Bogan ka daalaco, daawo oo ka dhagayso warar sugan iyo aragtiyo hufan oo dhexdhexaad ah!
Monday, June 24, 2013
Somalis fear Barclays closure of remittance accounts will cut lifeline
'Millions of Somalis depend on remittances from the diaspora, but banks are wary about lack of controls over the flow of funds''.Mark Tran
- Somalis have expressed their fear that Barclays's decision to close its accounts with most remittance companies will cut a financial lifeline to millions of people in Somalia. Barclays says it doesn't want to do business with firms that lack adequate controls to monitor where their money is coming from and going to. Academics and Somalis in Somalia and the diaspora have written to Mark Simmonds, a minister in the Foreign and Commonwealth Office (FCO), asking the UK government to work with British banks to find a durable solution. Remittances that support an estimated 40% of the population of Somalia, about 3.8m people, are at stake, they argue.
The Somali authorities last year said around $2bn – one-third of the country's GDP – is channelled to Somalia through "hawala" or small money transfer businesses. The letter, signed by more than 100 people, was sent to Simmonds after Barclays notified 75% of its money service businesses (MSBs) to find an alternative bank by 10 July.
The Somali Money Services Association (Somsa), a UK trade body for the money transfer industry, has confirmed that 12 of its 17 members have already lost their accounts in the UK, including at Barclays and HSBC. The letter to the FCO says Barclays – the last UK bank providing services to MSBs – is to withdraw services from up to 250 remittance companies.
"Somali MSBs provide fast, reliable and trusted transmission of funds from the diaspora (estimated at around 1.5 million people) to their relatives at home," said the letter. "In addition, many other diaspora groups from Horn of Africa – in Ethiopia, Kenya and South Sudan – send remittances to their family members using the same companies."
Barclays's decision follows the imposition of a $1.9bn fine on HSBC last year by the US authorities for poor money laundering controls. HSBC said last autumn it would get out of the money-service sector entirely. Meanwhile, Royal Bank of Scotland has been reviewing customers more frequently to ensure they meet compliance standards.
Barclays is playing down the impact of its decision, pointing out that 90% of remittances go through larger players such as Western Union.
"It is recognised that some money service businesses don't have the proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing," said Barclays.
"We want to be confident that our customers can filter out those transactions, because abuse of their services can have significant negative consequences for society and for us as their bank. We remain very happy to serve the many companies who do have strong anti-financial crime controls, including those who send money to Somalia."
The letter acknowledge such concerns, but argues that the best way to address them is to promote responsible, transparent and accountable systems in line with existing regulations, rather than by closing down the channels through which funds are sent. There is also the danger, they say, that people will instead send funds through illegal, unsafe and untraceable channels.
Laura Hammond, senior lecturer in development studies at Soas, University of London, said the timing was unfortunate at a time when Somalia was showing signs of recovery and given the UK's backing for the new Somali government. "The government in Somalia is the strongest in 20 years," said Hammond, one of the letter's signatories. "Why should the banks respond like this now?"
In May, the UK hosted a London conference in Somalia, designed to shore up the legitimacy of Hassan Sheikh Mohamoud, who was elected president in September.
Abdirashid Duale, chief executive of Dahabshiil, which has a big presence in Somalia, said it faced an extremely difficult situation. "Barclays has given us two weeks' notice," he said. "It will be hard for us as when we go to another bank; they will ask us why Barclays wanted to close our account. The UK and US governments say they want to help Somalia, but this action won't help."
Duale said he had received a letter from Barclays that said the decision to end the relationship was not a reflection of money laundering standards at Dahabshiil or a suggestion that it had unwittingly been a conduit for financial crime, but simply because of the commercial risk to Barclays.
The letter to Simmonds urges the UK government to help Somali MSBs find alternative banks, and requests that Barclays extends its termination deadline for at least six months so that the flow of remittance through licensed companies is not disrupted until a more durable solution can be found.