Blocked, delayed, shut down: How UK banks are failing Muslim charities

Muslim-led charities in the UK are facing widespread financial discrimination, with banks restricting their access to essential services disproportionately, according to a new report released on Wednesday by the Muslim Charities’ Forum (MCF).

The study found that 42 per cent of surveyed charities had their bank accounts closed without explanation, while 68 per cent experienced prolonged delays in opening accounts, with some waiting years.

These disruptions, including frozen international transfers and delayed payments, have hampered aid efforts severely in conflict zones like Syria, Palestine and Pakistan, delaying life-saving support such as medical supplies and refugee assistance.

The report attributes these challenges to overzealous counterterrorism financing measures, structural Islamophobia and a lack of transparency within the banking system.

“For over two decades, Muslim-led charities have struggled with de-risking, yet, despite the critical nature of this issue, it has not received the attention it deserves,” said Abdulsami Arjumand, MCF’s policy and advocacy lead.

Speaking to Anadolu, Arjumand highlighted what he called glaring inconsistencies in the UK’s approach to financial restrictions, pointing to the swift government response to the closure of former UKIP leader Nigel Farage’s account and the resulting minor banking reforms. He noted that the same urgency has not been extended to challenges faced by Muslim charities. Farage, of course, is now a Member of Parliament.

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“When Nigel Farage’s account was closed, government ministers were quick to raise concerns and push for reform. Meanwhile, Muslim charities have been battling de-risking for decades, yet it has not received the attention it deserves,” he said. “We urgently need stronger protections for charities and their resources. Without them, the most vulnerable will continue to pay the price of current banking policies.”

The report, titled “The Landscape of Debanking within Muslim Charities & Its Impact on Charitable Activities”, offers a detailed analysis of the barriers posed by arbitrary account closures, prolonged delays in account openings, and frozen transactions. Based on 19 survey responses and follow-up interviews, the report paints a stark picture of how “de-risking” policies target Muslim charities disproportionately.

These policies, the report asserts, stem from the broad application of counterterrorism financing and anti-money laundering regulations, which banks interpret in ways that restrict non-profit organisations.

Among the findings, 42 per cent of charities reported being threatened with account closures, fuelling widespread fear and uncertainty in the sector. The same percentage faced prolonged delays or outright freezing of international transactions.

One charity described how a 12-month delay in releasing funds jeopardised medical treatment for Syrian orphans battling cancer in Turkiye. Others, working in conflict zones including Syria and Palestine, reported heightened scrutiny and being classified as high-risk clients.

The report criticised financial institutions for relying on unverified media sources during “background checks,” profiling Muslim-led organisations disproportionately.

The banking restrictions, the report warns, are undermining critical humanitarian work directly in crisis zones. Delays in transactions have disrupted deliveries of food, medicine and shelter, while some charities have struggled to pay local healthcare staff, leading to gaps in essential medical services. In one instance, a charity supporting a rural hospital in a conflict zone was unable to pay its staff, forcing some medical workers to abandon their posts.

When barred from traditional banking channels, charities have resorted to carrying cash across borders or relying on informal financial systems, raising both security and regulatory risks — a practice that goes against financial institutions’ stated goals of preventing money laundering and financial crime.

Account closures without explanation have also created misplaced suspicion among donors, discouraging contributions and jeopardising projects as supporters fear that their contributions are at risk or question why projects face delays, leading to donor dropouts.

In the report’s foreword, Teresa Dumasy, who heads Australia-based group Conciliation Resources, acknowledged the importance of counterterrorism measures but warned against their indiscriminate application. “Financial access issues for Muslim charities… threaten to deprive some of the world’s most vulnerable people of aid,” she wrote.

Fadi Itani OBE, the CEO of Muslim Charities Forum, underscored the rigorous compliance checks and financial audits already conducted on Muslim-led charities. Yet, they remain subject to opaque, overly broad risk assessments, he argued.

“The Muslim charitable sector saves lives by delivering essential aid in challenging regions,” added Itani. “Debanking only hampers these efforts, fuelling instability and leaving vulnerable communities stranded.”

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The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Monitor.