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More U.S. banks are dropping Somali money transmitters as regulators crack down on the risk of terrorist financing at remittance houses serving the war-torn East African nation. Banks are familiar with regulatory tight spots, but rarely do their responses have life and death consequences, as is the case here.
August 29 -
The ability of Somali-Americans to send cash home to their relatives is again in peril after a California bank decided to stop facilitating the money transfers, according to a foreign aid organization that has been monitoring the situation.
January 30 -
Somali-Americans who send cash home to their relatives can breathe a bit easier following the decision by Merchants Bank of California.
September 30
Calls for U.S. regulators to reform money-transmittal rules are growing after a California bank cut off remittances to Somalia.
Twelve Democratic lawmakers last week
Remittances from the U.S. have for years been a crucial source of support for many in Somalia, which lacks a banking system and instead operates through a system of informal money-transmittal companies. Regulators argue that these firms can easily be used to launder money and fund terrorism, and have discouraged banks from working with them. The $81 million-asset Merchants had been the largest conduit for such payments after larger banks gradually dropped out.
The lawmakers' letter says that without the payments, a third of Somalis may be unable to meet basic needs, which "could throw the country and its already vulnerable economy deeper into crisis." The letter was sent to top banking and financial regulators, as well as to Kerry.
"To protect our national security and avoid exacerbating a humanitarian crisis, we must identify an emergency solution to prevent the disruption of remittances to Somalia," the letter said. "We believe it is critical that every federal agency with jurisdiction on this issue must work toward formulating a sustainable framework for remittance payments as quickly as possible."
On Sunday, Somali Prime Minister Omar Abdirashid Sharmarke urged U.S. banks to resume accepting remittances to his country and said that he had reached out to American lawmakers to find a way to address their concerns and re-open the pipeline.
"I will seek to appease their concerns and I will do everything in my power to find a permanent legitimate and transparent solution," Sharmarke said, according to a
With the pipeline cut off, some lawmakers are asking regulators to find a solution. Representative Keith Ellison, D.-Minn., addressed Congress Wednesday about the need to permit transfers to Somalia. His district is in Minneapolis, home to the largest population of Somali immigrants in the country.
The freeze in remittances "is catastrophic," Ellison said. "Now Somali-Americans cannot send money to their loved ones, and Somalis can no longer receive money that they depend on for food, school fees and medical bills."
Along with Ellison, the letter to Kerry and regulators was signed by senators Amy Klobuchar (D-Minn.), Al Franken (D-Minn.) and Sherrod Brown (D-Ohio) and representatives Maxine Waters (D-Calif.), Erik Paulsen (R-Minn.), Stephen F. Lynch (D-Mass.), Juan Vargas (D-Calif.), Adam Smith (D-Wash.), Chellie Pingree (D-Maine), Gwen Moore (D-Wis.) and Barbara Lee (D-Calif.).
