I was interviewed by ACAMS MoneyLaundering.com on charities and counter finance terrorism following a webinar I presented for Thomson Reuters on the topic, and based on a recent paper I wrote (see post below and to download clink on this link) -http://accelus.thomsonreuters.com/sites/default/files/GRC01499.pdf
Irene Madongo, September 17
Recent political turmoil and ever-rising regulatory expectations for banks have made it significantly tougher for British charities to send financial aid abroad, according to a survey.
Those findings, confirmed by non-profit groups interviewed by ACAMS moneylaundering.com, will be released later this year by London-based Charity Finance Group (CFG). The majority of charities responding to the query characterized the shift as a consequence of banks’ growing averseness to serving risky clients.
“The consequences of greater de-risking by banks in terms of the additional administrative burden it places on charities and the limiting of their ability to operate efficiently can be significant,” said Caron Bradshaw, the group’s chief executive officer.
The findings by CFG follow complaints by Muslim charities about HSBC Holdings Plc.’s decision to drop their accounts due to risk concerns.
While charities have long found it difficult to open bank accounts to send money to third-parties in troubled parts of the world, their standing with financial institutions has worsened to the point that even the largest non-profits have encountered difficulties moving money.
That happened last year for Oxfam International, which coordinates the efforts of 17 affiliated organizations to fight poverty and deliver aid to disaster victims. Although well-regarded, the group ran into hurdles that delayed aid for Syrians by five months, according to Bob Humphreys, the organization’s finance director.
“The last time I had a conversation with my peer finance directors, I think we were still one of the very, very small number of agencies that had succeeded in getting money into Syria,” said Humphreys. “So I suspect that it is still proving an issue.”
The delays largely revolve around internal controls intended to ensure that the funds don’t end up in the hands of blacklisted entities. Those efforts are then vetted by banks, said Humphreys, adding that smaller charities frustrated with the process may ultimately ask financial institutions in less risk-averse institutions in other countries to handle the transfers.
In such a scenario, small charities may turn to partners “willing to move the funds in some way across the border, and [the charities] simply won’t ask what the mechanism is that they are using because, as soon as [they] know, [they] will have to do something about it,” he said.
‘Chase and chase’
But charities aren’t finding trouble sending money to conflict zones only, according to Bradshaw. Some groups have encountered problems in “unexpected” places with tough regulations, such as the United States, she said.
Earlier this year, London-based Christian charity Tearfund ran into bank resistance related to funds destined for South Asia, according to the group’s finance director, Alison Hopkinson.
“We have had a lot of problems with sending money to India, which surprises me,” she said, adding that: “it just got held up and the banks were not willing to move and we just had to chase and chase until we got it through, and we were never given the explanation as to why.”
Elsewhere, financial institutions have implemented blanket bans on sending cash, according to Hopkinson.
“We have to find other banks, other ways of getting the money across,” she said. “You never know when the bank is going to change its attitude toward a certain country, so you have to keep your options open.”
Media reports—some misleading—have also contributed to the sector’s troubles.
Last October, the Telegraph amended a news story and headline claiming that “millions” of pounds from the Disasters Emergency Committee had ended up in the hands of Syrian terror groups. The newspaper changed the story after the Charity Commission, which regulates the non-profits in England and Wales, said it had “no evidence” that “huge amounts” had gone to terror groups.
“The story had to be retracted but reputational damage was certainly done, and Syria is a focus for the Charity Commission,” said Paul Cochrane, a Beirut-based freelance reporter who recently spoke on the topic during a Thomson Reuters webinar.
The commission has launched a separate investigation into whether Human Aid U.K. has implemented poor recordkeeping and fundraising controls as well as little oversight of its trustees. According to records filed with the agency, Human Aid’s income grew by 500 percent last year, with much of the money going to Syrian aid.
“Those working in counter-extremism networks were not surprised to hear that Human Aid is under investigation, given the kind of networks it is involved with here in the U.K.,” said Sam Westrop, director London-based anti-extremism group Stand for Peace. “Human Aid has hosted radical Islamist speakers such as Adnan Rashid, Abdul Hadi Arwani, Yusha Evans and Yvonne Ridley,” he said.
Human Aid denied wrongdoing in a statement posted to its Web site and characterized governmental scrutiny as “an active policy to restrict the work of charities in Syria through continuous monitoring and investigation.” In a statement to ACAMS moneylaundering.com, the group said it will cooperate with the commission.