Regulation aimed at cracking down on terrorism is not working and could unwittingly act as a "recruiting sergeant" for terrorist organisations, a charity finance director told a group of international charity regulators yesterday.
Haroun Atallah, finance and services director of Islamic Relief Worldwide, said that since the terrorist attacks of 11 September 2001, strict rules had prevented Islamic charities from functioning effectively.
Atallah was speaking at a meeting of charity regulators including the Charity Commission and regulators from the US, Canada, Australia and Ireland in parliament.
"The regulators have introduced these rules to fight terror but they are not having the desired effect," he said. "This will, if anything, increase the risks of radicalisation."
He singled out the work of the Financial Action Task Force, an inter-governmental body developing and promoting policies to combat money laundering and terrorist financing, as particularly problematic.
Atallah said that many banks would not do business with his charity at all, some had stopped money being transferred for weeks and months, and others had questioned transactions. He added that the bank he uses, Barclays, had queried the legitimacy of United Nations money meant for relief in Sudan.
"We said ‘you know us, and you ought to know the United Nations’, but they still wanted to know many things because they were so worried," said Atallah.
He said that the new international rules had shut down many international relief efforts, particularly in the Persian Gulf. One orphan adoption scheme sponsored by a Gulf charity, which had supported 6,000 people in a single town, had closed because of this, he said.
"Those people will survive," Atallah said. "But they will not be able to go to school, and they will be much poorer.
"I don’t think introducing these rules will help the war on terror. It will act, if anything, as a recruiting sergeant in that part of the world."
Kenneth Dibble, head of legal services at the Charity Commission, said that international regulation more generally was piecemeal and that there was relatively little progress in developing a comprehensive system.
"One of the real weaknesses is a lack of liaison between international charity regulators," he said. "This conference is a small way for the common law regulators to get together. But what’s required is a much more general framework for international cooperation and liaison."
Lois Lerner, director of exempt organisations at the Internal Revenue Service, which regulates charities in the US, told the meeting she believed any international agreement would be "a long time coming".