Global banks are reportedly blocking or returning donations worth millions of pounds for British charities over terror financing concerns. According to reports, the lack of funds will affect humanitarian operations in Middle Eastern countries like Iraq and Syria.

International banks such as NatWest, UBS and HSBC have apparently frozen accounts of U.K.-registered charities and NGOs that provide aid to crisis zones like Gaza. The Overseas Development Institute (ODI) has warned that the reaction of the international banks is a direct result of the counter-terror laws in the U.K. The ODI published a report on Thursday that asked the Treasury to offer banks appropriate guidance so that they could respond properly to counter-terror legislation in the country.

The Joseph Rowntree Charitable Trust, a Quaker foundation and The Roddick Foundation are under fire after the organisations funded Cage, a campaign group that allegedly helped Mohammed Emwazi. The British man is suspected for featuring in Islamic State videos apparently beheading a number of Western hostages on camera. British politicians demand an explanation why the organisations gave several hundred thousand pounds to the campaign group.

Emwazi was earlier called as a “beautiful young man” when the campaign group helped him. British interior Minister Theresa May condemned Cage’s attempts “to excuse the barbarism away”. The campaign group was founded by a group of Muslims in London to support British suspects who had been held in Guantanamo Bay by the U.S. government. Cage activists accuse the foreign policies of the U.K. and the U.S.A. of harassing Muslim suspects when they refuse to give information.

According to the ODI report titled “UK humanitarian aid in the age of counter-terrorism: Perceptions and reality,” more than 25 percent of all statutory probes launched by Britain’s Charity Commission since April 2012 targeted Islamic organizations. The report reveals that a bank suspended funds of one charity and the charity had to forgo donations worth around £2 million. The report also suggests that banks regularly delay or block wages of aid workers serving overseas.

Britain’s Charity Commission has launched an investigation into Cage’s funders. The investigation will try to find out if the funders have ensured that their money is used only for humanitarian objectives.

Contact the writer: s.mukhopadhyay@IBTimes.com.au