Anti-terror laws 'cost charities'
Aid charities are losing millions of pounds in funding for life-saving work as a result of counter-terror laws, according to a report.
Banks facing tough penalties for failing to stop terrorists channelling money through their accounts are becoming so risk averse that innocent groups are being caught up in the dragnet, research by think-tank Demos found.
It said the "outlook is bleak" for non-governmental organisations (NGOs) trying to organise finances to carry out humanitarian work in some of the world's most troubled areas, including Syria and Gaza.
David Anderson QC, the independent reviewer of terrorism legislation, said: "There are acute concerns within the charitable sector regarding banks withdrawing or curtailing services to NGOs. I welcome any report that seeks to address these concerns."
Banks must identify, track and tackle illicit finance such as money laundering and terrorist financing.
The obligations are leading to unintended consequences that can "impact on the innocent as much as on the guilty", the Uncharitable Behaviour report found.
In the wake of claims that charities have been used to channel funds to Islamic State and other terrorist organisations, NGOs are finding it more difficult to receive, send and store their money with some charities having bank accounts closed without evidence of wrongdoing, it said.
Tom Keatinge, author of the report, said: "The UK is rightly proud of its history of charitable giving by both individuals, corporations and government.
"However, the impact of creeping counter-terrorism fears on the banking sector means that delivering the benefit of this generosity is becoming increasingly challenging, and costing charities millions in lost donations and due diligence expense.
"The stark reality is that in the name of security we are creating greater insecurity."
Around £740 million of the Department for International Development's assistance funds are channelled through NGOs.
British aid organisations operating internationally "are clearly disrupted from conducting their activities", the report found.
The counter-terror laws are aimed at stopping the system being exploited, but the report pointed to findings by the Charity Commission that state the "actual instances of abuse have proven very rare".
Lisa Nandy, shadow civil society minister, said: "This report provides worrying evidence that fear about terrorism is stopping legitimate charities from doing lifesaving work.
"The Government has taken an inconsistent approach when it comes to charity regulation, it asks the charity commission to come down hard on organisations it suspects of having ties to extremists, but seems more relaxed about other charitable abuse like tax avoidance.
"This sets the wrong tone for the banks who lend to charities and for the public who donate to them.
"As we debate the draft protection of charities bill we need to get some balance back into the debate. It is vital that robust scrutiny of the charity sector is even-handed across the board, and doesn't prevent good charities from their critical work."