Push to stop white supremacist fundraising faces identity challenge

In the wake of the Charlottesville racist demonstrations and domestic terror attack perpetrated by white nationalist groups, financial institutions and service providers find themselves under new pressure to prevent the transfer of funds to extremist causes. Identifying them and deciding where to draw the line, though, poses new challenges.

Following the tragedy in Virginia, crowdfunding sites like GoFundMe and Kickstarter reiterated their own policies against racist and oppressive causes, and pledged a renewed crackdown on drives deemed inappropriate.

But crowdfunding sites represent only part of the problem: White supremacist hate sites commonly accept money directly from visitors, allowing supporters to help fund hate-fueled rallies like the deadly protest in Charlottesville.

In response, activists have taken aim at the credit card companies themselves, asserting that the fees charged through donations and fundraising activities for hate groups are generating profits for the likes of Visa, Mastercard, Discover, and American Express.

Racial justice organization Color of Change launched a new initiative on Wednesday dubbed “Blood Money” that aims to shame those credit card companies into blocking transactions donating money to hate groups. They note that the payment processing fees bring in 1.4 to 3.5 percent of each contribution.

In their estimation, fewer than 20 of the most prominent hate groups raised more than $20 million in 2014 and 2015. While exact amount collected is unknown, they allege that credit card companies may have siphoned hundreds of thousands of dollars in transaction fees from those donations — not only helping to fuel racist agendas, but also indirectly profiting from them.

Calls for more careful and critical monitoring of funding recipients fall under a number of established industry initiatives, including regulations related to know your customer and anti-money laundering. But KYC and AML measures are typically driven on a nation-by-nation basis of local laws, and this latest identity challenge, for now, is being pushed by social advocates.

While tensions in Charlottesville and across the U.S. remain high, there are signs that the push has had some early response. “Blood Drive” is maintaining a list of hate groups that receive funds through payment providers, and steps have already been taken by PayPal, Apple Pay and Amazon to cut funding.

None of the organizations, however, have been blocked yet by the big four U.S. credit card providers.

Going down that road presents a host of thorny issues for financial institutions, who already face difficulties in performing customer due diligence in an increasingly online world

While identifying hate groups and racist causes may be clear cut in some instances, it can be difficult to determine which organizations are inappropriate, even when viewed on a case-by-case basis.

One potential starting point could be culling from a list of known hate groups and associated organizations from an independent source, such as the Southern Poverty Law Center. Similar policies are already in place with AML stopping the flow of money to drug traffickers and terrorists.

Modern hate groups spread their messages both online and in person under publicly palatable euphemisms including “alt-right” and “post-truth.” Such terms draw inevitable comparisons to the fictitious words “Crimethink and “unperson” from George Orwell’s dystopian classic novel 1984.

Perhaps, to address the growing problem, the identity industry will need to coin their own alternative phrase: KYR, or Know Your Racists.