The British government is planning to create "a safe corridor for
payments" to Somalia money transfer companies in the UK face closure.
The Government's move comes only days before Barclays Bank is due to
shut the last account held by a money transfer company and effectively
bring a halt the majority of the estimated US$750 sent from Britain to
Somalia each year.
Thursday, October 17, 2013
Barclays, which is closing the accounts of 250 international money
transfer companies claims the sector is at risk of being used for money
laundering and terrorist funding and that it falls outside new
regulatory criteria. Last year, the HSBC bank was fined US$1.9 billion
by the US Regulator for poor anti-money laundering controls. There have
been widespread calls from the Somali government, charities and
international NGOs to find a solution. Now the UK Department for
International Development, the Treasury, the UK regulator and the
National Crime Agency have announced plans for a scheme to track
payments made from the UK to Somalia.
However, the pilot project is expected to take a year and it does not
address the immediate problems faced by money transfer companies in the
UK which cannot send large sums of money unless they are deposited with
a British bank. No other bank had offered to replace Barclays Bank. The
Chief Executive of Dahabshiil, the largest of the money transfer
companies involved, says the disruption of the remittances "presents an
immediate and real risk to the people of Somalia. A British MP noted
that "the action of shutting down Dahabshiil's accounts punishes
everyone and leaves no way to send money to Somalia via legitimate
routes," adding that the government and the regulator "need to come up
with a solution now."