Sufficient auditing or accounting 

controls to trace services or 

commodities between delivery by the 

charity and/or service provider and use 

by the grantee. 

C. Programmatic Review 

The charity should review the 

programmatic and financial operations 

of each grantee as follows: 

1. The charity should require periodic 

reports from grantees on their 

operational activities and their use of 

the disbursed funds; 

2. The charity should require grantees 

to take reasonable steps to ensure that 

funds provided by the charity are 

neither distributed to terrorists or their 

support networks nor used for activities 

that support terrorism or terrorist 

organizations. Periodically, a grantee 

should apprise the charity of the steps 

it has taken to meet this goal; and 

3. The charity should perform routine, 

on-site audits of grantees to the extent 

reasonable—consistent with the size of 

the disbursement, the cost of the audit, 

and the risks of diversion or abuse of 

charitable resources—to ensure that the 

grantee has taken adequate measures to 

protect its charitable resources from 

diversion to, or abuse or influence by, 

terrorists or their support networks. 

VI. Anti-Terrorist Financing Best 

Practices 

Charities should consider taking the 

following steps before distributing any 

charitable funds (and in-kind 

contributions). As explained in Section 

I, these suggested steps are voluntary. 

The purpose of these steps is to enable 

charities to better protect themselves 

from the risk of terrorist abuse and to 


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10Charities should also be mindful of the 

possibility that a grantee may have changed its 

name or transformed its organizational structure to 

avoid being associated with prior questionable 

activity. If a charity has any reason to believe that 

the grantee is operating under a different identity 

or has used a different name in the past, the charity 

should undertake reasonable efforts to uncover any 

such prior identity or name. 

11List-checking alone (as described throughout 

this section) does not guarantee the safe and secure 

delivery of charitable funds and services in highrisk areas. For this reason, the Guidelines encourage 

charities to employ all reasonably available 

resources both when determining the level of risk 

in a particular charitable operation and when 

engaging in appropriate vetting procedures. One 

example of publicly available information of which 

charities should be aware is the Terrorist Exclusion 

List (the ‘‘TEL’’). The TEL was created pursuant to 

the USA PATRIOT Act, which authorizes the 

Secretary of State to designate organizations or 

groups for inclusion on the TEL in consultation 

with or upon the request of the Attorney General. 

Inclusion on the TEL allows the U.S. Government 

to exclude or deport aliens who provide material 

assistance to, or solicit assistance for, designated 

TEL organizations. Although many of the 

organizations included on the TEL are also 

included on the Office of Foreign Assets Control 

(‘‘OFAC’’) SDN List, several TEL organizations are 

not listed on the SDN List because of the different 

purposes and legal criteria associated with these 

lists. 

TEL designations do not trigger any legal 

obligations for U.S. persons; however, the TEL does 

provide charities with additional terrorist-related 

information that may assist charities in making 

well-informed decisions on how best to protect 

themselves from terrorist abuse or association. For 

further information regarding the TEL, including 

access to the list containing all TEL designees, 

please refer to the U.S. Department of State’s Web 

site at http://www.state.gov/s/ct/rls/fs/2004/ 

32678.htm. 

12The master SDN List is an integrated listing of 

designated parties with whom U.S. persons are 

prohibited from providing services or conducting 

transactions and whose assets are blocked. OFAC’s 

designations are available in a variety of formats 

and can easily be broken down into subsets of the 

master list by program, by country of residency, 

individuals vs. entities, and other variations for 

appropriate use in a charity’s risk-based approach. 

Each charity should determine which OFAC listings 

align with the specific risks the charity faces in its 

operations and should check grantees accordingly. 

