Earlier in December we learned that banks in Minnesota were ending money transfers on behalf of the local Somali community back to their home country in order to ensure that the cash wasn’t funding the al-Qaeda offshoot al-Shabaab.
Thanks to Creeping Sharia (on the Twitter side) for alerting us to the latest on this story, which is a misguided complaint by the anti-hunger charity Oxfam about the Minnesota banks’ policy. An excerpt from the Ethiopian Review on Dec. 24:
The international aid organization Oxfam says thousands of Somali families could be cut off from much needed aid if a U.S. bank goes through with plans to discontinue its money-wiring services at the end of this month.
Last week, a small bank in the U.S. state of Minnesota announced it would stop wiring cash to “hawala” money transfer companies in Somalia because it feared the transfers risk violating U.S. counter-terrorism laws. The laws seek to clamp down on the financing of terror groups.
Shannon Scribner, a humanitarian policy manager at Oxfam, says the support that comes from the bank is crucial and that it is one of the few still offering the service.
“Within Somalia about $100 million in remittances from the U.S. goes to Somalia every year,” said Scribner. “And this money comes from diaspora members, who are Somalis themselves that are living in the United States, extended families and local charities.”
The cut-off comes when more than a 250,000 Somalis are on the brink of starvation because of famine and political violence. The al-Qaida linked terror group al-Shabab is in a deadly struggle with Somalia’s fragile transitional government.
Hawala money transfers rely on an informal system of merchants who send money, for a fee, from one location to another. Because it is informal, the U.S. and other countries worry the hawala system can be used to funnel cash to terrorist or criminal groups.
First of all, the bank should be applauded, not condemned, for ensuring that depositors and other bank customers aren’t indirectly financing the reign of terror in East Africa by al-Shabaab.
Secondly, from a legal standpoint, the bank has a responsibility to know its customers and in whose behalf transactions are being made. There is the bare minimum of complying with the minimal letter of federal anti-money laundering and terror finance laws, and the Minnesota bank in question has met that standard. The bank has also surpassed that standard by gauging the spirit of the law and living up to the moral responsibility that financial institutions bear to avoid funding a culture of death and destruction by jihadists.
Also keep in mind banks like Lloyds and RBS which exercised insufficient controls to ensure that they didn’t service Iranian accounts. Those banks got nailed with hundreds of millions of dollars in fines by the federal government for their deficiencies, and rightly so. This Minnesota bank has every reason to believe that one day they will be assailed by the federal government for exercising insufficient controls on money transfers. While it is unlikely that the current leadership of the Department of Justice or Treasury would go after any bank for hawala to radical Sunni-dominated territory, it is possible that a future administration would take a dimmer view of transferring money to the enemy.
Unfortunately for average Somalis, al-Shabaab is stealing the wealth of Somali citizens through Islamic-inspired taxes on everything from trade to breathing. That is why Oxfam should direct its complaints toward al-Shabaab—the entity ultimately responsible for the humanitarian fiasco. But if Oxfam still feels like attacking a mom & pop bank in Minnesota, it should offer constructive suggestions such as encouraging the bank to donate food aid to responsible international charities.
Considering the lack of know-your-customer practices endemic to hawala, no American bank should be forced to transfer money to hawala dealers anywhere on earth.