Bank stymies money transfers to Somalia

Multinational banking giant Barclays has closed money transfer agents' accounts due to banking regulations, it says, amid fears the move could worsen an already grave humanitarian situation in the poverty-stricken African nation

Bank stymies money transfers to Somalia

World Bulletin/News Desk

One of the UK’s largest banks closed the accounts of money transfer organizations (MTOs) on Monday, in a move that will cut off access to millions of Somalis who rely on remittances sent from abroad.

Barclays plc says it is closing the accounts because of banking regulations as well as ‘heightened money laundering risks.”

 The Somali Money Services Association (SOMSA) has rejected this allegation, stating that none of its members have ever been ‘in breach of any of the regulations’.

The bank said in a statement that it had faced “difficult decisions over money transfers to those in need. Barclays has an obligation to operate within the rules set by governments. Failure to do so would result in Barclays being prosecuted.”

Somali Prime Minister Abdi Farah Shirdon has written to Barclays Chief Executive Officer Antony Jenkins, pleading with him to reconsider the bank’s decision to close the accounts.

"[The decision] will directly affect millions of entirely innocent Somalis for whom remittances from overseas are absolutely vital," Shirdon said. He went on to warn the bank, saying, "This is how they feed their families, clothe their children and treat their illnesses. This is what keeps them alive. If the accounts closure goes ahead, Barclays will be condemning millions of Somalis to terrible poverty."

The Somali Prime Minister is not the only one that has spoken out. British runner and double Olympic gold medalist, Mo Farah, gave his support to an online petition asking the bank to reverse its decision. Over 100,000 people have signed the petition to date.

“Cutting this lifeline would be a disaster for millions,” said Farah, who came to the UK from war-torn Mogadishu when he was eight years old.

The level of remittances received by Somalia is far greater than the level of aid to the country.

Forty percent of households in Somalia receive regular remittances; out of those, eighty percent spend the money on basic costs such as food, schooling and healthcare.

The country receives $1.5 billion annually through remittances according to the Central Bank of Somalia, out of which an estimated $160 million is received from the UK. This has led nine UK humanitarian charities to speak out against the decision. One of the UK’s leading charities, Oxfam, has criticized the move to close the accounts.

Ben Phillips, Oxfam Director of Campaigns and Policy, said, “Today is a bleak day for Somalis as Barclays closes accounts that allow the Somali community in Britain to send money home.” He went on to condemn the bank for “failing in its responsibility to the very poorest people.”

He said that the move would hit the poorest worst, and urged the bank and the UK Treasury to find a solution that would work for the Somali people.

Somalia has no formal banking system and nearly half the population live on less than $1 a day, making it one of the poorest countries in the world. The country suffered from a terrible drought two years ago that it is only just beginning to recover from.

According to the largest money transfer provider to Somalia, Dahabshiil, they have had a “good working relationship with Barclays for over 15 years” and such short notice on the closure of accounts is “both unreasonable and unfeasible.”

Dahabshiil is also used major international charities, NGOs and UN agencies to fund their operations around the world. 95% of the funding for humanitarian projects in Somalia is transferred through Dahabshiil.  In a country with no functioning financial system, “money transfer companies provide a vital lifeline to citizens,” said a statement issued by the organization.

There is a fear that closing the accounts could drive the system underground into unregulated and illegal providers. The deadline for closing the accounts is on Monday and Barclays has not gone back on its decision.

Güncelleme Tarihi: 30 Eylül 2013, 16:13

Muhammed Öylek