Tuesday, October 01, 2013
Multinational banking giant Barclays has closed money transfer agents' accounts due to banking regulations, it says, amid fears the move could worsen an already grave humanitarian situation in the poverty-stricken African nation.
One of the UK’s largest banks closed the accounts of money transfer
organizations (MTOs) on Monday, in a move that will cut off access to
millions of Somalis who rely on remittances sent from abroad.
Barclays plc says it is closing the accounts because of banking regulations as well as ‘heightened money laundering risks.”
The Somali Money Services Association (SOMSA) has rejected this
allegation, stating that none of its members have ever been ‘in breach
of any of the regulations’.
The bank said in a statement that it had faced “difficult decisions
over money transfers to those in need. Barclays has an obligation to
operate within the rules set by governments. Failure to do so would
result in Barclays being prosecuted.”
Somali Prime Minister Abdi Farah Shirdon has written to Barclays
Chief Executive Officer Antony Jenkins, pleading with him to reconsider
the bank’s decision to close the accounts.
"[The decision] will directly affect millions of entirely innocent
Somalis for whom remittances from overseas are absolutely vital,"
Shirdon said. He went on to warn the bank, saying, "This is how they
feed their families, clothe their children and treat their illnesses.
This is what keeps them alive. If the accounts closure goes ahead,
Barclays will be condemning millions of Somalis to terrible poverty."
The Somali Prime Minister is not the only one that has spoken out.
British runner and double Olympic gold medalist, Mo Farah, gave his
support to an online petition asking the bank to reverse its decision.
Over 100,000 people have signed the petition to date.
“Cutting this lifeline would be a disaster for millions,” said Farah,
who came to the UK from war-torn Mogadishu when he was eight years old.
The level of remittances received by Somalia is far greater than the level of aid to the country.
Forty percent of households in Somalia receive regular remittances;
out of those, eighty percent spend the money on basic costs such as
food, schooling and healthcare.
The country receives $1.5 billion annually through remittances
according to the Central Bank of Somalia, out of which an estimated $160
million is received from the UK. This has led nine UK humanitarian
charities to speak out against the decision. One of the UK’s leading
charities, Oxfam, has criticized the move to close the accounts.
Ben Phillips, Oxfam Director of Campaigns and Policy, said, “Today is
a bleak day for Somalis as Barclays closes accounts that allow the
Somali community in Britain to send money home.” He went on to condemn
the bank for “failing in its responsibility to the very poorest people.”
He said that the move would hit the poorest worst, and urged the bank
and the UK Treasury to find a solution that would work for the Somali
people.
Somalia has no formal banking system and nearly half the population
live on less than $1 a day, making it one of the poorest countries in
the world. The country suffered from a terrible drought two years ago
that it is only just beginning to recover from.
According to the largest money transfer provider to Somalia,
Dahabshiil, they have had a “good working relationship with Barclays for
over 15 years” and such short notice on the closure of accounts is
“both unreasonable and unfeasible.”
Dahabshiil is also used major international charities, NGOs and UN
agencies to fund their operations around the world. 95% of the funding
for humanitarian projects in Somalia is transferred through Dahabshiil.
In a country with no functioning financial system, “money transfer
companies provide a vital lifeline to citizens,” said a statement issued
by the organization.
There is a fear that closing the accounts could drive the system
underground into unregulated and illegal providers. The deadline for
closing the accounts is on Monday and Barclays has not gone back on its
decision.