Banks including HSBC and NatWest are closing and freezing bank accounts held by UK charities working in conflict zones due to fears they could be accused of financing terrorism, a think tank has claimed.
A lack of guidance from the UK government, specifically the Treasury, on how banks should respond to counter-terrorism legislation has resulted in overly risk averse actions being taken towards such charities, according to the Overseas Development Institute (ODI).
One charity, which requested to remain anonymous in the ODI report, was forced to forgo donations worth £2 million in the last 12 months as a result of funds being blocked by a bank.
Salaries paid to the bank accounts of aid workers who live outside of the UK have also been delayed or blocked by banks, it claimed.
Tom Keatinge, an independent researcher for the ODI, said: "Tens of thousands of people in conflict areas such as Syria, Somalia and Gaza are depending on the life-saving assistance provided by UK charities, but these are precisely the locations that present the highest risks to banks under the counter-terrorism legislation."
The ODI recommends that the Treasury provides improved guidance on how banks, credit card companies, online donation websites and internet payment service companies can comply with counter-terrorism laws without adversely affecting legitimate aid activities.
It also recommends that all UK charities ensure they have adequate risk management and due diligence processes, including financial and administrative standards in line with UK charity law and the guidance provided by the Charity Commission, to ensure funds are adequately safeguarded from financing terrorism.
Economic Secretary to the Treasury Andrea Leadsom, said: "The government is committed to ensuring that UK consumers, charities and businesses are able to access the banking services they need. Financial inclusion is essential for economic and social development at home and abroad.
"That is why we have been leading international efforts, including through the G20, to prioritise work to address the global trend of banks withdrawing accounts and other services from a range of sectors.
"Last Friday, we secured even greater progress with the UK successfully encouraging the Financial Action Task Force (FATF) to undertake further international work to understand and address this important issue. We will continue to play an active role in driving this work forward over the coming months, and at the next meeting of the FATF."