Fears that funds might end up in the hands of terrorists prompted some British banks to stop offering banking services to some Somali remittance transfer firms, according to a report in The Globe and Mail.
Somalis living and working in Britain send an estimated $500-million a year in remittances, a vital stream of funds now threatened, said Somali central bank Governor Abdusalam Omer in the report.
“It’s a lifeline,” Omer told Reuters. About a quarter of Somalia’s gross domestic product is from remittances. Close to 2 million people get support from the diaspora that is spent on food, shelter, medicine and schooling in Somalia.
Barclays said in a statement it would stop offering banking services to some Somali transfer firms. “It is recognized 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,” it said without naming names, The Globe and Mail reports.
Somalia is struggling to recover from 20 years of conflict.
Twelve of the 17 Britain-based members of the Somali Money Services Association say they lost accounts with major banks in Britain such as Barclays and London-based HSBC, the report said.
Dahabshiil, one of Somalia’s best-known firms with agents in Britain and offices in Dubai and other African countries, said it had been told its Barclays account would be closed.
Stopping remittances “sends the wrong signal about the recovery that the country needs,” said Dahabshiil CEO Abdirashid Duale in the report. He is asking U.S. and British authorities to help reverse the decision.
More than 100 Somalia-focused researchers and aid workers signed a letter asking Britain to work with Barclays to keep remittances flowing, the report said.
“This will only encourage people to send funds through illegal, unsafe, and untraceable channels, thereby potentially making the problem of support to proscribed parties much more serious,” the letter said.
HSBC said it was cutting back on services to money transfer firms globally, a policy it started in 2012.
“We shall not survive if Britain stops the money flowing,” said Anab Mire Hussein, a mother of nine with a snack kiosk in Mogadishu, in the The Globe and Mail report. “I live on monthly cash from my son in London.”