A lack of guidance from the UK Government, particularly the Treasury, on how banks should respond to counter-terrorism legislation has caused millions of pounds of donation to charities to be inadvertently held, blocked or returned.
According to a new report by the Overseas Development Institute (ODI), international banks, including HSBC, UBS and NatWest, have frozen accounts held by UK-registered charities and international non-governmental organisations delivering aid in areas such as Syria, Gaza and Iraq.
ODI, the leading think tank on development and humanitarian aid issues, suggested that “overly risk averse actions” were being taken for fear of breaching counter-terrorism laws and led to the closing and freezing of accounts with “no detailed explanation.”
“Tens of thousands of people in conflict areas such as Syria, Somalia and Gaza are depending on the life-saving assistance provided by UK charities, but these are precisely the locations that present the highest risks to banks under the counter-terrorism legislation,” independent researcher for the ODI’s Humanitarian Policy Group, Tom Keatinge, warned.
Muslim groups have repeatedly argued that they are being disproportionately targeted by the authorities and include more than a quarter of the statutory investigations launched by the Charity Commission since April 2012 and remaining open have been directed at Islamic organisations.
The institute – whose report is entitled UK humanitarian aid in the age of counter-terrorism: perceptions and reality – said the sums were not trivial. In one example a charity that requested anonymity had to forgo donations worth £2m in the last 12 months due to funds being blocked by a bank.
The report recommends that the UK Government, namely the Treasury, provide greater guidance on how banks, credit card companies, online donation websites and internet payment service companies can comply with the counter-terrorism law without adversely affecting legitimate aid activities.
It also investigated claims that UK Muslim charities are being disproportionately affected by counter-terrorism legislation, an issue that has been compounded by repeated allegations of links to extremism and terrorism in the media and in the case of Gaza specifically by Israel.
Researchers suggested that this may relate to UK Muslim charities’ increased exposure to risk due to the nature of their work – local connections and language skills means they are often able to gain greater access to people in dangerous conflict areas in Syria, Iraq and Gaza as well as the poor image of Islam in the media and, in some cases insufficiently robust institutional practices which is a problem across the charity sector.
“Many UK Muslim charities sprung up quickly in response to crises such as the Syria conflict, driven by the generosity of their local communities to help. But managing such rapid growth – and ensuring that appropriate professional standards are in place – can be a challenge,” said Director of HPG, Sara Pantuliano.
To ensure funds are adequately safeguarded from financing terrorism, the report recommends that all UK charities should ensure they have instituted adequate risk management and due diligence processes, including financial and administrative standards in line with UK charity law and the guidance provided by the Charity Commission.