In Somalia, fears over US wire transfer block

[December 23, 2011]  MOGADISHU, Somalia (AP) -- Somali officials said Friday they are pleading with U.S. authorities to persuade banks to reconsider a decision to block money transfers from Minnesota's Somali community to relatives in this Horn of Africa nation, where anarchy has given safe haven to an al-Qaida linked terror group.

The institution that handles the bulk of money transfers from Minnesota to Somalia -- Sunrise Community Banks -- has said it will discontinue the service at the end of December over fears it could be at risk of violating government rules intended to clamp down on the financing of terror groups.

Minnesota political leaders Rep. Keith Ellison and Sen. Al Franken, both Democrats, are seeking solutions. Meanwhile, Somalis in Minnesota and elsewhere have been regularly talking with the bank, officials from the U.S. Treasury, and other authorities.

But the bank issued a statement Friday saying that without legal and regulatory relief, it must stand by its decision to close its accounts with those money service businesses on Dec. 30.

"Money remittances from the U.S.-based Somali Diaspora through the U.S. banking system must have a new solution to satisfy the important legal and regulatory requirements currently in place across this nation," the bank said in its statement.

Hassan Warsame, a consultant and adviser to the newly formed Somali American Money Services Association, said the bank's announcement is disappointing, especially after weeks of work on the issue.

"Now, it's really going to be up to the money service business owners to come together and decide what is the next step, what will happen," Warsame said. "I suppose most of them will begin to close, at least in Minnesota or Columbus, (Ohio)."

"In terms of solutions, really, there aren't many," he added. "You cannot stay in business legally without a bank account. It looks like there are no immediate alternatives."

An untold number of Somalis depend on small remittances -- perhaps $50 to $200 a month -- sent from family members in the U.S. Even that small amount of money goes a long way in Somalia, and can make the difference between a dignified life and homeless poverty.

"Adopting that decision will be catastrophe to the lives of millions of who depends on remittances," Abdiweli Mohamed Ali, Somalia's prime minister, said earlier this week.

Halima Osman, a mother of five in Somalia's impoverished capital, is among many worried about an even bleaker economic future. The 50-year-old Osman typically receives $150 a month from her son in Minneapolis, who is the family's only breadwinner.

"Without remittances we shall lead a new life of poverty and famine because there is no other alternative to get money from abroad," said Osman, who lives in a dilapidated five-room villa in Mogadishu.

Jamal said he is urging money transfer companies -- known as hawalas -- to make sure "money doesn't fall into the wrong hands."

The decision to end Somali remittances came weeks after two Minnesota women were convicted in October of conspiracy to provide support to al-Shabab, the most dangerous insurgent group in East Africa.

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 the group.

Joe Witt, president and chief executive officer of the Minnesota Bankers Association, said banks are required to monitor their customers and report on certain types of activity. If they make a mistake or report something wrong, they face huge penalties.

"It's an incredible framework of rules and regulations, and if you do it wrong, it's absolutely a nightmare for the banks," Witt said.

Meanwhile, he said, money service businesses that wire funds internationally -- especially to places that might be unstable -- have been tagged as businesses that involve heightened security and compliance measures. While that doesn't mean every hawala is risky, he said a lot of banks have "made a determination that it's not a type of business they are comfortable in conducting."

Adan Hassan, spokesman for the Somali American Moneywiring Association and a manager at Kaah Express, a Minnesota-based hawala with locations in six other states, said the hawalas are subject to federal and state regulations, which he understands are necessary for national security and the well-being of the community. The hawalas must comply in order to keep their licenses.

Federal regulations require that hawalas ask for identification from anyone submitting over $3,000, Hassan said, though some companies require IDs for lower amounts as well. The hawalas collect the name, location, and phone number of the beneficiary, and the sender gives the hawala cash or a check or money order. The money is processed and the sender receives a receipt.

The recipient must present some form of ID to pick up the money on the other end, Hassan said.

Transfers to Somalia are not the only ones affected. Hassan said Kaah Express sends most of its transmissions to Kenya, which has the largest number of Somali refugees. Kaah Express also works with a well-established Ethiopian bank. He said those accounts are all affected, regardless of the destination of the money.

Humanitarian aid in a region beset by war and famine could be harmed by the banking decision, said a statement from Oxfam American and the American Refugee Committee. The group said Somalia's famine this year would have been far worse without remittances from the Somali community abroad.

"It is estimated that $100 million in remittances goes to Somalia from the U.S. every year. This is the worst time for this service to stop. Any gaps with remittance flows in the middle of the famine could be disastrous," Shannon Scribner, Oxfam America's Humanitarian Policy Manager, said. "The U.S. government should give assurances to the bank that there will be no legal ramifications of providing this service to Somalis in need."

If the bank accounts close, Somalis in Minnesota have said they will find other ways to send money. One way is to send the remittances to another country, such as Kenya or Britain, and then have a third party pick up the money and re-wire it to Somalia.

Ali, the Somali prime minister, said his government is working to make sure the link between American banks and the Somalia hawala system continues.

"We have sent a memo to the U.S. authorities to call off that decision because that will cause Somalis to economical crisis," he said. "The monies sent from abroad are backbone for the lives of thousands."

[Associated Press; By ABDI GULED and AMY FORLITI]

Forliti contributed from Minneapolis.

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