Over 300 UK charities have their bank accounts closed as authorities clampdown on money laundering

ABOUT 300 UK charities have had their bank accounts closed over the last two years after being caught up in a global crackdown on illegal cash flows by British financial authorities combating the menace of money laundering.


Britain’s Charity Finance Group, that helps to organise charity financing, has revealed that thousands more charities have had operations disrupted by delayed payments causing financial losses and risks to employees. It added that major charities Oxfam and Save the Children say they were amongst those hit by the new crackdown.


Over the coming months, the British government will be setting up a panel of charity executives, bankers and officials to meet and drive new policy thinking to allow legitimate charities to operate unhindered. This decision to assemble the working group comes ahead of a review by the inter-governmental Financial Action Task Force (FATF) March 2018.


FATF was established as part of  efforts to tackle money-laundering and the financing of militant groups. At the FATF meeting, Britain could face criticism over its failure to tackle the problem of charities losing access to the banking system, charity sector analysts said.


So far, FATF has recorded over 100 cases worldwide of alleged abuse of charities for terrorist finance. In one example in the city of Birmingham in 2011, three people were convicted of impersonating Muslim Aid charity workers to fund a bomb attack.


Legitimate charities say they have been cut off from the financial system because banks have been alarmed by billion-dollar fines meted out for breaching sanctions, anti-terror financing and anti-money laundering rules. Charity officials say the clampdown by banks is causing government-backed aid efforts to fail, humanitarian workers to be put at risk and potential recipients to suffer.


HSBC and Co-Operative Bank closed the most charity bank accounts in the last two years, according to a survey of more than 30 case studies. Both banks, along with other big institutions, said they were taking action to better understand the needs and internal governance of charity clients.


Over the last two years, HSBC hired some 35 staff to work in a team dedicated to the charity sector. These staff are specialists whose job is to ensure charities comply with global financial rules.


Monowara Gani, a director at UK-based umbrella group 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."


Muslim charities in particular have been hit hard by the clampdown. Many British charities affected were reluctant to speak on the record about their experiences because they were worried that other banks might cut them off, or that donations could dry up if their banking problems were publicised.