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De-risking impedes access to finance for non-profit organizations

Emile van der Does de Willebois's picture



If you’ve opened a bank account in the last few years, you likely had to answer a bunch of more or less intrusive questions about yourself, your background and why you wanted to open the account. Annoying, but part and parcel of Anti-Money Laundering/Combating the Financing of Terrorism (“AML/CFT”) rules that all banks, in all parts of the world, are subject to.

The ostensible purpose is to enable banks to prevent bad actors using the financial system to launder their funds and, where bad actors are not identified at entry, to detect any suspicious financial activity and provide appropriate background to competent authorities. (Whether they are successful in this endeavour is another question.)

More recently large international banks have been upping the ante and have started to disengage altogether from clients from certain geographical regions or certain sectors because they consider the AML/CFT risks too great- a development known as “de-risking”. Often the business lines or countries exited are those that aren’t particularly profitable; the argument being that only a substantial profit margin justifies taking a larger than average risk. The amount of due diligence to be conducted on a customer cuts into that profit margin and the higher the perceived risk of that customer, the more the due diligence, the lower the profit.

One of the sectors particularly affected are non-profit organizations (NPOs). This is an unfortunate consequence of the mistaken and remarkably persistent idea that all NPOs pose a high AML/CFT risk. According to a report published earlier this month by the Charity and Security Network, two-thirds of U.S.-based NPOs working abroad are facing problems accessing financial services. Apart from account closures and account refusals, these also include delays in wire transfers and increased fees. 

As a result of these delays, they are sometimes forced to move money through less transparent, traceable, and safe channels. The prevalence and types of problems vary by program area, with NPOs working in peace operations/peacebuilding, public health, development/ poverty reduction, human rights/ democracy building, and humanitarian relief reporting the greatest difficulties. One NPO was prevented from sending immediate relief to the persecuted Rohingya minority in Myanmar in the midst of a dire humanitarian crisis. Timely transmittal of those funds might have saved lives, the charity’s director explained.
 

Changing the face of tourism one refugee at a time

Raneen Hasuna's picture
© Raneen Hasuna/World Bank
While increasing their tourism knowledge through trainings and hikes, participants were also able to connect and build relationships with one another. © Raneen Hasuna/World Bank

If you have been to the West Bank, you might know that refugees there no longer live in tents. You could even walk through a refugee camp without ever noticing, except for the many posters of those lost in the conflict. In the two refugee camps in Bethlehem, Aida and Dheisheh, there is no physical division left between city and camp, but an invisible divide remains.

Using socio-economic analysis to inform refugee programming in Turkana, Kenya

Raouf Mazou's picture
Kakuma Refugee Camp
Community leader Paul Gok (left), a refugee from South Sudan walks with young children in the 'Kakuma 4' area of Kakuma Refugee Camp, built to house new arrivals from South Sudan. © UNHCR/Will Swanson



In Kenya, and refugee-hosting countries in Africa, the camp-based protection and humanitarian assistance model has been the default response to the often-protracted forced displacement situations. The underlying assumption has been that it would be impossible or undesirable for refugees to be self-sufficient while waiting for peace to return to their countries of origin.

Therefore, it is not a surprise that refugees from South Sudan and other neighboring countries in north-western Kenya are being assisted in the Kakuma Refugee Camp, which has been hosting refugees since early 1990s. Several waves of refugees have come and gone over the past 25 years, the most recent influx from South Sudan having started in December 2013. The camp has grown into four sub-sections with a capacity of 125,000 persons but a current population of over 155,000. Like in the majority of protracted situations, the care and maintenance programs in Kakuma included providing them with access to shelter, food, water, health care and education.

Understanding the nuanced social impact of Kakuma refugees on their Turkana hosts

Varalakshmi Vemuru's picture


Kakuma refugee camp, in northwestern Kenya’s Turkana County, houses over 150,000 refugees. The majority are South Sudanese followed by Somalis. Established in 1992 in one of Kenya’s most remote areas, it is one of the longest-lasting refugee camps in the world, and refugees have become an integral part of the area’s social, cultural, and economic fabric.

