× Business BUSINESS MOTORING SHIPPING & LOGISTICS DR PESA FINANCIAL STANDARD Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS

Ordinary Somalis hit by anti-terror banking rules

By AFP | Feb 23rd 2015 | 2 min read
By AFP | February 23rd 2015

Mogadishu, Somalia: Mohammed Adan’s four school-age children are the latest victims of new international banking regulations aimed at terrorists, but hitting ordinary Somalis hard. Adan’s brother lives in the US where he runs a small business and sends money home to Somalia to pay school fees.

Now new rules imposed this month to stop money laundering and terrorist financing mean all US transfers to Somalia are blocked. “Why should someone stop my brother from helping my family?” Adan asked as he left a hawala - or money transfer office - empty handed after the payments he was desperately waiting for failed to come through.

Humanitarian lifeline

Terrorist financiers undoubtedly use the hawala system but so too do millions of Somalis struggling to get by with the help of relatives abroad. The tough new bank restrictions do not discriminate and are severing what the government calls a “vital humanitarian lifeline” to Somalia where no formal banking system exists.

Every year diaspora Somalis send an estimated $1.3 billion (Sh118 billion) home via the hawala system. Hawalas are cheap and efficient to use, allowing money to be deposited in a foreign bank and instantly credited to recipients who have to provide only basic identity details matching those provided by the sender.

The ancient money transfer system based on trust and honour is also used across the Middle East and North Africa. But banks in Britain and the US have become reluctant to keep the hawala businesses for fear of regulators who might prosecute them for financing terrorism and money laundering. The Merchants Bank of California that provides the majority of services to Somali money transfer companies said it would stop doing so after receiving a “consent order” from the US Treasury.


Share this story
New interchanges along Northern Corridor to improve users’ safety
Kenya National Highways Authority (KeNHA) has started improving key inter-sections along the Northern Corridor - from Mombasa to Malaba by changing the grade traffic flows to enhance road users' safety.
China rejected Kenya's request for Sh32.8b debt moratorium
China is Kenya’s largest bilateral lender with an outstanding debt of Sh692 billion.