OFAC routinely updates information on its 

targets, including persons designated under 

country-based and list-based economic sanctions 

programs, such as individuals and entities 

designated under the various Executive orders and 

statutes aimed at terrorism. OFAC offers a free 

email subscription service that enables subscribers 

to keep current with these updates. With respect to 

terrorism-related OFAC sanctions programs, SDN 

listings include persons designated under Executive 

Order 13224, Executive Order 12947, or the 

Antiterrorism and Effective Death Penalty Act of 

1996, as amended; such persons are called 

‘‘Specially Designated Global Terrorists’’ or 

‘‘SDGTs’’, ‘‘Specially Designated Terrorists’’ or 

‘‘SDTs’’, or ‘‘Foreign Terrorist Organizations’’ or 

‘‘FTOs’’, respectively. SDN listings also include 

parties subject to OFAC sanctions pursuant to other 

list-based programs (such as counter-WMD 

proliferation and counter-narcotics) and countrybased programs. 

In addition to checking appropriate SDN listings, 

charities should consult OFAC’s Web site for other 

information relating to sanctioned activities or 

countries that may implicate their operations. 

13As discussed in Footnote 12, the SDN List is 

an integrated list of individuals, organizations, and 

entities that the U.S. Government has designated 

pursuant to both country-based and list-based 

OFAC administered sanctions programs. U.S. 

persons, including U.S.-based charities, are 

prohibited from dealing with any of the parties 

included on the SDN List. A charity wishing to 

engage in activity in a country subject to economic 

sanctions should contact OFAC directly about any 

authorizations necessary to engage in such activity. 

Although the SDN List includes persons meeting 

the criteria established in the authorities or 

Executive orders that define certain OFAC 

sanctions programs, transactions with actors not 

named on the SDN List may nevertheless violate 

U.S. sanctions due to interests of designated parties 

in such transactions or prohibitions owing to 

country-based OFAC administered sanctions 

programs. For example, if a charity engages in a 

particular transaction with a party not on the SDN 

List that involves the property or interests in 

property of a designated actor, the transaction may 

be subject to OFAC sanctions. This underscores the 

importance of charities knowing their grantees and 

monitoring their programs and transactions through 

the use of appropriate due diligence measures. 

Therefore, while the SDN List is a critically 

important compliance tool that can assist charities 

in meeting their legal obligations under the variety 

of sanctions programs that OFAC administers, it 

should only form one part of a charitable 

organization’s broader risk-based approach to 

protect against the risks of terrorist abuse. 

facilitate compliance with U.S. laws, 

statutes, and regulations, with which all 

U.S. persons, including U.S. charities, 

must comply. Depending upon the risk 

profile of an individual charitable 

organization, adopting all of these steps 

may not be applicable or appropriate. 

When taking these steps, charities 

should apply a risk-based approach, 

particularly with respect to engagement 

with foreign grantees due to the 

increased risks associated with overseas 

charitable activity. 

A. The charity should collect the 

following basic information about 

grantees: 

1. The grantee’s name in English, in 

the language of origin, and any acronym 

or other names used to identify the 

grantee; 10

2. The jurisdictions in which a 

grantee maintains a physical presence; 

3. Any reasonably available historical 

information about the grantee that 

assures the charity of the grantee’s 

identity and integrity, including: (i) the 

jurisdiction in which a grantee 

organization is incorporated or formed; 

(ii) copies of incorporating or other 

governing instruments; (iii) information 

on the individuals who formed and 

operate the organization; and (iv) 

information relating to the grantee’s 

operating history; 

4. The available postal, e-mail and 

URL addresses and phone number of 

each place of business of a grantee; 

5. A statement of the principal 

purpose of the grantee, including a 

detailed report of the grantee’s projects 

and goals; 

6. The names and available postal, email and URL addresses of individuals, 

entities, or organizations to which the 

grantee currently provides or proposes 

to provide funding, services, or material 

support, to the extent reasonably 

discoverable; 

7. The names and available postal, email and URL addresses of any 

subcontracting organizations utilized by 

the grantee; 

8. Copies of any public filings or 

releases made by the grantee, including 

the most recent official registry 

documents, annual reports, and annual 

filings with the pertinent government, 

as applicable; and 

9. The grantee’s sources of income, 

such as official grants, private 

endowments, and commercial activities. 

