Humanitarian Aid Threatened by De-Risking

A new blog published by our colleagues at United Muslim Relief outlines the impact that bank de-risking is having on humanitarian aid delivery. In "Humanitarian Aid Threatened by Bank De-Risking," the authors explain that many banks avoid liability under federal counter-terrorism financing regulations by dropping any client doing work in areas deemed "high risk." This practice "hinders and endangers the work of disaster relief organizations and other NPOs," the article states. 

Many organizations have struggled to maintain their work in conflict-ridden areas "because financial institutions have closed their accounts with little to no warning and, oftentimes, cancel transactions that are time-sensitive," the article explains. While banks undergo a risk-benefit calculation to determine whether to retain an account, the human lives at risk are not considered. 

Read the full blog here

WSJ Spotlights De-Risking of Charities

A March 30 article in the Wall Street Journal has brought renewed attention to the problem of bank de-risking of charities. "Cautious Banks Hinder Charity Financing," by Rob Barry and Rachel Louise Ensign, is drawn from information provided by the Charity & Security Network and interviews with several C&SN members. 

The crackdown on terrorism financing "has been a challenge for humanitarian agencies trying to deliver aid in conflict areas even though they are often exempt from sanctions," the article states. The problem is particularly frustrating because banks do not give an explanation for closing an account, and there is no opportunity to appeal the decision. Some charities have had multiple account closures over the past several years. 

A companion article published the same day, "Losing Count: U.S. Terror Rules Drive Money Underground," focuses on the movement of funds to less-regulated channels as a result of de-risking. 

A third article, "The Unintended Consequence of Closing High-Risk Accounts," was published April 2. The article mentions our February sign-on letter and our upcoming study on the scope of the de-risking problem. 

Expose Finds World-Check Riddled with Errors

A February 4 expose in Vice News finds that private list-checking service World-Check erroneously lists individuals and orgnizations, predominantly Muslim, as terrorists. The article confirms what charities have heard for years, that groups with no ties to terrorism are listed in the database, used by 300 government agencies and 49 of the 50 largest banks, fueling the de-risking phenomenon. Because banks have no legal obligation to tell customers why their accounts are being closed, and because World-Check binds its users to secrecy, de-banked entities have had no way of determining the source of their woes. Those that have been able to trace the problem find that there's no clear path to successfully challenge an erroneous listing, according to the article. 

Read our blog here

58 Humanitarian, Grantmaking Organizations Ask U.S. Treasury, State for Help with Access to Banking Services

Fifty-eight nonprofit organizations (NPOs) from around the world, including umbrella groups with more than 300 member organizations, have sent a letter asking the U.S. Departments of Treasury and State to convene a multi-stakeholder dialogue as part of a broader effort to ensure that registered, law-abiding NPOs are able to access the global financial system. The signatories to this letter represent more than $8.3 billion annually in humanitarian aid and services to the world’s most needy. 

Read the letter here

More than 50 Organizations Ask U.S. Treasury, State for Help with Access to Banking Services

Date: 
February 24, 2016

On February 25, 2016, 58 nonprofit organizations (NPOs), including umbrella groups with more than 300 member organizations, sent a letter to the U.S. Departments of Treasury and State asking them to convene a multi-stakeholder dialogue as part of a broader effort to ensure that registered, law-abiding NPOs are able to access the global financial system.

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