​Banks freezing charity assets for fear of falling foul of anti-terror legislation

Charity accounts are being frozen because banks are worried about terror links.

A lack of guidance from the UK government, specifically the Treasury, on how banks should respond to counter-terrorism legislation has resulted in charity accounts being put on hold, claims a new report.

Driven by a fear of financing terrorism, international banks including HSBC, UBS and NatWest are effectively “de-risking” by closing and freezing bank accounts held by some charities.

They are also delaying, blocking or returning millions of pounds of donations with “no detailed explanation” says the report by UK think tank the Overseas Development Institute (ODI).

“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,” said Tom Keatinge, independent researcher for the ODI’s Humanitarian Policy Group (HPG).

Ensuring that appropriate professional standards are in place can be a challenge

For example, one charity which requested to remain anonymous, was forced to forgo donations worth £2 million in the last 12 months as a result of funds being blocked by a bank.

Salaries paid to the bank accounts of aid workers who live outside of the UK have also been delayed or blocked by banks.

The report, UK humanitarian aid in the age of counter-terrorism: perceptions and reality, 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.

The report also investigates the 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.

Researchers found 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 - the recent poor image of Islam in the media and, in some cases insufficiently robust institutional practices, which is a problem across the charity sector.

Director of HPG Dr Sara Pantuliano added: “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."