Barclays severs ties with Somali wire service over terror finance, money laundering concernsJuly 4, 2013
The international company in question is Dahabshiil—the same money transfer service that has exhibited worrisome shortcomings in its anti-money laundering and counter-terror finance compliance programs. It is also the same company that has been subjected to alleged extortion demands from the terrorist group al-Shabaab in exchange for remaining in business in Somalia.
Terror financing fears stop transfers to Somalia
By ABDI GULED and JASON STRAZIUSO
MOGADISHU, Somalia (AP) — When a bank transfers money to Somalia, can it be sure it’s not sending money to terrorists? That question is forcing one of Britain’s largest banks to cut ties with the largest cash transfer bank in Somalia, a company that brings in the majority of the country’s $1.2 billion in yearly remittances.
Many in Somalia are in desperate need of money. Payments from family and friends overseas are how many get by, and that’s why more than 100 aid workers and Somalia experts signed a letter this week pleading with the British government to find a solution.
Barclays bank will no longer allow customers to send money to Somalia via the Somali bank Dahabshil. A financial power-house in Somalia, Dahabshil describes itself as “the most trusted money transfer company for many immigrants willing to support their families and friends.” But anti-terror laws hold banks – like Barclays – responsible if they transfer money to criminal or terror elements. As a result, fewer are willing to send money into Somalia.
Such transactions for Somalis in the United States became more difficult in late 2011, when a bank in Minnesota closed accounts that facilitated such transfers. Sunrise Community Banks decided to halt the transactions after two women were convicted of sending money to the terrorist group al-Shabab.
“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,” Barclays said in a statement. “We want to be confident that our customers can filter out those transactions, because abuse of their services can have significant negative consequences for society and for us as their bank.”
Abdirashid Duale, chief executive of Dahabshiil, noted that his company is one of a number of transfer businesses affected by of Barclays’ decision.
“Naturally, Dahabshiil is appealing this decision and would like to emphasize that to date Barclays’ has acknowledged that our Anti-Money Laundering and Anti-Terrorist Financing policies are fully compliant with industry regulations,” he said.
Dahabshiil, he said, remains operational while it explores alternative banking arrangements.
The group of aid workers and researchers said the decision at stake here “is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia.” The group said it has seen firsthand the impact remittances have on families in the Horn of Africa.
“My son is in the U.K. He sent us money every month for our sustenance and school fees for the children. Where are we going to get the money to pay our bills?” said Dahabo Afrah, a longtime customer of Dahabshil in Mogadishu. “This is unfair to us and will affect hundreds of thousands of Somali people.”
Many big banks in the U.S. have already stopped handling transfers to Somalia, saying the federal requirements designed to crack down on terrorism financing were too complex and not worth the risk. Last April, U.S. Bank confirmed it is working with Dahabshil to allow Somalis in Minnesota to send money back home. U.S. Bank spokeswoman Teri Charest said Monday that the bank is working closely with Dahabshil but the transactions have not yet started.
Barclays said it remains happy to maintain a relationship with businesses that have anti-financial crime controls…