Advancing global mental health action: lessons from Canada

Patricio V. Marquez's picture

Also available in: Español

A portrait of Miliett Kangar at JFK Medical Center and E.S. Grant Mental Health Hospital in
Monrovia, Liberia on March 07, 2016.  (Miliett did not want to show her face in the picture)
Photo © Dominic Chavez/World Bank

In 2016, a lot of effort was placed on shining the light on mental health as a neglected issue in the global health and development agendas.  The flagship event organized by the World Bank Group (WBG) and the World Health Organization (WHO) during the Spring Meetings of the WBG/IMF held in Washington D.C. was an important step to galvanize attention and commitment to change this situation.

Stronger together: Stepping up our partnerships with the UN

Hartwig Schafer's picture

A few years ago, West Africa was gripped by the Ebola outbreak. The onset of the virus devastated communities and weakened the economies of Guinea, Liberia, and Sierra Leone.

Ebola moved quickly and an immediate response by development partners was badly needed. The governments of the three affected countries requested assistance from UN agencies and the World Bank to lead a coordinated effort to curb the epidemic. The Bank responded by restructuring ongoing health projects to free up resources for the governments to quickly contract UN agencies.  

Rehabilitating child soldiers in the Middle East

Omer Karasapan's picture
Robert Adrian Hillman l shutterstock.com

The issue of child soldiers is a modern blight with a long historical pedigree. Once the norm, documented back to the classical world and prevalent till the 19th century, the phenomenon was thought to be slowly disappearing as the modern nation state came into being. Yet it is now seen in almost every continent and in almost every conflict, though rarely among formal militaries.

Bank Funding Helps Emergency Programs on the Ground in Yemen

Auke Lootsma's picture


Yemen is facing an unprecedented political, humanitarian, and development crisis. Long the poorest country in the Arab region, over half its population was living below the poverty line before the current conflict worsened. That number has risen steeply, with over 21.5 million people needing humanitarian assistance now—close to 80% of the country’s 28 million people.

Nigeria General Household Survey 2015-2016: Data and documentation now available

Vini Vaid's picture
© Curt Carnemark / World Bank

The National Bureau of Statistics (NBS) in collaboration with the World Bank’s Living Standards Measurement Study (LSMS) team launched the third wave (2015–16) of the Nigeria General Household Survey (GHS)-Panel in Abuja, on December 13, 2016.  
 
The GHS-Panel survey is a nationally representative survey administered every 2–3 years, that covers a range of topics including demography, education, welfare, agriculture, health and food security. The data is collected in two visits: post-planting and post-harvest seasons. The survey follows the same households over time and collects a rich set of information, to allow for comprehensive time-series analyses that can help shape policies for a wide array of development sectors. Here are some interesting findings from the 2015–16 survey:

Year in Review: 2016 in 12 Charts (and a video)

Tariq Khokhar's picture

Between the social, political, and economic upheavals affecting our lives, and the violence and forced displacement making headlines, you’d be forgiven for feeling gloomy about 2016. A look at the data reveals some of the challenges we face but also the progress we’ve made toward a more peaceful, prosperous, and sustainable future. Here are 12 charts that help tell the stories of the year.

1.The number of refugees in the world increased.

At the start of 2016, 65 million people had been forcibly displaced from their homes, up from 60 million the year before. More than 21 million were classified as refugees. Outside of Sub-Saharan Africa, most refugees live in cities and towns, where they seek safety, better access to services, and job opportunities. A recent report on the "Forcibly Displaced" offers a new perspective on the role of development in helping refugees, internally displaced persons and host communities, working together with humanitarian partners. Among the initiatives is new financial assistance for countries such as Lebanon and Jordan that host large numbers of refugees.



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