Banks concerned about anti-terror legislation need more government guidance, report says

The think tank the Overseas Development Institute says banks need more help if they are to provide services to charities that work in conflict zones

The report by the Overseas Development Institute
The report by the Overseas Development Institute

Banks need more guidance from the government on how to interpret counter-terror legislation so they can provide banking services to charities that work in conflict zones, according to a report from the think tank the Overseas Development Institute.

Published today by the ODI with support from the Muslim Charities Forum, UK Humanitarian Aid in the Age of Counterterrorism: perceptions and reality says that the impact of counter-terror legislation on overseas aid work has been discussed for a number of years, at least since the terror attacks in the US on 11 September 2001.

But it says the issue has become more relevant because of a major scaling-up of work by UK NGOs since 2011 in Syria, Somalia, Gaza, Israel and elsewhere, the denial of bank accounts to several Muslim charities, and scrutiny of the Charity Commission's views on terrorism and extremism.

The report says banks are worried that if they inadvertently play a part in financing terrorism, they will breach legislation. So banks such as HSBC, NatWest and UBS have been "de-risking" by closing or freezing bank accounts, or delaying, blocking or returning millions of pounds of donations, without giving any detailed explanation of why they are doing this, according to the report. In some cases, the salaries of aid workers outside the UK cannot be paid into their bank accounts, the report says.

"In order to break the impasse, it is critical for the government to provide clearer guidance and engage in these complex issues in a more meaningful way, as well as utilising its reportedly close ties with the US Department of the Treasury to engage the US authorities," the report says.

It says that although there is evidence that the Treasury in this country has written to banks asking them to consider taking on an account closed by another bank, its public position has been to emphasise that it cannot and should not influence the commercial decision of individual financial institutions.

The report says the Charity Commission should "consider producing additional guidance for British charities raising funding for aid operations, or actually undertaking aid operations, in Syria and Iraq".

And it says the regulator should do more to protect the sector when unfounded allegations of abuse are made against charities.

"The commission could consider speaking out in the media more actively in cases where it has found no evidence to substantiate such claims or in defence of charities that have been subject to abuse by others, and positively affirm the life-saving work they are carrying out," it says.

A call for government to look at the issue of anti-terror legislation and its impact on aid work was also included in last week's report by a cross-party committee of MPs and peers that scrutinised proposed legislation that would expand the regulator's powers.

John Low, chief executive of the Charities Aid Foundation, said: "CAF has been calling for the Charity Commission to work to create Treasury-approved guidance on countering terrorist financing and money laundering, to sit alongside the existing Joint Money Laundering Steering Group guidance but to be focused specifically on charities, in order to reduce the risks to banks of complying with their legal and regulatory responsibilities."

Sir Stephen Bubb, chief executive of the charity leaders group Acevo, said: "Too often, anti-extremism and anti-terrorism regulation is counterproductive when it touches charities, so I hope this report will help to reduce such problems in future."

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