HSBC decision to withdraw services from Islamic Relief blocked Nepal aid relief

04 Jan 2016 News

Islamic Relief is the latest Muslim charity to confirm that HSBC withdrew banking services from it over concerns about links to terrorism.

Islamic Relief is the latest Muslim charity to confirm that HSBC withdrew banking services from it over concerns about links to terrorism.

The banking giant severed its client relationship with the charity in 2014, which meant that a payment to buy tents for earthquake victims in Nepal was blocked.

Following a report in the Sunday Times at the weekend about HSBC ending its ties with Islamic Relief over concerns that “cash for aid could end up with terrorist groups abroad”, the charity put out a statement saying that it has been able to continue the majority of its work due to the services of other financial partners.

However, it said that it is concerned by trends of “de-risking” by banks, where they are ending their engagement with international humanitarian agencies working in “high-risk jurisdictions”.

In 2014 HSBC closed the account of another charity working in Gaza, the Ummah Welfare Trust, as well as other Muslim organisations including the Finsbury Park Mosque.

In a statement, Islamic Relief’s UK director Imran Madden said: “Islamic Relief shares concerns expressed across the charity sector and beyond that banks ‘de-risking’ their engagement with international humanitarian aid agencies in this way will end up either denying aid to those who need it in certain parts of the world or forcing NGOs to transfer funds in ways that are less transparent than bank transfers. The first of these would be plain immoral, the second unpalatable and counter-productive.”

HSBC’s withdrawal of services from Islamic Relief took place in December 2014, following discussions during the year between the charity and the bank. HSBC told the charity that it felt it would be difficult to continue its banking relationship with it due to the nature of its work, said Madden.

He said: “At this point they invited us to end the relationship – which they did themselves at the end of the year when we declined. We were told that HSBC needed to ‘manage the challenge’ posed by customers operating in ‘high-risk jurisdictions’, as a result of an obligation imposed on the bank in a Deferred Prosecution Agreement with the US authorities in 2012 to avoid prosecution for money laundering and dealing with pariah states.”

Madden said that Islamic Relief “were and remain extremely surprised at HSBC’s stance”. He said: “We know that similar action has been taken by HSBC with other clients, so this appears to be generic risk-averse behaviour rather than something specific to Islamic Relief.

“Islamic Relief’s mission is to alleviate poverty and suffering where most needed, and that means we are committed to operating in complex conflicts where proscribed organisations are sometimes active. It appears that this is deemed a risk too far by HSBC but we continue to be trusted to deliver aid in such places by governments and by other financial institutions, and lives depend on our being able to do so.”

He went on to say that the “breadth and vagueness of counter-terrorism regulation has created a fog of uncertainty for both banks and charities that governments need to do more to help us navigate our way through”.

Withdrawal blocked aid in Nepal

Islamic Relief has secured other providers to replace the services that HSBC was offering, and said that it is still able to transfer funds and deliver aid to all of the places where it was working before HSBC’s actions.

However it said that, like other charities working in difficult environments, Islamic Relief’s work has been “hampered in some important ways by HSBC’s actions”.

It said that UK payments by Islamic Relief to others who bank with HSBC have been held up for weeks, or in some cases months. This included a payment to procure tents urgently for earthquake victims in Nepal. It said that a minority of donors who bank with HSBC have had donations to Islamic Relief blocked.

In a statement, HSBC said: “Whenever we review a customer relationship, we gather information from a wide range of sources and take a number of factors into consideration. For a business customer these factors would typically include the type of activities the business is involved in, the jurisdictions in which it operates and the products and services it uses.

“Although we can’t always be specific about why we decide to close an account, a decision of this kind is never taken lightly and is never due to the customer’s race or religion.”

At the Labour Party Conference last October, Jehangir Malik, former UK director of Islamic Relief, told delegates of the problems Muslim charities have experienced when there accounts are closed down