Aid Payments and Bank Refusals: NGO Sanctions Guide

 A humanitarian programme can be legally permitted and still fail at the bank. That is one of the most frustrating parts of sanctions compliance for NGOs. A finance officer may have checked the relevant sanctions regime, confirmed that the activity falls within a humanitarian exception or general licence, obtained donor approval, and sent the payment instruction. The bank then delays the transfer, asks for more documents, or refuses to process it. To the NGO, the answer seems obvious: if the law allows the payment, why is the bank stopping it?

The short answer is that legal permission and banking acceptance are not the same decision. A humanitarian exception answers one legal question: whether a transaction that would otherwise be restricted is permitted under a particular sanctions framework. A bank has to answer several other questions before it lets the payment move. It may need to satisfy its own sanctions controls, anti-money laundering and counter-terrorist financing duties, correspondent-bank requirements, internal risk rules and regulatory expectations. The practical task for an NGO is therefore not simply to prove that an exception exists. It is to make the particular payment understandable, traceable and defensible to every institution that must carry it.

The exemption is a legal doorway, not a payment guarantee

United Nations Security Council Resolution 2664 of 2022 created a standing humanitarian exemption to asset freezes under specified UN sanctions regimes for certain humanitarian providers and activities necessary to deliver humanitarian assistance or support basic human needs. Resolution 2761 of 2024 continued that protection for the ISIL and Al-Qaida sanctions regime. The legal purpose is important. Sanctions should not prevent legitimate humanitarian work from reaching civilians.

Yet the UN position itself shows why an NGO should be careful about treating an exemption as a universal clearance. The Security Council’s current guidance on humanitarian exemptions for the Democratic People’s Republic of Korea expressly states that a UN exemption does not release an organisation from domestic regulations and licensing requirements in Member States involved in the transaction. The point is wider than that particular regime. A permission under one system does not automatically settle the position under every other system that may touch the payment.

The same distinction appears in national frameworks. The UK Office of Financial Sanctions Implementation explains that some activities can proceed under exceptions or general licences, while others require a specific licence. In the United States, OFAC’s FAQ 1106 states that financial institutions may process transfers relating to specified humanitarian activities authorised by general licences. The word “may” matters. The authorisation removes the OFAC prohibition where its conditions are met; it does not require every bank to process the transaction.

What the bank sees when the NGO sees “humanitarian”

Suppose an NGO in Nairobi is paying USD 60,000 to an implementing partner working in a conflict-affected country. The NGO describes the payment as humanitarian support for food distribution and emergency health services. Its legal team concludes that the payment falls within an applicable humanitarian exception. That conclusion is necessary, but the bank sees a longer chain.

The bank sees the NGO, the beneficiary account, the beneficiary bank, any intermediary or correspondent bank, the US dollar clearing route, the country risk, the names of directors and authorised signatories, the purpose stated in the payment message, and sometimes the programme’s downstream parties. It may also see a jurisdiction associated with armed groups, weak financial controls or repeated sanctions alerts. If any part of the payment chain raises a concern, the bank may pause even though the underlying programme is humanitarian.

The US Treasury’s De-Risking Strategy records that non-profit organisations have experienced payment delays and denials from their own banks and from intermediary banks elsewhere in the payment chain, even after humanitarian authorisations expanded. The European Banking Authority has documented similar delays, account freezes and terminations affecting NPOs operating in or near higher-risk jurisdictions. The practical gap is therefore well documented: the legal exception may answer the sanctions question while the payment still has to pass through institutions assessing their own risks.

A bank may therefore ask for information that feels repetitive to the NGO. It may want the grant agreement, project budget, partner agreement, invoices, beneficiary account details, programme location, purpose of payment, ownership information, names of key counterparties, licences or exception wording, and an explanation of how the NGO prevents diversion. The request is not always evidence that the bank believes the NGO has done something wrong. Sometimes the transaction simply arrived in a form that did not give the bank enough information to make its own decision.

The best response starts with the payment, not with a pile of policies

When a bank asks questions, an NGO can make the problem worse by sending a large folder of documents without explaining how they fit together. A twenty-page sanctions policy may show that the organisation takes compliance seriously, but it may not tell the reviewer why this USD 60,000 transfer is lawful.

