Debanking Crisis: Muslim Charities Unfairly Targeted by Banks

Muslim charities in the UK are facing significant challenges with banking services, with over two-thirds struggling to open accounts and 42% experiencing a total withdrawal of services, according to a new report from the Muslim Charities Forum (MCF).  

Despite the high-profile Nigel Farage "debanking" controversy in June 2023, Muslim-led organisations are increasingly being excluded from the financial system.  

Although Muslim charities represent a small segment of the UK's nonprofit sector, Muslims are the most generous donors among faith groups, the report highlights. The banking restrictions have had severe humanitarian repercussions.  

One charity running a hospital in a conflict zone was unable to pay its medical staff for two months. Another organisation, which provides treatment for Syrian refugee children with cancer in Turkey, faced a year-long payment delay, disrupting vital care.  

In another instance, a charity received an eviction notice for a shelter due to delayed transactions. These accounts were shared anonymously by organisations interviewed for the study.

Beyond immediate operational setbacks, banking restrictions have also strained relationships with partners, affecting 44% of impacted charities, according to the MCF report. Delays in fund transfers and sudden account closures have eroded trust between charities and their partner organisations.  

In some cases, the consequences have been severe. One charity operating in the Middle East described a particularly dangerous situation: "Due to these delays, local vendors came to our field offices demanding payment at gunpoint, endangering the lives of our staff."

Lacking a bank account not only disrupts operations but also puts charities in violation of legal requirements—yet they have no legal recourse when their accounts are closed.  

Charities are often forced to defend themselves without being informed of the reasons behind account closures or blocked transactions. The MCF report identified five key factors contributing to the debanking of Muslim charities.

These include alleged Islamophobia and the "highly common" occurrence of charity workers' names appearing on terrorist lists. Risk-averse banking practices and operating in high-risk areas like Syria were also cited as major factors.

"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 report's lead author Abdulsami Arjumand wrote.

The report recommends bank staff undergo anti-racism training to "avoid stereotyping or perpetuating racial and Islamophobic biases". Banking lobby group UK Finance has responded to the study's findings.

"We want the process of opening and managing a bank account to be as clear and straightforward as possible and welcome engagement from charity organisations," said David Raw, the body's managing director of commercial finance.

Raw confirmed UK Finance has contacted the Muslim Charities Forum to discuss the issues they are facing.

The organisation has recently launched a new guide for voluntary organisations to help with account management.

The organisation has recently launched a new guide for voluntary organisations to help with account management.

UK Finance stated that decisions to restrict or close accounts are only taken after careful consideration and based solely on regulatory compliance needs.