B. The charity should conduct basic 

vetting of grantees as follows: 

1. The charity should conduct a 

reasonable search of publicly available 

information to determine whether the 

grantee is suspected of activity relating 

to terrorism, including terrorist 

financing or other support. Charities 

should not enter into a relationship with 

a grantee where any terrorist-related 

suspicions exist; 11

2. The charity should assure itself that 

grantees do not appear on OFAC’s 

master list of Specially Designated 

Nationals (the ‘‘SDN List’’), maintained 

on OFAC’s Web site at http:// 

www.treas.gov/offices/enforcement/ 

ofac/sdn/,12 and are not otherwise 

subject to OFAC sanctions.13

3. With respect to key employees, 

members of the governing board, or 

other senior management at a grantee’s 

principal place of business, and for key 

employees at the grantee’s other 

business locations, the charity should, 

to the extent reasonable, obtain the full 

name in English, in the language of 


cprice-sewell on PROD1PC66 with NOTICES
Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 63847 

14Under United Nations Security Council 

Resolution 1373 (2001) (UNSCR 1373), UN Member 

States must generally freeze without delay the 

funds and other financial assets or economic 

resources of persons financing or otherwise 

supporting terrorist activity or terrorist-related 

individuals, entities, or organizations. In addition, 

UN Member States must generally prohibit their 

nationals from engaging in transactions with such 

parties. In order to implement these obligations 

under UNSCR 1373, each UN member state should, 

as a practical matter, develop its own list of parties 

sanctioned under the criteria of UNSCR 1373. For 

example, the SDN List incorporates those parties 

designated by the United States pursuant to its 

national obligations under UNSCR 1373. 

The Guidelines do not legitimize or endorse the 

UNSCR 1373 lists adopted by foreign jurisdictions. 

Rather, this information is intended to assist 

charities in developing their own risk-based 

programs based upon a full understanding of the 

law in those jurisdictions in which they may 

operate. Charities operating in a foreign jurisdiction 

may choose to take the additional precautionary 

measures of determining whether that jurisdiction 

maintains a national list under UNSCR 1373 and 

screening the identities of grantee organizations 

(including their directors and key employees) 

against any such list. Such precautionary measures 

may protect charities from potential sanctions or 

other consequences to which they might be subject 

from foreign jurisdictions as a result of engaging in 

transactions with individuals, entities, or 

organizations deemed to be financing or otherwise 

supportive of terrorist activity under the laws of 

those jurisdictions. 

15See, e.g., Matthew Levitt, HAMAS: Politics, 

Charity and Terrorism in the Service of Jihad; New 

Haven, CT: Yale Univ. Press, 2006 (documenting 

the logistical and financial support Hamas charities 

provide for the group’s political and terrorist 

activities); Heather Timmons, British Study 

Charitable Organizations for Links to Plot, N.Y. 

Times, Aug. 25, 2006 (describing the risks inherent 

in delivering charitable aid and resources to highrisk areas where terrorist organizations are known 

to operate); Robert F. Worth & Hassan M. Fattah, 

Relief Agencies Find Hezbollah Hard to Avoid, N.Y. 

Times, Aug. 23, 2006 (describing Hezbollah’s efforts 

to cultivate support by controlling the provision of 

charitable resources and services across southern 

Lebanon); Laila Bokhair, Political Struggle Over 

Earthquake Victims, Norwegian Defense Research 

Establishment, Nov. 23, 2005 (documenting terrorist 

organizations such as Lashkar-e-Taiba and Jaish-eMohammed efforts to provide humanitarian aid to 

