Buckets passed around mosques, fundraisers shared on WhatsApp groups and televised appeals will raise hundreds of millions of pounds for charity over the coming weeks of Ramadan.

Much of the £2bn raised by British Muslims each year comes when giving surges during the holy month, but the full potential of that support – especially at a time of US, British and European government aid cuts – is being limited by challenges charities say they face in sending money abroad.

According to a 2025 report on “debanking” by the UK-based coalition, Muslim Charities Forum (MCF), more than two-thirds of Muslim charities face problems opening bank accounts and 42% have been had their banking services completely withdrawn, compared with 12% of charities generally.

Most of the charities also reported that aid payments to humanitarian projects had been delayed because of banking issues.

The issues stem from “derisking” – policies that banks employ to avoid the risk of falling short of regulations designed to prevent money laundering or terrorism financing. As legislation has tightened, banks have become so averse to risk that some will, directly or tacitly, avoid dealing with countries where there is conflict or disaster.

The MCF chief executive, Fadi Itani, said the humanitarian crisis in Sudan was an example of where charities struggled to get banks to send on the money to the countries in need.

“These obstacles disrupt essential charitable operations and undermine the delivery of life-saving humanitarian assistance,” he said.

“As part of wider derisking strategies, banks are becoming increasingly reluctant to serve charities – particularly those operating in perceived high-risk jurisdictions such as Sudan – leaving many organisations effectively excluded from the financial system,” said Itani.

According to MCF, Muslim charities are disproportionately falling foul of these banking policies. Organisations have had to wait up to three years to open a bank account; many have had accounts suddenly closed without explanation or appeal or have faced rigorous questioning about aid payments, particularly going to Palestine, Syria or Pakistan.

Muslims donate four times more than the average adult in Britain, according to a report by the thinktank Equi published in December. Much of this during the month of Ramadan, when they believe rewards for giving are multiplied.

Many use the month to make their annual zakat payment – a contribution of 2.5% of surplus wealth that must be used to support the poor.

While zakat is increasingly being used to help people in poverty in the UK, much of the money is also directed to the destitute in crisis zones.

One charity surveyed by MCF said simply using “Syrian refugees” as a reference led to transactions being frozen to an aid project supporting Syrian children receiving cancer treatment in Turkey.

In other cases, organisations were refused services after background checks used unverified articles as evidence of terrorism links, especially after the 9/11 attacks in 2001.

“Almost all the Muslim-led charities I have spoken to would not even try to obtain the special licence required to work in sanctioned states such as Afghanistan, despite often being areas most in need,” said Dr Samantha May, a senior lecturer at the University of Aberdeen.

“They would expect the licence not to be granted or that just applying for the licence could raise ‘red flags’ and create banking issues associated with derisking.”

May said these policies were not by design targeted at Muslim-led charities, but in reality they were often working in fragile states.

These problems can have an effect when donors become concerned about delays on projects to which they have contributed. Mosques are frequently wary, tending to stick with causes they know.

The administrator of one east London mosque, who did not want to be named, said they were very careful about the charities they supported, selecting four to support during Ramadan or at Friday prayers so they were able to directly monitor how the money was used.

They added that partners they had worked with had encountered problems because of the extra scrutiny they felt Muslim campaigns faced.

Razib Hasan, finance director at Muslim Aid, one of the largest Islamic charities in the UK, said one solution would be to adopt legislation already enforced in France and Belgium, which makes having a bank account a legal right.

Itani also believes this would mean charities having to spend less time and resources on administrative battles and more on humanitarian work.

“Muslim-led charities must be able to operate without undue hindrance. Only then can their capacity to support vulnerable communities – in the UK and globally – reach its full potential,” said Itani.

A spokesperson for the Financial Conduct Authority said it was aware of the problems faced. “We know that some charities face real difficulties opening and keeping bank accounts,” they said. “We’ve been clear in our expectations on banks for how they should handle charity accounts.”

The FCA said it expected banks to enforce policies to react proportionately to the risks posed by financial crimes and not apply a generic approach to all charities, adding that it had issued guidelines to that effect in 2024.