A stronger response begins with a short transaction explanation. It should identify who is sending the money, who will receive it, the amount and currency, the programme purpose, the country and location of activity, the beneficiary bank, any known intermediary bank, and the legal basis relied upon for the payment. If the NGO relies on a humanitarian exception, general licence or specific licence, it should identify the exact instrument and explain in plain language why this transaction falls within it. If conditions apply, the response should show how those conditions are being met.

The supporting records can then follow that explanation. The grant agreement or donor award shows where the funds came from and what they are for. The implementing-partner agreement explains the relationship with the recipient. Registration documents show the legal identity of the NGO and its partner. Bank-account confirmation reduces uncertainty about where the money is going. Procurement records, programme budgets and invoices help show why the amount makes sense. Sanctions-screening records can show what names were checked, against which lists, on what date, and how possible matches were resolved. Internal approval records demonstrate that someone with proper authority reviewed the payment before it was released.

For NGOs operating from Kenya, this approach also fits the Central Bank of Kenya’s 2025 Guidance on Customer Due Diligence. The guidance expects financial institutions to consider factors such as the customer’s type and ownership, products and services used, cross-border exposure, high-risk jurisdictions, source of funds and the nature of the transaction. An NGO that understands those questions can prepare its evidence in the same order the bank is likely to assess it.

Ask what the bank actually needs to resolve

There is a useful difference between asking “Why are you blocking our humanitarian payment?” and asking “What specific legal, compliance or documentation issue remains unresolved?” The second question is more likely to produce an answer that can be acted upon.

The NGO should try to establish whether the payment is delayed because of a sanctions concern, an AML/CFT review, missing customer information, a correspondent-bank restriction, a problem with the beneficiary bank, a mismatch in payment instructions, or the bank’s own risk appetite. These are different problems. A copy of a humanitarian licence may solve the first and do nothing about the others.

If the bank identifies a sanctions concern, the NGO can provide the precise legal basis and supporting facts. If the issue is ownership or control, the NGO may need reliable corporate records showing who owns or controls the partner, vendor or bank involved. If the bank is concerned about the purpose of the payment, the NGO can connect the transfer to a budget line, invoice, distribution plan or programme agreement. If an intermediary bank is refusing the transfer, the sending bank may need to identify a different lawful route rather than repeatedly resending the same payment.

Where the bank gives only a vague answer, the NGO should request escalation to the sanctions, financial-crime or compliance team rather than relying only on a front-line relationship manager. The purpose is not to argue with the bank. It is to get the transaction in front of someone who can understand the legal instrument and the evidence supporting it.

The bank’s caution is not unlimited

Banks are entitled to manage legal and financial-crime risk, but international standards do not support treating every NGO working in a difficult country as an unacceptable customer. FATF has repeatedly explained that de-risking should not replace a genuine risk-based assessment. Its position is that financial institutions should identify, assess and manage risk rather than terminate entire classes of customer merely because the sector or geography is difficult.

The European Banking Authority has taken a similar position. Its guidance on de-risking warns that refusing or terminating relationships with whole categories of customers without considering individual risk can be unwarranted. Its NPO-specific guidance was designed precisely to help financial institutions understand how charities operate so that risks can be managed instead of services simply being denied.

That does not create an automatic legal right for an NGO to force a bank to process a transfer. It does, however, give the NGO a sound basis for asking whether the bank has assessed the actual transaction and the organisation’s controls, rather than reacting only to the words “conflict zone,” “humanitarian” or the name of a country.

An NGO should also distinguish between sanctions law and targeted financial sanctions obligations that apply locally. Kenya’s Financial Reporting Centre states that targeted financial sanctions apply not only to reporting institutions but to natural and legal persons generally. The Centre continues to publish 2026 notices concerning UN and domestic designations. A Kenyan NGO therefore cannot assume that its own sanctions responsibility ends because the bank performs screening. The NGO needs its own reasonable process, while the bank carries out a separate process for the financial services it provides.

