LONDON (Thomson Reuters Foundation) - Banks' fear of breaching British counter-terrorism laws is hindering the work of UK charities in Syria, resulting in delayed transfers, accounts being closed or frozen and other problems, according to a development thinktank.
In some cases, international banks' actions have directly affected aid operations, delaying payments of salaries and suppliers and forcing the abandonment of projects, the Overseas Development Institute (ODI) said on Thursday.
"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," Tom Keatinge, independent researcher for the ODI's Humanitarian Policy Group, said in a statement.
Britain first passed anti-terrorism legislation in 1974, linked to conflict in Northern Ireland. It has since passed more laws in an effort to prevent terror attacks and avoid funds reaching militants.
In 2012 Islamic Relief Worldwide, a large British Muslim aid group with operations in more than 30 countries, discovered that donations that account holders at Swiss bank UBS had tried to send the charity had been blocked, the report said.
Another charity, which requested anonymity, estimated that it had missed out on 2 million pounds in donations in 12 months because funds were blocked by a bank, the report added.
Researchers who spoke to 40 people, working for charities, banks, the government and the Charity Commission regulatory body, also looked at the risk of British charities being abused for "extremist or terrorist purposes".
It said this concern was often cited in relation to British Muslim charities, which are able to tap local connections and language skills to gain access to dangerous conflict areas in Syria, Iraq and Gaza often where militants are fighting.
The report said aid convoys heading to Syria from Britain may be used by potential fighters posing as aid workers, and that armed groups may divert aid for their own purposes. But the risk of British charities being exploited had been overstated, it added.
The Muslim Charities Forum (MCF), an umbrella organisation of Muslim charities, said it was concerned about the suspicion the groups were facing.
"This of course is highly prevalent in the banking sector, where we have seen in some cases, banking facilities withdrawn, bank transfers either delayed or restricted," MCF's policy and research officer Omayma El Ella said.
"It should be noted that Muslim charities can bring an added value to the aid sector, often working in areas other charities are unable to access due to an understanding of faith and local culture," she added.
The ODI called on the UK government to provide better guidance on how banks, credit card companies, online donation websites and internet payment service firms can comply with counter-terrorism laws without hurting legitimate aid activities.
There are 11,659 charities registered with the Charity Commission in England and Wales that are engaged in some form of overseas aid or famine relief.
(Writing by Katie Nguyen; Editing by Tim Pearce)