Ordinary Somalis hit by anti-terror banking rules
| Feb 23rd 2015 | 2 min read
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.
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.
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