LONDON

In the face of a persistent debanking crisis, Muslim charities in the UK are intensifying calls for fair banking practices and greater transparency in financial transactions.

Speaking to Anadolu, Abdulsami Arjumand, policy and advocacy lead at the Muslim Charities Forum, highlighted the widespread nature of debanking in the country, saying it has particularly plagued Muslim charities for nearly two decades.

Among the detrimental effects of the practice are that it diverts valuable resources away from humanitarian efforts towards operational challenges, he said.

“Debanking prevents charities from fulfilling their missions effectively,” Arjumand said, stressing that closure of accounts forces organizations to allocate resources to other areas rather than directly trying to help beneficiaries.

The repercussions extend beyond financial inconvenience, impacting donor trust and relationships with local partners, he underlined, adding that delays in payments and project deliveries result in critical aid not reaching those in need on time.

Prominent examples in recent years include the Finsbury Park Mosque in North London, which was plunged into crisis when HSBC abruptly closed its account without explanation and blacklisted the mosque from seeking banking services elsewhere.

Despite no evidence of wrongdoing or suspicious activity, HSBC’s risk assessment algorithms falsely accused the mosque of having connections to “terrorism,” leaving its leaders baffled and the community outraged.

In a strikingly similar case, HSBC faced legal repercussions after wrongly accusing a Muslim activist of terrorist connections without evidence, leading to damages being awarded.

Additionally, Islamic Relief, a leading Muslim charity dedicated to humanitarian aid, encountered debanking by HSBC, obstructing its vital work assisting earthquake victims and refugees worldwide.

The Co-operative Bank also came under scrutiny for unceremoniously shutting down accounts belonging to Friends of Al-Aqsa, the Palestinian Solidarity Campaign, and 25 other pro-Palestinian groups in 2016.

In 2022, Cordoba Foundation, known for its efforts in facilitating peaceful discourse and conflict resolution, was gearing up to host a crucial forum in London aimed at addressing the escalating political unrest in Tunisia.

However, their plans were abruptly derailed when their bank accounts fell victim to debanking.

- ‘Muslim charities deserve right to appeal’

A report released by the Financial Conduct Authority in September 2023 revealed that UK banks shuttered more than 343,000 accounts in 2022 without disclosing the reasons.

Arjumand underscored the need for political leaders to advocate for improved banking standards and urged banks to engage more equitably with charities.

He emphasized the importance of charities having mechanisms to prevent external risks, while also calling for greater accountability and stricter requirements for labeling Muslim charities as high risk.

“A lot of charities, when they are debanked, often don’t have the right to appeal or explain or give some form of a response. This is one of the biggest things that we want,” he said.

“We want to see a change in this particular element with regards to whether it be regulations, whether it be advice from government to actually instruct banks to have that kind of better relationship with Muslim charities who have been labeled as high risk without any form of justification, without any form of accountability, without any way of responding to these labels.”

After Brexit, the UK implemented amendments to its banking regulations, bolstering measures against debanking.

The amended law grants banks authority to close accounts under governmental directives aimed at combating issues such as corruption, money laundering, political constraints, and terrorism.

Last year, in an open letter to Prime Minister Rishi Sunak, Zara Mohammed, secretary general of the Muslim Council of Britain, emphasized the significant impact of debanking on various Muslim-led charities and prominent individuals within the community.

Mohammed urged Sunak to initiate a comprehensive review of banking practices, citing concerns regarding the indiscriminate inclusion of UK Muslims in the World-Check database without substantiated evidence of criminal activity.

She highlighted the need for a more transparent and fair approach to how individuals are flagged within such databases.​​​​​​​