Muslim charities could close as bank halts transactions outside EU

29 Sep 2020 News

Charities could be forced out of business by a bank’s ban on sending money outside the European Union, the Muslim Charities Forum (MCF) has warned.

The Al Rayan Bank, which offers Sharia-compliant banking to many Muslim charities, has told those charities that international payments to partners outside the EU will be banned after November.

MCF says that it is raising the issue with the Charity Commission.

60 days’ notice

The letter, first reported by the 5Pillars news website, was sent to dozens of charities last week, and said that Al Rayan Bank has decided to “amend the international payments feature we offer on your account”.

It continued: “Whilst you will still be able to make international payments through Al Rayan Bank to beneficiaries within the European Union, you will no longer be able to make international payments to any beneficiary outside of the EU. This letter is our formal notification to you of this change.

“In line with our Business Banking Terms and Conditions, we are giving 60 days’ notice of the change to our international payment facility.”

Al Rayan Bank has declined to say why it is bringing in these rules.

Charitable aims at risk

Fadi Itani, chief executive of MCF, told Civil Society News that some charities “will go out of business” as a consequence of the new rules, because they will no longer be able to fund their development work in countries around the world.

Itani said that many Muslim charities had chosen to use Al Rayan “as a last resort”, after growing frustrated with the way they were treated by mainstream banks.

‘The bank was supposed to understand the client’

Al Rayan Bank offers specialist Sharia-complaint services, “which is a big incentive for a lot of Muslim charities and individuals to bank with them”, Itani said.

“For some of us it is an ethical issue, a theological issue. And the bank was supposed to understand the client.”

He added: “At the end of the day, the loss is on the people who desperately need the help.”

Transferring funds is like ‘chasing ghosts’

Itani said that the announcement is the latest challenge facing Muslim charities in the UK, which he says are being “scapegoated” because of new restrictions on all businesses and charities transferring donations between international accounts.

Tracking money sent to help people overseas is “like chasing ghosts”, he said. “You have got three to six months where you are stuck chasing where the money has gone. Your bank says it has transferred the money but the other bank says it has not received it.”

Itani said: “If you have a Muslim name, or it is a Muslim country the money is going to, or if it is clearly a Muslim charity, it is obvious you are going to have issues transferring the money.”

Al Rayan Bank did not answer questions about the reasons for changing their policies or how many charities might be affected. A spokesperson said: “We regularly review the accounts, products and services that we offer to our customers.

“Following a recent review, we have taken the decision to amend the international payments feature we offer on these accounts.

“Customers can still make international payments through Al Rayan Bank to beneficiaries within the European Union but are no longer able to make international payments to any beneficiary outside of the EU.”

Lloyds Bank, which provides clearance facilities for Al Rayan, said that it would not comment on how Al Rayan chooses to work with its customers.

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