Recently, we began a survey of the impact of the de-risking activities of banks on our members and their ability to carry out their charitable activity. Little did we know at the time that we would later see a flurry of banks deciding that certain – mainly Muslim – charities no longer fit their risk profiles, and withdrawing those charities' facilities.
Now I do have some sympathy for the banks. They are being placed under increasing pressure to take responsibility for anti-money laundering and counter-terrorism agendas. The Financial Action Task Force, an inter-governmental body that is the global authority on the matter, is often quoted highlighting charities' vulnerability to abuse. This can act as a disincentive for some of these banks to even try to establish their charity clients' positions. If it's not generating you much return, maybe it's just not worth the hassle to find out what steps have been taken to mitigate the risk. Frankly, that's a cop-out.
While some banks are clear that they should try to work with charities and find a solution that allows the latter to undertake legitimate work for their beneficiaries, the actions of others have been unfortunate. The FATF might flag up vulnerability to abuse, but it also says that governments should not disrupt or discourage legitimate activity. David Anderson QC, the official reviewer of counter-terrorism legislation, expressed concern that "anti-terrorism laws will be given a bad name if they result in avoidable restrictions on the ability to conduct vital humanitarian and peace-building operations in parts of the world from which terrorism emanates". So banks that ditch charity clients are rightly challenged.
Charities are finding it difficult in this environment. You won't be surprised to see Lebanon, Sudan, Ukraine and Syria featuring among the most problematic jurisdictions. Conflict, particularly in the modern context, is often accompanied by terrorism; that equals risk. The banking infrastructure suffers or even collapses in such locations, and the surrounding countries are drawn into the instability. What might surprise some is that charities report difficulty transferring funds in and out of places such as the US – not because they are "risky", but because they are hyper-vigilant.
With more conflict, increased threats of terrorism and further global instability, this risk-averse environment appears likely to be prolonged. That is the great shame of this situation. At the CFG's risk conference in 2012, Anderson cited the case of terror suspects held in Belmarsh prison, quoting Lord Hoffman's view that the risk to society lay not only in terrorism, but also in a disproportionate legal response to it.
We are continuing to talk to banks, government and charities to find ways to balance the risks faced by all and bring about the outcome we all want – charities working legitimately for their beneficiaries, supported by an intelligent and safe banking structure.
Caron Bradshaw is chief executive of the Charity Finance Group