Thursday, July 11, 2013
Barclays bank is closing
about 100 UK accounts held by cash transfer businesses, over fears they
are being used for money laundering.
Many Somalis rely on money sent from their relatives abroad
The businesses are vital for Somali expatriates sending remittances back home, where banking facilities have collapsed.
Aid workers say the service is a "lifeline" for 40% of the Somali population, who rely on the transfers.
It is feared that the cash transfer business could now go underground.
Several money transfer businesses - including
Dahabshiil, the largest such business providing services to Somalia -
say Barclays has given them a temporary reprieve of one month.
Dahabshiil says it is urgently trying to meet the bank's criteria to keep its account open. Abdirashid Duale, chief executive officer of Dahabshiil, has said
Barclays' decision could see money transfers pushed underground into the
hands of "unregulated and illegal providers".
Barclays is the last major UK bank that still provides such
money transfer services to Somalia, which has an estimated 1.5 million
of its nationals living overseas.
The UK Serious Organised Crime Agency has identified money service businesses generally as a potential money laundering risk.
All international banks have been tightening rules in a bid to cut money-laundering and funding of groups accused of terrorism.
"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 last month.
The bank emphasised that it was "very happy" to serve companies with strong anti-financial crime controls.
Last month, more than 100 researchers and aid workers signed a
letter urging the UK government to stop Barclays closing its account
They said the move would cause a crisis for the families that rely on the transfers.
According to Dominic Thorncroft of the UK Money Transmitters
Association (UKMTA) trade body, "closing these accounts will lead to a
humanitarian crisis in Somalia". UKMTA represents over a third of money
transfer firms in the UK.
Oxfam says there is no need for a blanket shut-down of these
kinds of accounts. Instead, it would like to see better regulation and
the money service businesses investigated on a case-by-case basis.
Research for the charity suggests that Somali migrants in the
UK may be sending as much as £100 million a year back to Somalia, about
12.5% of the total amount. That would make it the second largest
proportion of remittances, after the US.
Oxfam's study also estimates that remittances could account for about 60% of a recipient's annual income.