A group of aid practitioners are urging the UK government to stop Barclays bank closing the last account in Somalia which allows its citizens overseas to send money back home. Barclays is the last major British bank to still provide such money transfer services in Somalia.
Over 100 academics, researchers and aid workers, including Somalis both at home and in the diaspora have written to Mark Simmonds of the Foreign and Commonwealth Office (FCO), asking the UK government to find a solution.
They say that the money transfer service is a crucial “lifeline” for an estimated 40% of the Somali population – about 3.8 million people – who rely on the transfers from the estimated one and a half million Somalis living overseas.
Somali authorities said last year that around one-third of the country’s GDP enters Somalia through “hawala” or small money transfer businesses.
Barclays plans to close its account with Dahabshiil, the largest money transfer business providing services to Somalia, on 10 July. The letter’s signatories want the UK government to ask Barclays to extend its termination deadline for at least six months.
Barclays told Dahabshiil it was “a commercial decision due to the risks of the sector in which you operate”.
“The decision to exit our business relationship with you is not a negative reflection of your anti-money laundering standards, nor a belief that your business has been unwittingly been a conduit for financial crime,” the bank said.
Abdirashid Duale, CEO of Dahabshiil, said Barclay’s decision could have dire consequences, leading to money transfers pushed underground and into the hands of “unregulated and illegal providers”.
“Barclays’ decision to terminate its relationship with Dahabshiil results from changes in Barclays eligibility criteria, which have affected a large number of Barclays’ customers in the Money Service Business sector, including Dahabshiil,” Mr Duale explained.
The Somali Money Services Association (SOMSA), a UK umbrella group of transfer services, has confirmed that 12 of its 17 members have already lost their accounts in the UK, including at Barclays and HSBC. The letter to the FCO says Barclays – the last UK bank providing services to money service businesses (MSBs) – is to withdraw services from up to 250 remittance companies.
“Somali MSBs provide fast, reliable and trusted transmission of funds from the diaspora (estimated at around 1.5 million people) to their relatives at home,” said the letter. “In addition, many other diaspora groups from Horn of Africa – in Ethiopia, Kenya and South Sudan – send remittances to their family members using the same companies.”
Barclays’ decision follows last year’s imposition of a $1.9 billion (£1.24 billion) fine on HSBC by US authorities for poor money laundering controls. HSBC said last autumn it would leave the money-service sector entirely. Meanwhile, Royal Bank of Scotland says it has been reviewing its customers more frequently to ensure they meet compliance standards.
The UK Serious Organised Crime Agency has also identified MSBs generally as a potential money laundering risk.
But SOMSA said in a statement: “The key issue is the damage to flows of cash to the vulnerable Somali people, who depend on remittances for their livelihood; and the likely threat of this action to economic and political stability in fragile parts of the Somali region.”
