Innocent Brits Frozen Out of Banking: The Post-9/11 Reforms' Unfair Legacy
In the damp hills of mid Wales, Hamish Wilson runs a heartwarming project at his farm, Degmo, celebrating Somali culture and honouring his father's wartime bonds. Yet, this initiative has inadvertently exposed a deep-seated injustice in the global financial system, where innocent people are being systematically excluded from basic banking services.
A Farm Project Reveals Systemic Flaws
Wilson's farm hosts Somali guests each summer, funded through a charity where participants chip in. However, he faces relentless scrutiny from his bank, with compliance officers repeatedly questioning every transaction, wasting hours of his time. "They phone me up and say, 'I need to ask you some questions about your account,'" Wilson explains, "and it is always another half-hour of my time."
The problems are even worse for his guests. A community leader from Birmingham described how moving £4,000 for the trip triggered intense bank investigations, making her feel like a money launderer. Her accounts were frozen for mundane activities like saving with friends or transferring money to family, with transactions blocked for using Somali references or exceeding £250. "The days when I have to go to the bank are the worst days," she says, highlighting the stress and stigma.
The Root Cause: Post-9/11 Reforms
This unfair treatment traces back to reforms rushed through after the 9/11 attacks. In 2001, the USA Patriot Act and UN measures expanded anti-money-laundering rules to combat terrorist financing. The Financial Action Task Force (FATF) issued recommendations, but critics argued they were flawed—terrorist financing involves small amounts of clean money, unlike large-scale money laundering.
Banks, fearing huge fines, adopted a risk-averse approach. FATF guidance hinted that fundraising might occur through charities "targeted at a particular community," leading banks to disproportionately scrutinise Muslim-focused organisations. Since then, Muslim charities and individuals worldwide have faced debanking, with accounts closed without explanation or appeal.
Widespread Impact and Failed Goals
In the UK, HSBC debanked groups like Finsbury Park mosque in 2014, while other banks cut off pro-Palestinian organisations. A 2022 US poll showed over a quarter of Muslims reported banking problems, often due to international transactions or "key words" triggering flags. The system has not only failed to curb terrorism—with groups like the Taliban resurgent—but has alienated marginalised communities.
Mohamed Ibrahim of the London Somali Youth Forum questions whether racism plays a role, though banks deny targeting Muslims. Instead, compliance systems rely on databases flagging "adverse news" linked to names or addresses, ensnaring innocent people. FATF's 2007 "risk-based approach" aimed to correct this, but banks prioritise avoiding fines over fair treatment.
A Political Failure with No Recourse
Banks, acting as de facto police, find it costly to maintain high-risk accounts. One European bank noted needing 40-50 employees to check a single transaction to Afghanistan. In the UK, account closures soared from 45,091 in 2016 to 343,350 in 2022. Victims have little recourse, unless, like Nigel Farage, they have media and political clout to reverse decisions.
This capricious system harms the poorest while letting the wealthy buy their way out. As Pamela Dearden of JPMorgan Chase notes, "We are kind of in a ping-pong match between financial inclusion and avoiding regulatory scrutiny, and we are the ball." Ultimately, it's a political failure, outsourcing policing to profit-driven banks with no accountability.
The legacy of post-9/11 reforms is a financial landscape where innocence is no protection, and only the connected can fight back—a stark reminder of how well-intentioned policies can perpetuate injustice.
