One of the main observations made by the Institute for European Integrity (IEI) was that much of the available information related to high-risk third sector organizations (TSOs) such as NGOs, Nonprofits, Foundations, Charities, or Trusts was ad hoc, diffuse in nature, and not easily accessed in one central location. Because the information is scattered throughout cyberspace, organic blind spots exist that expose nonprofits to unnecessary risk as they engage with other actors in this space. IEI consolidates, distills, and synthesizes information scattered throughout cyberspace, alleviating organizations from having to conduct cumbersome enhanced due diligence processes and facilitating risk-based calculations for key leaders. IEI’s flagship NGO Watchlist serves as a due diligence tool by publicly displaying high-risk TSOs that morally corrode the third sector as well as pose a threat to institutional integrity and/or democratic norms.
IEI’s methodology for nonprofit analysis was informed by a comprehensive literature review of publicly available information obtained from leading authorities addressing intersecting areas of interest: financial crime, organized crime, war crimes, asymmetric warfare, and hostile foreign intelligence operations, to name a few. Our sources primarily consisted of international institutions’ (e.g., the United Nations, the International Criminal Court, and NATO) informational products; western government or international organization sanctions, indictments, testimony, or commissioned studies; conviction, prosecution, or official investigation of a nonprofit organization or its associated leadership by a western government or international organization; research published by premier think-tanks or institutes; articles written by industry-leading investigative journalists or outlets; and material published by subject matter experts. Using this literature and well-established western norms, IEI developed a proprietary and conservative methodology referred to as LESA– Leaders, Enabling Structures, and Activities– that is capable of identifying high-risk TSOs. The methodology is conservatively designed and only meant to place TSOs on the watchlist where two conditions are met: where we have relied on proprietary and/or open source information suggesting that an organization’s character is egregiously or unethically outside the realm of legitimacy, and for which our level of confidence related to our findings is based on subject matter expertise and the credibility, volume, and consistency of information.
Through the lens of LESA, IEI employs a holistic analysis of TSOs by interrogating three primary categories: Leaders, Enabling Structures, and Activities. In terms of leadership, we evaluate those serving or having served as founders, senior leaders, or board members. Additionally, IEI incorporates AML and CFT “red flags” to better gauge the level of risk associated with certain TSOs. Upon subsequent identification of a high-risk TSO through LESA, an internal peer review process is undertaken before the entity in question is publicly placed onto the NGO Watchlist. This methodological process has guided the population of IEI’s NGO Watchlist, in-depth investigations that have uncovered possible OFAC violations, as well as in conclusions later reflected in unsealed indictments.
METHODOLOGY:
1: LEADERSHIP:
Primarily, we attempt to identify leaders–founders, board members, and senior leadership–that have been sanctioned, convicted, indicted, prosecuted, placed under official investigation, or referenced in official inquiries by a western government or international organization.
Secondarily, we attempt to identify through non-governmental sources leadership possessing meaningful direct or indirect links to malign finance, malign influence, organized crime, financial crime, narrative laundering, reputation laundering, terrorism, genocide, or hostile foreign intelligence services.
2: ENABLING STRUCTURES & SUPPORT:
Primarily, we attempt to identify professional enablers, designated non-financial businesses and professions as well as politically exposed persons (PEPs) that have been sanctioned, convicted, indicted, prosecuted, placed under official investigation, or referenced in official inquiries by a western government or international organization.
Secondarily, we attempt to identify through non-governmental sources professional enablers, designated non-financial businesses and professions as well as politically exposed persons (PEPs) possessing meaningful direct or indirect links to malign finance, malign influence, organized crime, financial crime, narrative laundering, reputation laundering, terrorism, genocide, or hostile foreign intelligence services.
Thirdly, we attempt to identify trusts, charities, or foundations that have been either sanctioned, convicted, indicted, prosecuted, placed under official investigation, or referenced in official inquiries by a western government or international organization; or possess meaningful direct or indirect links to malign finance, malign influence, organized crime, financial crime, narrative laundering, reputation laundering, terrorism, genocide, or hostile foreign intelligence services.
Fourthly, we attempt to identify donors or undisclosed financial or in-kind supporters, pseudo-academics, and/or former hostile foreign intelligence service officers affiliated with the organization that have been either sanctioned, convicted, indicted, prosecuted, placed under official investigation, or referenced in official inquiries by a western government or international organization; or possess meaningful direct or indirect links to sanctioned entities or individuals, malign finance, malign influence, organized crime, financial crime, narrative laundering, reputation laundering, terrorism, genocide, or hostile foreign intelligence services.
3: ACTIVITIES:
We attempt to identify direct or indirect links to the following activities conducted by TSOs:
I: Financial crime (e.g., money laundering, tax evasion, embezzlement, etc.) of any variety.
II: Bribery, corruption, or influence peddling by a TSO.
III: Reputation or narrative laundering.
IV: Foundations, Charities, or Trusts funding individuals or organizations with meaningful direct or indirect links to illicit activities.
V: Espionage activity.
VI: Biased election observations or delegation organizer.
VII: Philanthropic donations from authoritarian or kleptocratic regimes, and/or organizations or people with meaningful direct or indirect links to illicit activity.
VIII: Activities flagged by international organizations such as UN, NATO, ICC, etc.
IX: Financial documents that exhibit “red flags” associated with financial crime.
X: Behavior contradicting a TSO’s mission statement as well as its leaders’ public statements.
XI: Populating websites with fake profiles of people.
XII: Claiming affiliations with prominent bodies or institutions yet where the affiliation cannot be corroborated.
XIII: Advocating for kleptocrats or policies enabling less transparency of the third sector.
XIV: Claiming to be a nonprofit or NGO without proper registration.