Continuing the initiative that emerged during the panel discussion “International Financing of Civil Society Organizations: War-Related Banking Challenges”, CEDEM is working to create a platform for experience sharing and peer-to-peer dialog between Ukrainian and foreign banks on NPO banking issues, involving interested NPOs to take into account their interests.

On November 8, 2023, CEDEM held an expert meeting “Banking Services for NPOs: How to Maximize Synergy” with the participation of representatives of Ukrainian banks, civil society organizations, experts from international organizations and the Dutch bank ABN AMRO. 

During the meeting, the issues of taking into account the interests of non-profit organizations (NPOs) in the development of banking services and products were discussed. In particular, they discussed the following:

1. Ukrainian banks have a commercial interest in serving NPOs. At the same time, banks should understand and take into account the peculiarities of the legislation regulating the activities of NGOs and COs, and move away from the presumption that NPOs are a mechanism for money laundering. NGOs and COs work for the public good, so it is important that funds flow quickly to priority areas, to the end user: the military, for humanitarian aid, etc.
2. Taking into account the growing interest of banks in servicing NPOs, there is a tangible need for the National Bank’s guidelines on the possibility of expanding the list of banking services that can be provided to NPOs, given the existing risk criteria and requirements for applying a risk-oriented approach. In carrying out their project activities, NPOs raise significant funding, including international funding, to support the population, the military and the reconstruction of the country. Therefore, there is a need to enhance their ability to manage and effectively utilize these resources. At the same time, the position of the NBU as a regulator is important when it comes to practical implementation and introduction of new types of services, taking into account regulatory requirements and other significant aspects of banks’ operations. 
3. NPOs in Ukraine are now facing a number of serious problems in banking services, including:

• Lack of ability to attract credit financing
• Lack of cash-in-transit services for charitable organizations
• Difficulty in receiving international transfers from EU countries, given the restrictive measures.

4. Foreign experience should be taken into account. It is a roadmap that helps to combine the theory and practice of foreign and Ukrainian banks in servicing NPOs. In particular, when it comes to determining the criteria of acceptability of transactions, mechanisms of simplified submission of documents by NPOs and analysis of these documents by banks.

Proposals for improving cooperation between banks and NPOs, taking into account the experience of the Netherlands, were also voiced at the meeting:

1. Creation of a working group: Cooperation between state authorities, regulator, banks and civic sector for systemic dialog. The regularity of such meetings and the desire to gain knowledge about the actual risks present in the sector are important aspects.
2. Joint determination of riskiness criteria. The regulator, banks and the civic sector should collectively identify specific factors to reduce/increase interaction risks.
3. Adaptation and publication of a portal for NPOs. Creation of an online portal for non-profit organizations, which would inform about the legal and regulatory acts in the field of combating money laundering and terrorist financing. The portal would make available the information on how banks conduct AML/CFT risk assessments. This would help NPOs to consider measures to mitigate (potential) risks. 

Such measures would build and expand cooperation between the civic sector, banks and the National Bank of Ukraine. After all, it is the cross-sector dialog that will help to identify where CSOs can mitigate their operational risks on their own, and where banks and the regulator need to issue clarifications to protect the rights of banking consumers.

The expert meeting was held as part of the Ukraine Civil Society Sectoral Support Activity, implemented by the Initiative Center to Support Social Action “Ednannia” in partnership with the Ukrainian Center for Independent Political Research (UCIPR) and the Centre for Democracy and Rule of Law (CEDEM) with the sincere support of the American people through United States Agency for International Development (USAID).