Somali-Americans lose another bank willing to transfer cash

Numerous money transfer businesses advertise their services in the predominantly Somali Village Market in South Minneapolis Monday. (Pioneer Press/Scott Takushi)

Tuesday, February 17, 2015

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BLOOMINGTON — For years, Mohammed Amin Kahin has sent money to his family in Somalia to help them with rent, food and schooling.

But now the 27-year-old Bloomington man and others in the Twin Cities with roots in the impoverished East Africa country are concerned about how they will continue the practice of remittances to Somalia, what they call a lifeline for their relatives’ basic needs.

Under pressure from federal agencies trying to curb money flows to criminals and terrorists, the last large American bank willing to arrange cash transfers to the country informed Somali-American money-transfer operators in January that it was discontinuing their relationship.

Some smaller banks are continuing the transfers, but whether they can keep up with the demand is unknown, Mohamud Noor, executive director of the Confederation of Somali Community in Minnesota, said Monday.

“I came to the United States to live the American dream of working hard and playing by the rules while supporting my family,” Kahin wrote on a petition he started on change.org to ask the U.S. Treasury Department to help solve the problem.

“To share one personal example, my sister was very sick and in a coma for several months in Somalia. Our family there did not have money to pay for her hospitalization and treatment, and she was saved only through God’s grace and the funds the community here in America were able to send home.”

Minnesota is home to the largest community of Somalis in the United States. The majority visit local hawalas — the Somali word for money transfer agencies — to send cash home, amounts that can range from $50 to a hundreds of dollars a month, said Jaylani Hussein, executive director of the Council on American-Islamic Relations, Minnesota.

No formal banking system exists in Somalia, and making such transfers is the only realistic way many Somalis can receive cash.

Before discontinuing the practice Feb. 6, tiny Merchants Bank of California handled about 80 percent of wire-transfer services to money services businesses serving Somalia, said Abdulaziz Sugule, president of the Somali-American Money Service Association.

Some smaller banks have continued to allow them, though Sugule said they’ve received notification from another bank that will be stopping this spring.

“It’s going to be a difficult issue,” said Sugule, who is president of Olympic Financial Group in Minneapolis. “That’s the concern, what’s going to happen now?”

Cutting back

Some local money services businesses are talking about closing or limiting their hours; some are being forced to handle fewer transfers, Sugule said.

At the Village Market mall, a cluster of Somali-American-owned businesses on East 24th Street in Minneapolis, the small money-transfer shops remained open Monday.

Money transfer services have operated for years, but they are now under intense scrutiny as many countries, especially the U.S. and the United Kingdom, have accused the agencies of helping fund Islamic extremist terrorist groups.

That concern has forced some international banks to terminate business with them — anti-terror laws hold banks responsible if they transfer money to criminal or terror elements.

Somalia is home to a brutal Islamist insurgency called al-Shabaab, as well as an epidemic of piracy, and U.S. federal agencies have become increasingly concerned about American cash transfers ending up in dangerous hands.

“If this has to do with trying to stop funds from reaching extremists, that’s fine because we don’t want that either, but 99 percent of Somalis rely on this money and it’s the lifeline of their daily living,” said Jibril Afyare, president of the Somali Citizens League in Minneapolis.

Members of Congress, including Minnesota Reps. Keith Ellison and Erik Paulsen, and Sens. Al Franken and Amy Klobuchar, sent a letter Feb. 6 to the U.S. secretaries of state and treasury, and others, requesting a meeting to develop an emergency plan and to discuss a longer-term one.

Sugule said he has been told there will be a meeting this month in Washington, D.C.

Treasury officials have said they understand the critical role cash remittances play in Somalia as well as other poor countries and that they are working to find a solution. They say they want banks to monitor transfer clients on a case-by-case basis, not to get out of the business altogether, as Merchants did.

David Cohen, a Treasury undersecretary, said last month that while remittance payments to poorer, less-regulated countries present “real money laundering and terrorist financing risks,” the government is eager to develop a more secure transfer system where “legitimate customers” can be served but “terrorists and criminals are turned away.”

Legislators and officials of aid groups led by Oxfam America have proposed a number of possible emergency remedies, such as using the World Bank or the United Nations to handle family remittances along with assistance funds they regularly send to Somalia.

They have been meeting with administration officials over the past several weeks.

More than $215 million was sent last year from the United States to Somalia, “most of which was used to meet basic humanitarian needs,” according to the letter from the members of Congress.

“It’s literally a disaster,” said Hussein, of CAIR-MN. “This could create another humanitarian disaster in Somalia.”

Hussein and Afyare said they’re also worried that extremists in Somalia could try to use the situation as propaganda to recruit people to their cause, telling them things like “the USA is starving Somalia.”

“We don’t want this to go underground,” Hussein said of money transfers. “It’s all transparent now … but once you remove that system, we won’t know who’s sending money to who and that will definitely create a huge security issue.”

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