Wednesday, November 06, 2013
Somali money transfer company Dahabshiil on Tuesday welcomed a
temporary injunction by a British court allowing it to continue sending
vital funds to the war-torn nation.With no formal banking system,
diaspora Somalis turn to money transfer services to support their
families back home, sending some $1.3 billion (one billion euros) each
year, according to aid agencies Oxfam and Adeso.
Barclays, the
last major British bank still working with transfer companies, had said
it would close all dealings with money transfer systems, cutting a $500
million yearly flow to Somalia.
The bank defended the move citing fears of money-laundering and the financing of terrorist activities.
But Dahabshiil challenged it in a London court.
"The
court handed down its judgement, granting an interim injunction which
has the effect of preserving Dahabshiil's banking arrangements with
Barclays until the conclusion of a full trial," the company said in a
statement.
In a first reaction a Barclays spokeswoman later said
the bank was "very disappointed at today's decision, and we will be
appealing.
"Barclays made a legitimate decision to exit these
businesses based upon the well-known risks of money-laundering and
terrorist financing in the money service business sector.
"The
risk of financial crime is an important regulatory concern, and we take
our responsibilities in relation to this very seriously."
Banks
have been tightening rules in a bid to comply with international
regulations against money laundering and funding terrorism, but experts
said there were no known cases of regulatory breaches by Somali
companies.
"We are not just a business.... We enable Somalis to
help themselves, by sending money to every corner of the Somali
territories to enable relatives and friends to buy food, medicine and to
pay for education," the company added.
"Remittances are also used
for investment in business start-ups and property. Remittances are
helping Somalis get the country back onto its feet."
It was feared that closing organised transfers could drive them underground.
Somali
Prime Minister Abdi Farah Shirdon welcomed the decision, while warning
that a "permanent solution must be found to keep open this vital
lifeline".
The best solutions would be to set up formal banking systems, experts say.
Somalis send money home via transfer businesses which can accept deposits abroad and immediately credit recipients.
But regulations require that transfer systems pass money through a bank account.
"As
Somalia continues to recover from two decades of unrest these
remittances remain an essential source of income for more than half of
all Somalis," Shirdon added.
"To many these remittances pay for a
basic standard of living, allowing families to put food on the table,
clothe their family, treat illnesses and educate their children."
Charity groups have been campaigning to keep the transfer system afloat.
"The
ruling provides a small window of opportunity for Somalis living in the
UK to send money home to loved ones in one of the poorest countries in
the world," Oxfam's Ben Phillips said.
"However, this does not
solve the problem," he added. "A long-term fix is needed to safeguard
hundreds of thousands of people relying on the money for food, medicines
and education."