There are federal restrictions that provide stiff penalties for banks that allow for transfers of money from the U.S. to certain other countries, which could make them complicit in money laundering or funding terrorism. That’s obviously something that banks want to avoid, so they have developed a tendency to simply close the accounts of groups that seem to fit that profile.
Unfortunately, the banks don’t put a lot of effort into determining what, if any, grounds there are for closing those accounts, meaning that nonprofits which fund schools and other programs in countries like Syria sometimes find that their accounts are closed without warning or explanation.
One such story came from a recent Wall Street Journal article. The founder of Watan USA, which funded a school in Turkey for Syrian refugees, had its accounts closed by J.P. Morgan Chase. She was not given any reason for the decision. Since the organization believed it had no other way to send money overseas, Watan closed down the school. A spokeswoman for J.P. Morgan eventually told the Wall Street Journal that it had reversed its decision but neglected to inform the organization’s founder.
The overcautious nature of bank puts the onus on nonprofits to prove that they are not funding terrorists. It also means that these organizations need to find other ways to transfer money or risk giving up their mission. This is particularly unfortunate because nonprofits are an important tool in the fight against terrorism: by helping people in Syria survive, they keep those people from joining up with ISIS or other groups.
So what can be done to improve the situation? One thing that comes to mind is the creation of an objective third party organization. This group could investigate organizations that transfer money to countries where they could be supporting terrorists, and make sure that they aren’t.
Another, and perhaps easier, way this organization could help would be to work with nonprofit organizations to prove to banks that they’re sending money to Syria not to fund ISIS, but to help educate children or maintain hospitals.
That is perhaps easier said than done, but there is certainly room for such an organization, and it’s surprising that one doesn’t yet exist.