On 25 July, the international aid charity the Ummah Welfare Trust, which is active in Gaza, Syria and Iraq, published a letter it had received from HSBC. "HSBC Bank has recently conducted a general review of its portfolio of customers and has concluded that provision of banking services to Ummah Welfare Trust now falls outside of our risk appetite," the letter said.
A few days later, the Finsbury Park Mosque announced that it had received a similar letter from the bank, as did the founder of the Cordoba Foundation, a non-charitable think tank on Islamic issues, and members of his family.
The Muslim Association of Britain opened an account with HSBC earlier this year, but it was closed by the bank three days later; Helping Households Under Great Stress had its account frozen in July; and Cage, a human rights organisation with an Islamic focus, had its accounts with Barclays and the Co-operative Bank closed earlier this year.
The termination of these banking relationships is, some believe, an example of Islamophobia. Khalid Oumar, one of the trustees of Finsbury Park Mosque, said his charity's account closure was "unacceptable" and "clearly discriminatory". About 300 people participated in a protest outside the mosque's local branch of HSBC in north London on 15 August.
Tom Keatinge, associate fellow of the Royal United Services Institute, who is conducting research on the impact of counter-terrorism regulation on NGOs' access to finance, says HSBC's actions are characteristic of decisions by banks' risk committees, which often reconsider their client lists as wars or terrorism develop.
He says that banks might have higher risk appetites when working with organisations in affected countries that bring them substantial profits; charities with smaller accounts are not considered worth the risk. He says this is "highly amoral", but adds: "I'm afraid that the Muslim charities sector is losing the public relations battle when it comes to the risk-reward analysis."
'Charities need bank accounts'
The charities that have had their accounts closed could end up banking with foreign institutions, operating in cash or even ceasing to function altogether. "Charities need bank accounts to operate safely and effectively," says Sarah Atkinson, head of information and communications at the Charity Commission. "We would have serious concerns if a charity were not able to operate because of a lack of banking services."
Justine Walker, director, financial crime, at the British Bankers' Association, says she met the Charity Commission in August to discuss these problems, and the National Council for Voluntary Organisations is arranging meetings with the commission and several banks to raise the concerns of Muslim charities.
Keatinge expects the problem will grow. The reasons, he says, include the Treasury's national risk assessment of counter-terror finance – the outcome of which will cause banks to reconsider their client lists once more – and the impact on risk committees of cases such as Jordan's Arab Bank in the US, which is being sued for allegedly facilitating charitable and other payments to Hamas.
"Certain things are going on that will mean that banks turn the screw again in the next six to nine months," he says.