Like their American counterparts, British NGOs working in or near areas where non-state armed groups are active increasingly face restrictions on their access to the financial system, according to a 2017 report from Chatham House, Humanitarian Action and Non-state Armed Groups: The Impact of Banking Restrictions on UK NGOs. This may include delayed transfers, the freezing of funds, and closure of bank accounts.
The report, like many before it, tie the perception of NGOs as high-risk to the Financial Action Task Force’s Recommendation 8. In addition, the global financial crisis has made banks subject to tougher regulatory and enforcement regimes, decreasing their appetite for risk. It notes, “Humanitarian NGOs generally accept the need for regulation and due diligence, but the current weight of compliance demands by their banking partners is often seen as disproportionate, resulting in a need to spend donor money on additional staff and due diligence tools, increased administration costs, aid delivery and financial transfer delays, and in some circumstances the closure of programmes to which funding cannot be delivered.”
The report recommends that banks and NGOs cultivate relationships that allow for reciprocal education about compliance expectations, operating risks and mitigation steps. It also encourages the UK government to take ownership of this problem.