Banks have been urged to improve their staff training on Islamophobia and racism in order to prevent debanking and de-risking of Muslim charities.
In a report published today, the Muslim Charities Forum made several recommendations to banks, the government, the Charity Commission and the wider charity sector on how to improve banking issues
Many Muslim charities reported banking difficulties and some a “complete withdrawal” of services in response to a survey conducted for the report.
Some reported a strain on human resources due to the added administrative burden of addressing financial issues and negative impacts on their relationships with implementation partners due to problems such as transferring funds or account closures.
The report suggests that Muslim-led charities face “disproportionate scrutiny” from banks when attempting to use their services, especially if the charities are operating in “high-risk regions or conflict zones”.
“While these charities share some challenges with the broader third sector, they also face the added burden of suspicion due to counter-terrorism frameworks, creating a unique and intensified set of financial difficulties,” it reads.
“Evidence suggests that structural Islamophobia plays a role, with Muslim-led charities often unfairly targeted by banks for perceived risks without concrete evidence of wrongdoing.”
The new data comes after a recent report found that an estimated nine in 10 charities generally had reported difficulties with banking in the last two years.
Recommendations to regulators and government
The report recommends that banks improve their transparency and communication with charities and provide better staff training on Islamophobia and racism as part of EDI programmes.
It also calls on banks to improve their due diligence processes, and offer “proportional” responses to any suspicions rather than outright de-banking or de-risking charities.
The report recommends that the Charity Commission should continue advocating for fair treatment of charities, especially if they are Muslim-led, and to improve information accessibility for banks.
It urges the UK government to introduce a legal right to basic banking services for charities, as has been introduced in some European countries, and encourages leniency from regulatory bodies.
Regulator finds new findings ‘discouraging’
Responding to the report, a Charity Commission spokesperson said: “These new findings are discouraging, but sadly not surprising, echoing the widespread problems in the way banks engage with their charity customers.
“We have heard from many charities about the significant impact this can have on their charities – as well as the stress it puts on trustees who have volunteered their time to do good.
“Charities provide vital support to people across the country and deserve better, so we continue to press this matter and continue to engage with the Treasury, FCA, high-street banks, and the charity sector.”
The regulator’s critical stance reflects troubling findings from its annual sector survey, published last year, which found that 42% of trustees surveyed said that their charity had experienced poor service from their banks in the last 12 months.
FCA: ‘We have been actively engaging with sector’
A spokesperson for the Financial Conduct Authority (FCA) said: “We know that some groups can face challenges accessing bank accounts.
“We recently set out clear expectations on account access and have been actively engaging with the sector to ensure that these are being met.
“Smaller charities will benefit from the protections of the Consumer Duty. We continue to monitor data on account access.”
Related articles
