In early 2016, the British government pledged 2.3 billion pounds ($3.3 billion) to ease the suffering of Syrian refugees and improve the lives of those still in the country. According to Save the Children, which is sponsored by 41 churches in Britain and Ireland, much of that money won't help those in need if charities, major conduits for delivering government aid, can't transfer cash.
Some U.S. banks have refused to transfer cash for Oxfam the global anti-poverty organization founded 74 years ago to relieve famine in Greece. Such obstacles are taking a toll in places where aid is needed most. This winter, Christian Aid made arrangements to deliver blankets to displaced people in Iraq, but by the time the money came through it was almost spring. Scores of charities are seeing donations from supporters held up by banks and online payments-processing companies.
The U.S. has prosecuted several charities over the past decade. In 2009, five leaders of the Holy Land Foundation for Relief and Development, once the largest Muslim charity in the U.S., were imprisoned for funneling millions of dollars to the Palestinian group Hamas.
What started as a response to Sept. 11 has morphed into a dilemma with implications for governments, banks and hundreds of millions of people struggling to survive in nations with little financial infrastructure. Law enforcement authorities have made tracking the global flow of money a key tool in their fight against al-Qaeda, Islamic State, and Hezbollah as well as Syria and Iran.
The Obama administration and other G-7 leaders are increasingly employing sanctions to punish nations such as Syria, Russian and Iran. That's led to an explosion of new standards and regulations determining what banks can and can't do when serving legitimate charities. Unsure which of countless OFAC rules might apply to a simple banking transaction, increasingly banks are closing charity accounts to avoid any possibility of an OFAC fine. For banks asked to help transfer fund to set up a hot meals field kitchen for Syrian children, for example, the benefit to the banks are not worth the risk of crossing OFAC.
OFAC urges bank to play it safe and avoid risks. The de-risking advised by OFAC continues to intensify among banks globally after the U.S. Justice Department filed a criminal charge in 2012 against Standard Chartered for moving millions of dollars through the financial system on behalf of sanctioned Iranian entities. According to Bloomberg, the bank has paid almost $1 billion to settle actions brought by the federal government and New York State. Also in 2012 HSBC bank was fined 1.9 billion after being charged with violating sanctions laws.
An idea to somehow lessen some of the harsher OFAC regulations seen as targeting charities was offered recently by some industry lawyers that represent major lending institutions. Thd plan would be to create a sort of safe harbor where banks could avoid punishment if any money inadvertently ended up in the wrong hands, as long as prescribed due diligence measures were followed. OFAC quickly rejected this idea. Jennifer Fowler, assistant secretary for terrorist financing, insisting that the US government is not going roll back any restrictions, insisting that "We have these rules in place to protect our financial system."
One solution could perhaps be for the UN and its specialized agencies to get involved and take advantage of an OFAC regulation exemption. But this idea is complicated by OFAC's refusal to permit humanitarian funds transfers to Syria except those made, pursuant to section 5420513, and done by United Nations organizations or its contractors. Even then, the general license prohibits any blocked entity from touching the funds, setting up additional compliance fears for the banks involved and their unwillingness to risk yet another mega-fine from OFAC.
The Obama administration acknowledges that closing the accounts of clean charitable organizations is a problem. The US Treasury Department has been informally passing the word to U.S. and foreign banks that they won't be indicted for innocent mistakes.
But few if any financial institutions are convinced given OFAC's record.
Consequently, much needed food aid for Syria's most vulnerable will likely continue to be blocked.
To provide a meal to a
Syrian refugee child in Lebanon: Please visit:
http://mealsforsyrianrefugeechildrenlebanon.com
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