Alternative Systems for Managing Financial Transactions in Humanitarian Crises

Abstract

Restrictions on the banking sector are having a growing adverse impact on the flow of funds to humanitarian agencies and assisting communities affected by humanitarian crises has also become much more difficult and costly.

Delays, refusals of transactions by financial institutions and outright bank account closures worsen humanitarian crises by delaying aid distribution response times. The inability to channel funds and critical financial services into countries in humanitarian crisis prevents life-saving humanitarian assistance from reaching those who need it most. The absence of legal transfer channels means the financing vacuum is often filled by illicit means, which can facilitate the spread of crime and corruption (ODI, 2021). Humanitarian organisations have turned to a variety of transaction channels due to disruptions in legitimate transfer mechanisms. Without these alternative money transfer channels humanitarian organisations have been unable to run some parts of their programming.

These alternatives means of obtaining funds requires humanitarian organisations to enter into less regulated financial agreements that are not subject to international standards.