Sir Stephen Bubb has said he will write to the Co-operative Bank after it emerged that the bank will close several charities' accounts after reviewing its "risk appetite".
The Sheffield Palestine Women’s Scholarship Fund, which supports 43 Palestinian women in education, said it is among 20 charities to have received a letter from the bank. The Sheffield Palestine Solidarity Campaign and the Yorkshire Palestine Cultural Exchange are also among those affected.
The charity's fund secretary, Sara Gowen, said the bank’s action could put “43 women’s university degrees in jeopardy”.
“The fund receives over £600 per month in standing orders and we have been given only two months’ notice to close the account with no help offered by the bank,” she told The Sheffield Star newspaper today.
“Although it will be possible to switch to another bank, the process of transferring the large number of regular monthly contributions will be an administrative burden and could lead to a loss of income.”
Acevo chief executive Sir Stephen Bubb said it was “a ludicrous way to treat charities”.
“How are they supposed to operate if banks refuse to manage their accounts? If an organisation is forced to work only with cash, this only exposes that organisation to a greater risk of fraud and abuse,” he said.
“What worries me most is the general backlash against the Muslim community which drives alienation rather than encouraging social cohesion. I am shocked that the Co-op has done this. They appear to have put their ‘risk appetite’ above their founding principles of co-operation and community cohesion.”
Bubb said he would write to the Co-operative Bank’s chair to express his “dismay” and to “seek further explanation”.
'Worrying trend'
The Muslim Charities Forum also expressed concern this morning, calling the closure of further charity bank accounts a “worrying trend”.
The Muslim Charities Forum's operations manager, Omayma El-Ella, said: “The decision of a financial institution to close an account of a charitable organisation due to unexplained risk appetite reasons has life changing consequences for the beneficiaries of these organisations as well as the sector as a whole.
“We would echo our previous sentiments on this matter that this overt clampdown on the entire charity sector cannot continue without casualties amongst the many organisations that work within it,” she told Civil Society News.
In March, a Charity Finance Group report warned charities working in high-risk areas to take more steps to prevent “de-risking” by banks.
The Briefing: Impact of banks’ de-risking on not-for-profit organisations report said charities were losing services due to “disproportionate actions" by increasingly risk-averse banks.
In the summer of 2014, HSBC closed a number of charity bank accounts after carrying out a similar de-risking exercise.
Co-operative Bank: we are committed to charities
A spokesman for the Co-operative Bank said the decision was made “in line with due diligence checks required by all banks to ensure that funds do not inadvertently fund illegal or other proscribed activities”.
“It was not a reflection on the work carried out by many organisations throughout the world, or a statement about the causes they support,” he said.
“We remain a committed supporter of charities which can meet the industry level requirements. However, in common with all banks, we have to perform due diligence on our customers, their accounts and the payments they make to ensure the bank complies with anti-money laundering obligations and to manage the bank’s risk.”
The spokesman said customers operating in, or sending money to, “very high risk or high risk locations” required “advanced due diligence checks”. But he said in cases where checks could not be made to the bank’s satisfaction, the decision to “close a number of accounts, including the PSC and some of its affiliates, is an inevitable result of this process”.
“Unfortunately, after quite extensive research, the charities involved did not meet our requirements or, in our view, allow us to fulfil our obligations,” he said.