affected areas in the months following the 

earthquake in South Asia); Christopher Kremmer, 

Charities Linked to Extremists Lead Quake Relief, 

Age, Nov. 21, 2005 (reporting that in addition to 

providing relief in South Asia, terrorist 

organizations are recruiting and indoctrinating 

orphan children in their extensive network of 

orphanages); Evan Kohlmann, The Role of Islamic 

Charities in International Terrorist Recruitment and 

Financing (2006), Danish Institute for International 

Studies: available at http://www.diis.dk/graphics/

Publications/WP2006/DIIS%20WP%202006- 

7.web.pdf (tracing the historical link between 

charitable organizations and terrorist activities from 

the Soviet-Afghan war through to the present); BBC 

News, Faith, hate and charity: Transcript, BBC One, 

Recorded from Transmission, July 30, 2006 

(reporting on one of Britain’s leading Islamic 

charities, Interpal, and illustrating Interpal’s use of 

a network of charities in Gaza and the West Bank 

to support and fund Hamas, a terrorist organization 

designated by the U.S. Government and the 

European Union). 

origin, and any acronym or other names 

used; nationality; citizenship; current 

country of residence; and place and date 

of birth. The charity should assure itself 

that none of these individuals is subject 

to OFAC sanctions. 

4. Charities should be aware that 

other nations may have their own lists 

of designated terrorist-related 

individuals, entities, or organizations 

pursuant to national obligations arising 

from United Nations Security Council 

Resolution 1373 (2001).14

5. With respect to the key employees, 

members of the governing board, or 

other senior management described in 

the preceding paragraph, the charity 

should also consider consulting 

publicly available information to ensure 

that such parties are not reasonably 

suspected of activity relating to 

terrorism, including terrorist financing 

or other support; and 

6. As a pre-condition to the issuance 

of a charitable grant, the charity should 

require grantees to certify that they are 

in compliance with all laws, statutes, 

and regulations restricting U.S. persons 

from dealing with any individuals, 

entities, or groups subject to OFAC 

sanctions, or, in the case of foreign 

grantees, that they do not deal with any 

individuals, entities, or groups subject 

to OFAC sanctions or any other persons 

known to the foreign grantee to support 

terrorism or to have violated OFAC 

sanctions. 

C. The charity should conduct basic 

vetting of its own key employees as 

follows: 

1. The charity should conduct a 

reasonable search of publicly available 

information to determine whether any 

of its key employees is suspected of 

activity relating to terrorism, including 

terrorist financing or other support. 

Charities should not employ a person 

where any terrorist-related suspicions 

exist; and 

2. The charity should assure itself that 

none of its key employees is subject to 

OFAC sanctions or have violated OFAC 

sanctions. 

D. Should a charity’s vetting practices 

lead to a finding that any of its own key 

employees, any of its grantees, or any of 

the key employees, members of the 

governing board, or other senior 

management of its grantees is suspected 

of activity relating to terrorism, 

including terrorist financing or other 

support, there are a number of available 

mechanisms and resources that a charity 

may utilize: 

1. If the charity believes there is a 

match between the name of one of the 

individuals or organizations listed 

above and a name on the SDN List, the 

charity should take appropriate due 

diligence steps to ascertain whether the 

match is valid. These steps and further 

guidance are available on OFAC’s Web 

site at http://www.treas.gov/offices/ 

enforcement/ofac/faq/ 

answer.shtml#hotline; and 

2. The charity should provide 

information on any suspicious activity 

relating to terrorism, including terrorist 

financing or other support, which does 

not directly involve an OFAC match, 

through a referral form available on 

Treasury’s Web site at http:// 

www.treas.gov/offices/enforcement/keyissues/protecting/index.shtml. In 

addition, the Federal Bureau of 

Investigation maintains local field 

offices to which charities should 

provide such suspicious information. A 

list of the locations and phone numbers 

of the FBI’s field offices is available at 

http://www.fbi.gov/contact/fo/fo.htm. 

