Revealed: hundreds of charity accounts being closed by banks

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Banks taking the easy option and closing accounts in fear of money laundering laws 

28th July 2017 by Robert Armour 0 Comments

Hundreds of UK charities have had their bank accounts closed due to draconian money laundering laws.

The Charity Finance Group said over 300 charities have had their accounts closed with hundreds others having vital payments and funds delayed because of the legislation.

Oxfam and save the Children are just two of the charities that have been hit as banks take the safe option for fear of falling foul of money laundering legislation.

Banks face potential fines of billions of pounds if they don't follow strict guidance on laws designed to weed out terrorist funding.  

Charities have warned that the clamp-down is causing government-backed aid efforts to fail, humanitarian workers to be put at risk and deperate people to suffer. 

The most charity accounts were closed by HSBC and Co-Operative Bank in the last two years, according to a Reuters survey of more than 30 case studies. 

The UK government said it is setting up a working group comprising charity executives, bankers and officials to meet in the coming months to "drive to allow legitimate charities to operate unhindered.

Some banks are responding to the problem, but other institutions are taking the easy option and steering clear of allowing aid charities to set up new accounts or simply closing existing accounts with no warning.

A spokesperson for Save the Children said: "Save the Children believes a more aligned approach between governments, regulators, and NGOs will help to reduce financial crime, whilst ensuring critical and life-saving humanitarian work continues.”

Banks, along with other big institutions, said they were taking action to better understand the needs and internal governance of charity clients.

It is reported that one small human rights charity funded by the Foreign Office closed down this year after being unable to open a bank account. 

The humanitarian sector is struggling with a policy vacuum - Mike Parkinson

Money laundering laws initially focused on mainly smaller Muslim-related charities after September 11, 2001 attacks in America but accelerated in the last few years to involve thousands of charities.

Monowara Gani, a director of the Muslim Charities Forum, said: "Delayed and declined payments have become a regular recurrence in the sector with charities experiencing disruption to their objectives on a daily or weekly basis.”

Mike Parkinson, policy adviser for Oxfam UK, said he had encountered delays in opening bank accounts overseas.

"The humanitarian sector is struggling with a policy vacuum, leaving commercial organisations such as banks to set the risk rules for delivery of publicly-funded aid,” he said.

Tim Boyes-Watson, executive director of Mango which helps charities manage their finances said: "We feel like banks used to be competing for charity business, but now they are pushing us away.”

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