US Designation Causes British Bank Discontinuing Services to UK Approved Charity

Lloyds TSB, one of London's most prominent banks, was pressured into discontinuing financial services to Interpal, a UK based nonprofit, due to ongoing allegations in the UK and the United State's designation of the charity as a terrorist related organization.  Despite two investigations (1996 and 2003) finding no evidence of wrongdoing by the UK Charity Commissions, which monitors and regulates UK based charities, Interpal remains a target of sanctions for terror-related financing.

Initially, Lloyds TSB did not provide an explanation for their decision. But the latest Interpal newsletter reports that the bank confirmed the United States' designations and sanctions in 2003 were the driving force. The statement from the bank said, "The US has classified Interpal as a Specially Designated Global Terrorists which means that Lloyds TSB cannot provide any services to Interpal."

Even as the latest investigation unfolds, Interpal continues to raise money for Palestinians in need throughout the Middle East. They held an event in London on Dec. 1, 2008 honoring Karen AbuZayd, the Commissioner General of the United Nations Relief and Works Agency for Palestine Refugees in the Near East (UNRWA). Members of the English Parliament were in attendance to hear AbuZayd say that she was "happy to be working with Interpal" and praise their critical donations to UNRWA.

Trustees of the charity and representatives from the British Treasury met in late December 2008 to discuss the refusal of Lloyds TSB to reopen the account. Lord Myners, the financial services secretary for the Treasury, and the charity's Trustees were unable to change Interpal's status. A spokesman for the charity said, "All levels of the government know about the situation but still nothing is being done."

However, a breakthrough did occur that may improve the charity's ability to remain active. The Islamic Bank of Britain found an alternative method for transferring funds overseas for Interpal that does not require the services of Lloyds. Early reports indicate that the new system is operational and aid is slowly trickling back into the region. Interpal's website reports, " We would like to reassure our donors that our aid is being delivered to our areas of operation thanks to our local partners."

The backlash to the account closure has been severe. Lloyds has faced a series of petitions and protests in response to its actions. On Jan. 17, over sixty nonviolent protesters gathered in front of a Lloyd's branch office in Bristol, England. They held signs, repeated slogans and laid boxes of "blood-soaked" dolls on the steps on the bank. The dolls represented the people who died while being denied aid caused by the bank's actions.

Jeremy Clarke of Bristol's Stop the War Coalition applauded the protestors' efforts. Clarke said, "Interpal is amongst only a handful of charities able and daring to work in such a politically sensitive area." He like many others hope the bank rescinds its account closure and allows the charity to carry out its mission. "By denying them banking facilities, Lloyds TSB have played a part in preventing humanitarian aid reaching people who are in the grip of a catastrophe," he added.