History of De-Risking - How We Got Here
What Is De-Risking?
De-risking is when a bank or financial institution decides to stop doing business with a person, charity, or company it sees as “too risky.” It often happens without explanation, without warning, and without any proof of wrongdoing. Originally, this was meant to protect the financial system from money laundering and terrorist financing. But over time, de-risking has ended up hurting innocent people and organizations — especially Muslim charities and communities.
Where It All Began?
After the 9/11 attacks, governments around the world introduced much stricter financial regulations. The goal was to cut off funding to terrorist groups. Banks were suddenly under pressure to monitor all customers and transactions very closely — or face steep fines and reputational damage.
To avoid that risk, banks began shutting down accounts that might look problematic, even if nothing illegal had happened. It became easier — and safer — for banks to walk away than to ask more questions.
Who Is Being Affected?
Muslim charities were some of the first — and hardest — hit.
Many of these charities do vital work in crisis zones like Syria, Gaza, and Somalia. These regions are often flagged by banks’ internal systems as high-risk. Even if the charity is registered, audited, and transparent, its account may still get shut down — with no real explanation.
Here in Canada:
- A Toronto mosque received 30 days’ notice to move all its funds.
- Another mosque was dropped by its bank with a vague letter about “risk appetite.”
- Many charities have had donations blocked, aid transfers delayed, or payment processors suspended — all without evidence of wrongdoing.
Why Does This Happen?
Most banks today rely on complex screening software to monitor risk. These systems scan for certain terms or regions — like “Iran,” “Syria,” or even “Palestinian.” The idea is to spot potential red flags, but these tools often cast a very wide net.
For example, one person had a PayPal payment blocked because the memo said “Persian poetry class.” In many cases, being Muslim — or having a Muslim name — seems to make you more likely to be flagged.
The problem is that banks are more afraid of missing something than they are of cutting off an innocent customer. So when in doubt, they shut the door.
A Global Problem
Canada isn’t alone. In the United Kingdom and the United States, Muslim nonprofits and individuals have faced the same treatment:
- In the U.S., Muslim charities raising money for Gaza in 2023 suddenly had donations blocked or accounts closed.
- In the U.K., over 40% of Muslim charities surveyed reported having their accounts shut down — often with no reason given.
Governments in both countries are now reviewing the problem. But in Canada, there are still no formal safeguards, no right to a bank account, and no independent appeal process with real power.
Why This Matters
- De-risking doesn’t just inconvenience people — it can shut down entire aid projects, block lifesaving funds, and make entire communities feel unwelcome in Canada’s financial system.
- When charities can’t send money to orphans, refugees, or disaster zones, people suffer.
- When everyday Canadians lose their accounts for unclear reasons, public trust in banks — and in fairness — erodes.
- De-risking was meant to keep us safe. But without better rules and real accountability, it’s doing serious harm — especially to communities that are already vulnerable