Why does the Mott Foundation require all organizations re-granting with Mott funds to check the terrorism watch lists?
If our funds are re-granted to a listed organization, Mott faces potential penalties, including revocation of tax-exempt status and the freezing of our assets. There is also the potential for criminal and civil penalties. In addition, Mott managers may face possible penalties.
What penalties does an organization re-granting with Mott funds face if it provides support to a listed individual or organization?
An organization faces the possibility of its assets being frozen and the revocation of its tax-exempt status. There is also the potential for criminal and civil penalties. In addition, organization managers may face possible penalties. *
What is Executive Order 13224?
Executive Order 13224, signed by President George W. Bush in September 2001, authorizes the Executive Branch to block the property of, and prohibits transactions with, persons who commit, threaten to commit, or support terrorism.
What is the USA Patriot Act?
The USA PATRIOT Act, passed by Congress and signed into law by the President in October 2001, imposed or enhanced civil and criminal penalties for knowingly or intentionally aiding terrorists.
What is U.N. Security Council Resolution 1373?
U.N. Security Council Resolution 1373, adopted at the end of September 2001, declares that all states (or nations) shall prohibit their nationals or any persons and entities within their territories from making any funds available for terrorism. In the broad wording of Resolution 1373, financial assets, economic resources, or financial or other related services shall not be made available, directly or indirectly, for the benefit of persons who commit, attempt to commit, facilitate, or participate in the commission of terrorist acts. Further, funds shall not be made available to entities owned or controlled, directly or indirectly, by such persons and to persons and entities acting on behalf of, or at the direction of, such persons.
To whom do these laws apply?
All U.S. citizens and permanent resident aliens, entities and organizations located in or out of the United States (including any subsidiary or foreign offices overseas) must comply with the USA PATRIOT Act, Executive Order 13224, and Office of Foreign Assets Control regulations. Further, U.N. Security Council Resolution 1373 and other resolutions have the force of international law binding on all member states.
What is the Office of Foreign Assets Control (OFAC)?
The Office of Foreign Assets Control is a division of the U.S. Department of Treasury. It helps enforce sanctions against terrorist organizations, drug traffickers, money launderers, and non-cooperative foreign countries.
What is the OFAC SDN list?
The OFAC specially designated nationals and blocked persons (SDN) list is the U.S. government list of individuals and organizations identified as terrorists or otherwise associated with terrorism, drug trafficking, and money laundering.
Are there other terrorism watch lists?
Yes. The European Union, the United Nations, and other governments and/or governmental bodies also maintain lists of individuals and organizations identified as terrorists or otherwise associated with terrorism. The Terrorist Exclusion list is the U.S. Department of State’s list of organizations identified as terrorists or otherwise associated with terrorism for immigration purposes.
How will an organization be able to identify which individual or organization has been identified by OFAC or TEL as a terrorist or otherwise associated with terrorism?
OFAC information is available electronically directly from OFAC. OFAC indicates that its listings are partial and using its lists alone does not ensure compliance with the laws. The OFAC and TEL lists/links are identified in the Resources and Software section of this kit. Also, there are a number of third party vendors available to assist in this list checking process. See the Resources and Software section for a list of vendors.
What types of payments should be checked against the terrorism watch lists?
All payments to sub-grantees should be checked. See Step 1 in “What re-granting organizations need to do” section. *
Do the laws define “material support?”
Yes. The Antiterrorism and Effective Death Penalty Act defines “material support” as “currency or monetary instruments of financial securities, financial services, lodging, training, expert advice or assistance, safe houses, false documentation or identification, communications, equipment, facilities, weapons, lethal substances, explosives, personnel transportation and other physical assets, except medicine or religious materials.” This is an exceptionally broad range of assistance. *
How often should the terrorism watch lists be checked?
Check the official terrorism watch lists prior to each payment processing. *
What should an organization do if it has a hit or match?
Any “hit” should be reviewed and documented as either a false positive or true positive. Any match (true positive) should likewise be reviewed and documented. For a match, a hold should be placed on the pending transaction with the individual/organization, program staff or other appropriate personnel should be contacted to notify the “matched” individual/organization and seek clarification. (See Steps 3 and 4 in “What re-granting organizations need to do” section.) *
Do OFAC and TEL compliance require more than checking lists?
There is no easy answer to this question. Even if the organization checks all the lists, this may not be seen as complying with the law. These lists do not identify affiliated members of the organization. However, list checking is an important step in an organization’s overall due diligence plan. *
Should an organization amend its grant agreement to comply with the laws?
We recommend that any grant agreement include prohibitions against violence or terrorist activities and re-granting. *
What should an organization do if a sub-grantee name appears on one of the terrorism watch lists after the grant has been approved and after the funds have been expended?
Assuming the sub-grantee name is a 100% match for which clarification cannot be obtained, the grantmaker should request a refund of the entire grant amount, should notify us immediately, and should refrain from providing any future support to the sub-grantee. See Step 4 in “What re-granting organizations need to do” section. *
* We strongly recommend that organizations re-granting with Mott funds contact their legal counsel to learn more about the implications for the organizations.