Counterterrorism architecture has grown exponentially in the last two decades, with counterterrorism measures impacting humanitarian, development, peacebuilding and human rights action across the world. Addressing and mitigating the impact of these measures take various forms in different contexts, local and global. This article will address one particular form of engagement and redressal – that of the multi-stakeholder dialogue process – to deal with the unintended consequences for civil society of countering the financing of terrorism rules and regulations. The impact is seen in the difficulties that non-profit organizations face across the world in terms of financial access. Involving civil society, banks, government, financial intelligence, regulators, supervisors and banking associations, among others, in a dialogue process with clearly defined objectives is considered by policymakers and civil society to be the most appropriate and effective form of engagement for dealing with and overcoming this particular set of challenges. Multiple examples are provided of ongoing initiatives, with the nuances of each drawn out for a closer look at the conditions needed to sustain such dialogue, and an examination of whether such stakeholder dialogue processes are fit for purpose for solving the seemingly intractable problem at hand.

Following the events of 11 September 2001, measures aimed at countering the financing of terrorism (CFT) were intensified by States. Many countries around the world adopted strict anti-money laundering and CFT regulations for the transfer of funds globally. This process increased the costs of complying with regulatory requirements and imposed high penalties on banks for non-compliance. As a result, preventive measures – often known as “de-risking” – were taken up by banks, including terminating the accounts of clients perceived as “high-risk” for money laundering or terrorist financing, and delaying transfers. These measures, however, have had negative consequences, reducing financial access for local civil society organizations in conflict-affected contexts that are deemed high-risk for terrorist activities. Drawing on five years of research to understand the impact of de-risking on conflict-affected contexts from a local perspective, this paper reflects on the local political economy of CFT, with a focus on the Middle East and North Africa. It explores two key areas of inquiry. The first of these is the politics of interpretation – how counterterrorism as a discourse and a set of practices, of which CFT is one, gets interpreted by local authorities and banks, and subsequently gets reinterpreted to the population. This also has implications for which local actors are better positioned to access funds than others, and why. The second area of inquiry is the politics of vulnerability – how the local political economy impact of CFT can increase the social and economic vulnerabilities of some groups more than others. This paper demonstrates that under the guise of “counterterrorism”, local authorities in conflict-affected contexts have used CFT to restrict the non-profit and philanthropic space and are using banking regulations to shape that space in ways that are bound to have negative medium- and long-term implications for it.