Welcome to banking when you’re Muslim, an experience that involves addressing systemic, deep-seated institutional discrimination.
LaunchGood, a GoFundMe-like crowdfunding platform for the global Muslim community, has raised more than $300 million for critical causes around the world most recently raising $10 million for earthquake relief in Turkey and Syria. But LaunchGood was almost killed three times by “banking while Muslim”.
It first started in 2019, when payment processor LaunchGood took off suddenly and without warning from day one. LaunchGood just met the processor in person three weeks ago and was assured that the Muslim crowdsourcing platform is in good shape. There was no indication that there was a problem, nor was it clear what the problem was, or the ability to challenge it or correct their position. It was sudden and final. When LaunchGood asked their account manager why she didn’t warn them, she made it clear that she herself had no warning and that it was their banking partner’s decision.
LaunchGood has moved to another payment platform. That summer, the platform was acquired by a major American bank. Of course, problems appeared almost immediately.
When the payment platform switched to a major bank’s compliance software, 50 percent of LaunchGood donors in the UK were turned away. As they pushed further, they found they had “too many Muslim and Arabic names” throwing off their software. Sad but predictable, six months later they received an email from their account manager on the platform that their parent bank had decided to spin off LaunchGood. Similar to the previous payment platform, there was no justification, warning or possibility to challenge the decision.
So LaunchGood switched to its third processor during the year. Executives at the crowdsourcing platform developed a personal relationship with the payments company’s CEO, even working with his daughter to help raise money for a school in Indonesia. Their Chief Compliance Officer was impressed with how thorough and careful the LaunchGood team was: Their incredibly low chargeback rate (fraud rate) made them an excellent customer.
However, a few months later, a board member of the payment platform came across LaunchGood’s website and, based on nothing but emotion (and prejudice), demanded that it be removed as a customer. Again, with no warning, no opportunity to challenge the decision, or take steps to assuage concerns, LaunchGood kicked out this payment processor.
LaunchGood was forced to invest an absurd amount of time and effort into building a new payment system with multiple partners and multiple points of redundancy to simply survive. She could use this time and resources to improve her product, expand her partnerships, and realize her mission. The company estimates that these problems with the payment platforms cost more than $100 million in donations and more than $5 million in revenue for LaunchGood/
These are far from isolated incidents. According to a new report — the first of its kind — released last month by the Institute for Social Policy and Understanding, in partnership with Islamic Relief USA and LG, Muslims are by far the most likely religious group in the United States to face challenges. banking.
Challenges may include, but are not limited to, account bans, account suspensions or closures, or payment investigations. At 27 percent, Muslims are twice as likely to report problems at financial institutions as the general public (12 percent) and Jews (14 percent), and are on par with blacks (23 percent). Muslims (29 percent) are more than twice as likely as the general public (14 percent) to have had a personal bank account investigated for sending payments to others. The study is based on a 2022 nationally representative survey of American religious and non-religious groups.
But where Muslims are really singled out are business and non-profit accounts that impact not just one person’s financial situation, but potentially an entire community. Of those reporting problems, Muslims (64 per cent) are more than twice as likely to experience difficulties with business accounts as the general public (26 per cent).
Common problems include: 22 percent of those who had a business bank account investigated for sending payments to others; 21 percent who were not allowed to send or receive money from merchant accounts on payment platforms; and 19 percent who could not send payments to others from a company account or had a closed company credit card.
Nonprofits, like those Muslims give during Ramadan, fare no better. Of those individuals reporting problems, Muslims (62 percent) are nearly four times more likely than the general public (17 percent) to experience problems with their nonprofit accounts. These include closing a credit card for a nonprofit account (21 percent) and banning a nonprofit from opening a bank account (20 percent).
So what is the rationale behind these difficulties on the part of financial institutions?
Some were understandable reasons, such as a low credit score or an overdrawn account – fears that the banking industry would have sense