Annex to Guidelines 

The risk of terrorist abuse facing 

charitable organizations is ongoing and 

significant and cannot be measured 

from the important but relatively narrow 

perspective of terrorist diversion of 

charitable funds to support terrorist 

acts. Rather, terrorist abuse also 

includes the exploitation of charitable 

services and activities to radicalize 

vulnerable populations and cultivate 

support for terrorist organizations and 

activities. As reported through a wide 

range of media sources, terrorist 

organizations deliberately establish, 

infiltrate, or otherwise exploit charitable 

organizations to build terrorist support 

networks.15 Recent developments—such 

as the exploitation by Lashkar e Tayyiba 

(a.k.a. Jamaat-ud-Dawa) and other 

terrorist entities/charitable fronts of 

relief efforts following the October 2005 

earthquake in South Asia, the critical 

role of Hamas-associated charities in 

building popular support in the 

Palestinian territories for the terrorist 

organization, and Hezbollah’s 

substantial control of charitable 

distribution networks in southern 

Lebanon—demonstrate the ongoing 

intent and effectiveness of terrorist 

organizations in exploiting charitable 

organizations and relief efforts. 

Treasury, together with other 

Departments across the U.S. 

Government, is continuing to combat 

such terrorist abuse of the charitable 

sector by: (i) Administratively 

sanctioning terrorist-related charities 

and charitable officials through terrorist 

financing designations; (ii) contributing 

financial information and investigative 

resources and expertise to advance 

criminal investigations and 

prosecutions of charities and charitable 

officials providing material support for 

designated terrorist organizations or 


cprice-sewell on PROD1PC66 with NOTICES
63848 Federal Register / Vol. 71, No. 210 / Tuesday, October 31, 2006 / Notices 

16The efforts of the MENA FATF are particularly 

exemplary of international efforts to combat 

terrorist abuse of charities. MENA FATF Member 

States have issued a best practices paper, based on 

the FATF’s international standard for combating 

terrorist abuse of the non-profit sector, tailored to 

the specific religious, social, and economic values 

of the region. The comprehensive framework, 

crafted by the MENA FATF, outlines legislative, 

regulatory, and procedural measures to ensure that 

the charitable sector is not misused or abused by 

terrorist financiers. The MENA FATF charities best 

practices paper is an indispensable tool for the 

Middle East and North Africa region in helping to 

protect against terrorist abuse of charities by 

offering guidance to promote transparency and 

accountability in the charitable sector. 

activities; (iii) facilitating international 

action to address these abuses; and (iv) 

conducting comprehensive outreach to 

the charitable sector to raise awareness 

of terrorist exploitation and the steps 

charities can take to protect themselves 

from such abuse. 

U.S. designations of charities and 

charitable officials demonstrate the 

breadth of the problem of terrorist 

infiltration and exploitation of the 

charitable sector. To date, the United 

States has designated forty-three 

charities worldwide and twenty-nine 

associated individuals for their support 

of terrorist organizations and operations. 

These seventy-two charities and 

individuals comprise over fifteen 

percent of all U.S.-designated terrorist 

supporters or financiers, indicating the 

primary importance of charities as a 

critical means of support for terrorist 

organizations and activities. Treasury 

maintains a summary of all designated 

charities, including unclassified 

background information summarizing 

the basis of each designation, to assist 

the donor and charitable communities 

in identifying those charities associated 

with terrorist financing and support. 

Further information and press releases 

relating to these designations are 

available on the Treasury Web site at 

http://www.treas.gov/offices/ 

enforcement/key-issues/protecting/ 

charities_exec-orders.shtml. 

