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Barclays (BCS) to cut off money transfers to Somalia
Wednesday, October 16, 2013
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A British bank could soon be cutting a financial lifeline for millions of Somalis.
Barclays Bank (NYSE:BCS, Stock forum) is poised to sever its ties to Dahabshiil, one of the Somali expatriate community's biggest money transfer services, as part of a larger reorganization of its business. Barring a successful last-minute court challenge, experts say the move will jeopardize 100 million pounds ($160 million) worth of payments made from the U.K. each year.
Barclays' move, part of an industry-wide effort to insulate banks from the risks associated with money-laundering and corruption, could force Dahabshiil to stop executing transfers between individuals within days. A court ruling had been expected Tuesday but was delayed because arguments ran late, the company said.
Barclays did not comment ahead of the court's ruling, but it and other British banks have been cutting high-risk clients after a slew of scandals involving money laundering and corruption.
Somalia is a terrorism hotspot that has not had a functional government in two decades, and the flow of expatriate money to the troubled East African nation has repeatedly come under law enforcement scrutiny on both sides of the Atlantic.
Laura Hammond, a development expert at London's School of Oriental and African Studies, warned that cancelling Dahabshiil's bank accounts could make matters worse by forcing the Somali money transfer business underground.
“It will be the perfect opportunity for those who want to send money to Somalia to fund terrorism or enable money laundering,'' she said. "It creates a black hole for accountability.''
Somali President Hassan Sheikh Mohamud said Monday that his government was watching what was happening in London "with great concern.''
“Our people are now recovering from a long and devastating civil war and this is not the time to punish them again by closing the legitimate lifeline on which millions of Somalis absolutely depend,'' he said. "Innocent millions should not be made to suffer because of the crimes of the guilty few.''
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