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No end to bank closure of Muslim charity accounts

29th Jan 2016
No end to bank closure of Muslim charity accounts

HSBC,has ended providing banking services for Islamic Relief, which operates in 40 countries and is the highest profile charity to be affected by a series of bans. (Photo:Barry Caruth/Wikimedia Creative Commons

Hamed Chapman

One of the largest international aid organisations and a Palestinian human rights group have become the latest victims in Britain to have had bank accounts arbitrarily closed in what appears to be part a sustained campaign against Muslim charities.

HSBC, the biggest British bank, has ended providing banking services for Islamic Relief, which operates in 40 countries and is the highest profile charity to be affected by a series of bans.

The action coincided with the Co-operative Bank unilaterally cutting it 10 year banking relationships in December with Friends of Al-Aqsa (FOA) which highlights the Human Rights abuses suffered by the Palestinians and puts pressure on the British Government to make Israel respect International Law.

No consultation or engagement preceded the decision, and the bank was said to have refused to undertake any discussion on the matter. It follows a similar move by the Co-operative Bank against the generic Palestine Solidarity Campaign and its branches, as well as other banks, which appear to be targeting groups for political reasons.

The only reasons provided by the bank for the closure is a change in its “risk appetite”.

This deeply worrying move reflects the vulnerability that all politically active organisations in Britain face, in particularly Muslim, and those linked with supporting the plight of the Palestinians.

“There is no legitimate way for the Co-operative Bank to justify its actions. FOA has had a very good relationship with the bank for 10 years. We do not transfer funds abroad, and we have never been overdrawn”, said Chair of FOA, Ismail Patel.

Islamic Relief, which receives funding from the Government’s aid budget, said it was seeking to secure new partnerships with other financial providers to keep its vital humanitarian work going.

Islamic Relief’s UK Director, Imran Madden, said he was “extremely surprised at HSBC’s stance” but his organisation was aware that “similar action has been taken by HSBC with other clients.”

He suggested that there was a “fog of uncertainty” created by the “vagueness” of the Government’s counter-terrorism regulation that is being blamed, but warned that “not supporting a civilian population who happen to live in a war zone is inhumane and unjustifiable.”

UK payments by Islamic Relief from their other banks to others who bank with HSBC have been held up for weeks or even months – including a payment to procure tents urgently for earthquake victims in Nepal. A minority of donors who bank with HSBC have had donations to Islamic Relief blocked, said Madden.

There has been widespread concern about the attitude of banks such as HSBC to what is being referred to as ‘de-risking’ dealings with Muslim humanitarian aid agencies not only in the charity sector but among financial regulators, including the UK Government’s independent reviewer of counter-terrorism laws, David Anderson.

Shadow Secretary of State for International Development, Diane Abbott, said there needs to be a code of practice to stop banks from severing ties with Islamic charities without explanation.

She said the Treasury should produce guidelines giving non-government organisations the right to obtain detailed reasons for any bank account closures and the right to appeal.

The Financial Conduct Authority has also distanced itself from the de-risking approach of banks, saying in a statement last April, “Effective money-laundering risk management need not result in wholesale de-risking.” Banks should use “judgement and common sense and (that) is what we would regard as an effective risk-based approach,” it said.

HSBC response to questions why the bank is targeting Muslim individuals and organisations and also that they have no right of appeal was that “Whenever we review a customer relationship we gather information from a wide range of sources and take a number of factors into consideration. For a business customer these factors would typically include the type of activities the business is involved in, the jurisdictions in which it operates and the products and services it uses. Although we can’t always be specific about why we decide to close an account, a decision of this kind is never taken lightly and is never due to the customer’s race or religion. We will continue to work with the UK Government and industry bodies to support the not-for-profit sector and to help charity customers manage risk in their operations.”

Similar response was given by Co-operative Bank: “This decision is not a reflection on the work carried out by many organisations throughout the world, or a statement about the causes they support. We remain a committed supporter of charities which can meet the industry level requirements. However, in common with all banks, we have to perform due diligence on our customers, their accounts and the payments they make to ensure the Bank complies with anti-money laundering obligations and to manage the Bank’s risk. This is part of our normal banking processes and is an area where the Bank has made some changes recently to bring it into line with the industry generally.

“For customers who operate in, or send money to, any very high risk or high risk locations throughout the world, advanced due diligence checks are required by all banks to ensure that funds do not inadvertently fund illegal or other proscribed activities.

“Depending on the particular circumstances it may not be possible for us to complete these checks to our satisfaction and the decision to close a number of accounts, including the PSC and some of its affiliates, is an inevitable result of this process. Unfortunately, after quite extensive research, the charities involved did not meet our requirements or, in our view, allow us to fulfil our obligations.

“This does not mean that we cannot or will not facilitate humanitarian, educational, medical and human rights donations to the Gaza region. Many high profile organisations do excellent work in these fields in Gaza and elsewhere and we make regular donations to some of these organisations through our current account and credit cards.

“We would like to reassure customers that we apply consistent criteria when dealing with all customers and countries and this decision is about adhering to our obligations under the law and not about arbitrary decisions or any form of discrimination or inequality. We have done considerable research and this decision is based on our adherence to our legal obligations and on our assessment of risk. Adhering to our obligations is clearly part of our ethics and we continue to support charities in all sorts of areas who can meet our criteria including charities as stated above which operate in Gaza.”


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