In addition to these ongoing efforts by 

Treasury and the U.S. Government, 

other countries and organizations from 

around the world have recognized and 

helped curb abuse of the charitable 

sector by terrorist organizations. The 

Financial Action Task Force (FATF)—

the premier inter-governmental 

organization responsible for developing 

and promoting global policies to combat 

money laundering and terrorist 

financing—has studied the problem of 

terrorist financing and abuse across the 

charitable sector globally and has 

published typologies of such abuse. The 

FATF has also published Best Practices 

for Non-Profit Organizations and more 

recently issued interpretive guidance 

strengthening the international standard 

for combating terrorist abuse of nonprofit organizations. Additionally, FATF 

style regional bodies (FSRBs) such as 

the Asia Pacific Group (APG), Eurasian 

Group (EAG) and the Middle East and 

North Africa Financial Action Task 

Force (MENA FATF) are developing 

typologies and studies on the active 

threat of terrorist financing and support 

through charities that operate within 

their regions.16 These organizations and 

their member countries are 

implementing measures to actively 

combat this threat through the 

development and application of 

supervisory, investigative, and financial 

authorities to identify and dismantle 

charities engaged in terrorist financing 

or support. Many of these documents, 

which underscore the threat that 

terrorist organizations and operations 

pose to the charitable sector, are 

available on the Treasury Web site at 

http://www.treas.gov/offices/ 

enforcement/key-issues/protecting/ 

index.shtml. 

Treasury continually engages in 

outreach and updates its Web site to 

communicate useful information 

regarding: (i) The ongoing risks of 

terrorist abuse in the charitable sector; 

(ii) ongoing U.S. and other 

governmental efforts to mitigate these 

risks and combat terrorist abuse, and 

(iii) steps the sector can take to protect 

against such abuse. Treasury’s 

Guidelines represent one essential 

component and product of the ongoing 

outreach that Treasury is conducting 

with the charitable sector to empower 

and protect the sector from terrorist 

abuse. Another example of available 

resources is Treasury’s December 2005 

advisory paper, which provides 

information to charities delivering relief 

in areas affected by the 2005 South Asia 

earthquake by detailing typologies of 

terrorist abuse of charities and reports 

on activity by militant and terrorist 

groups in those areas. This paper also 

shows, through media reports, the 

extent to which terrorist organizations 

pose a risk to charities trying to deliver 

aid in unstable areas, where terrorist 

organizations themselves and/or their 

charitable fronts are often engaged in 

delivering relief as an effective 

recruitment mechanism in building 

broader support for their organizations. 

Treasury will continue its outreach 

and informational efforts as part of its 

larger mission to combat terrorist 

financing and safeguard the charitable 

sector from terrorist abuse. 

[FR Doc. 06–8961 Filed 10–30–06; 8:45 am] 

BILLING CODE 4811–37–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

FEDERAL RESERVE SYSTEM 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

Proposed Agency Information 

Collection Activities; Comment 

Request 

AGENCIES: Office of the Comptroller of 

the Currency (OCC), Treasury; Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); and 

Office of Thrift Supervision (OTS), 

Treasury. 

ACTION: Joint notice and request for 

comment. 

SUMMARY: In accordance with the 

requirements of the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

chapter 35), the OCC, the Board, the 

FDIC, and the OTS (the ‘‘agencies’’) may 

not conduct or sponsor, and the 

respondent is not required to respond 

to, an information collection unless it 

displays a currently valid Office of 

Management and Budget (OMB) control 

number. The Federal Financial 

Institutions Examination Council 

(FFIEC), of which the agencies are 

members, has approved the agencies’

publication for public comment a 

proposal to extend, with revision, the 

Consolidated Reports of Condition and 

Income (Call Report) for banks and the 

Thrift Financial Report (TFR) for 

savings associations, which are 

currently approved collections of 

information. At the end of the comment 

period, the comments and 

recommendations received will be 

analyzed to determine the extent to 

which the FFIEC and the agencies 

should modify the proposed revisions 

prior to giving final approval. The 

agencies will then submit the revisions 

to OMB for review and approval. 

DATES: Comments must be submitted on 

or before January 2, 2007. 

ADDRESSES: Interested parties are 

invited to submit written comments to 

any or all of the agencies. All comments, 

which should refer to the OMB control 

number(s), will be shared among the 

agencies. 

OCC: Communications Division, 

Office of the Comptroller of the 

Currency, Public Information Room, 


cprice-sewell on PROD1PC66 with NOTICES