Reprieve for US Somalis on money transfer issue

[December 10, 2011]  MINNEAPOLIS (AP) -- A bank that handles the majority of money transfers from Minnesota to Somalia said Friday it would continue that service until Dec. 30, allowing funds to keep flowing into the war-torn and famine-stricken country while officials discuss ways to reduce the bank's risk.

The news came as a relief to Somalis in Minnesota who say their loved ones might not survive without the monthly remittances they send back home through the money transfer businesses, known as hawalas.

Sunrise Community Banks had planned to close the accounts of its Somali money transfer businesses next week, after determining it could be at risk of violating government rules intended to clamp down on terror financing. But after a meeting Friday with Somali community members, representatives from the Somali transfer businesses, and Rep. Keith Ellison, the bank decided to keep the accounts open an additional 15 days.

"The humanitarian need is enormous. So that's got to be first and foremost in our minds," said Sunrise CEO David Reiling. "From a risk perspective, we are making progress, and I am optimistic that we are on the right path to get to a solution."

Somalia has not had a functioning government since 1991 and has no banking system. The U.S. Treasury says it's estimated that Somalis in the U.S. send $100 million back home each year. Minnesota represents the nation's largest Somali population. Local Somalis say $100 can feed a family of five in Somalia for one month.

Because Somalia has no financial institutions, Somalis use hawalas, which require little paperwork and reach even the smallest towns, to send money. The hawalas need banks to do the actual money wiring, said Aden Hassan, a spokesman for the Somali American Moneywiring Association. Without bank accounts, many of the money transfer businesses faced possible closure next week, he said. The bank's extension was a relief, even if temporary, he said.

Many big banks have stopped handling the transfers in recent years, saying the federal requirements designed to crack down on terror financing are too complex and not worth the risk. Sunrise Community Banks, a group of independently managed banks that include Franklin Bank, stepped forward to fill the need.

But a recent terror financing trial in Minnesota led Sunrise to reconsider. In that case, two Minnesota women were convicted in October of conspiracy to provide support to al-Shabab. Evidence showed the women, who claimed they were sending money to charity, used the hawalas to send more than $8,600 to the terror group, which has ties to al-Qaida. In another case, a Somali refugee in San Diego admitted this month that she sent money to al-Shabab.

Reiling said the bank wasn't involved in either the Minnesota or the San Diego case. Reiling said his bank wants to continue wiring money to Somalia but has to find a way to remove the risks.

One possibility, Reiling said, could be a waiver or other legal relief that would take pressure off banks. Reiling said he'll continue to work with congressional delegates and officials from the Treasury, State and Homeland Security departments.

Ellison, D-Minn., said he's pleased with the bank's decision and that his office has contacted the bank's regulator and officials at the U.S. Treasury. He told the AP in a telephone interview that a solution is needed that would give banks some security so they don't have to worry about enforcement actions, provided they don't knowingly aid the financing of terrorism.

"We need to work it out long term to protect public safety and national security but at the same time not shut down remittances to the most vulnerable part of the globe," Ellison said.

Sen. Al Franken, D-Minn., also wrote to the State and Treasury departments asking officials to tell Minnesota residents about other options. Omar Jamal, first secretary of the Somali Mission to the United Nations, said a teleconference was held Thursday with the money transfer businesses, Treasury officials, and officials from the Somali government.

The hawala system has been under scrutiny since 2001. After the Sept. 11 terror attacks, several money transfer businesses were closed because of security concerns, though most eventually reopened. The hawalas also feared closure years later when the major banks got out of the business.

Dahir Jibreel, head of the Somali Justice Advocacy Center, said his mother in central Somalia depends on the $100 or more he sends each month to help her pay for medical bills and food. He said she's in her 80s and is frail.

"That's the only money she gets," he said. "If she cannot get that, probably she will starve to death."

Many Somalis had questions in recent days. Abdulaziz Sugule, chairman of the Somali Money Services Business, said the hawalas were telling people not to panic.

Jamal said the community is thankful for the bank's extension. He said the Somali government will work with the U.S. to try to come up with a strategy that will satisfy federal officials who expect businesses to follow guidelines designed to crack down on terror financing.

"The Somali government and the Somali people cannot afford to shut this lifeline down," he said.

[Associated Press; By AMY FORLITI]

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