Do not turn a bank delay into a compliance problem

The most dangerous response to a blocked payment is often the improvised workaround. Programme pressure is real. Salaries may be due, medicines may be waiting, and field teams may be asking why approved funds have not arrived. Still, an NGO should be cautious before changing the payment route simply to make the alert disappear.

Dividing one transfer into smaller amounts, changing the payment description, using an unrelated third party, moving funds through a personal account, or choosing an informal channel without proper risk assessment can create a worse problem than the original delay. A route that is lawful and necessary may sometimes involve money service businesses, cash or informal value transfer systems, especially where formal banking is unavailable. Current UK charity guidance recognises that such systems can be used in appropriate circumstances. But the decision must be justified, documented and subject to proportionate controls. The objective is to find a lawful route, not to hide the transaction from compliance systems.

The NGO should also avoid making the payment description vague. If a designated person, authority or controlled territory is relevant, deal with that fact directly. Incomplete payment information can destroy the credibility needed when asking a bank to apply an exception.

When external confirmation is worth seeking

Sometimes the issue cannot be resolved by sending more documents. The wording of an exception may be uncertain, the bank may interpret ownership differently, or several sanctions regimes may apply at once. In that situation, the NGO may need a formal legal opinion, regulatory clarification or a specific licence.

OFSI encourages charities and NGOs to check the current regulations and contact it where the position is uncertain. OFAC likewise tells financial institutions and humanitarian actors that they may contact its compliance channels with questions about authorised humanitarian transactions. The European Commission maintains an EU-level contact point to assist humanitarian operators, including NGOs and banks, with questions concerning humanitarian sanctions derogations, while national competent authorities remain responsible for decisions under EU sanctions law.

A regulatory enquiry can clarify the legal issue, but even a regulator’s confirmation may not resolve a separate commercial refusal. The NGO should therefore keep the bank involved and ask what evidence would permit reconsideration once the legal point is settled.

Keep the record even after the money moves

A successful payment should not end the compliance process. The NGO should retain the legal analysis, licence or exception relied upon, correspondence with the bank, screening results, donor approvals, supporting agreements, payment messages, invoices and any evidence of how funds were used. The record should make it possible for a future reviewer to understand why the transaction was considered lawful and what the organisation did when questions arose.

This is especially important after an initial refusal or delay. A clear file can show that the NGO did not bypass controls, answered the bank’s questions, and chose any alternative route for documented legal and operational reasons.

The broader lesson is simple. Humanitarian sanctions exceptions matter because they create legal space for aid to move. They do not remove the practical friction of international banking. An NGO is in the strongest position when it treats the exception as one part of a larger payment file rather than as a single document that should end every conversation.

When a bank refuses or delays a payment, the useful question is not whether the bank has “ignored” the humanitarian exception. The useful question is what unresolved risk the bank is still trying to understand. Once that question is identified, the NGO can respond with the right evidence, seek regulatory clarification where necessary, and preserve a record showing that humanitarian urgency was matched by legal discipline. That is how lawful permission becomes a payment that has a realistic chance of moving.

Source note. This article draws on United Nations Security Council Resolutions 2664 (2022) and 2761 (2024); current UN Security Council guidance on humanitarian exemptions; the UK Office of Financial Sanctions Implementation, Financial Sanctions Guidance for Charities and Non-Governmental Organisations, updated 28 January 2026, and the UK Financial Sanctions FAQs; the US Office of Foreign Assets Control humanitarian general-licence guidance and FAQ 1106; the US Department of the Treasury 2023 De-Risking Strategy; European Commission guidance on humanitarian assistance in environments subject to EU sanctions; European Banking Authority guidance and reporting on de-risking; Financial Action Task Force materials on the risk-based approach and non-profit organisations; the Central Bank of Kenya Guidance on Customer Due Diligence, 2025; and Kenya Financial Reporting Centre materials on targeted financial sanctions and 2026 designation notices. It is prepared for public legal education and does not replace advice on a particular payment or sanctions regime.

Suggested citation: 

Ronald Serwanga, “Aid Payments and Bank Refusals: NGO Sanctions Guide” East Africa Legal Insight (4 September 2026).