Little Rock Immigrants to the United States, Canada, and Europe from Somalia, Bangladesh, Haiti, and Nigeria where banking systems are unstable or virtually nonexistent are about to face expensive and difficult burdens as more banks curtail money transfer services for fear of running afoul of thorny terrorism regulations. The British-based bank, Barclays, has announced that shortly it will suspend all transfer channels to Somalia. Transfer companies in that country like Dahabshiil that depend on Barclays are reeling in the face of these cutoffs, as are Somalians around the world since 40% of the income in the country comes from remittances received from relatives and friends in more developed countries.
Alternatives are slim. Western Union, the big MTO internationally, has only one outlet in the entire country for example.
For ACORN International’s Remittance Justice Campaign, this is another example of the contradictions in national and international policies. Where Barclays is claiming the cutoff is meant to thwart terrorists, the truth in Somalia and many other African and Middle Eastern countries is that the hawala system also dominates which is of course a very inexpensive and informal system used for years in this part of the world based on networks of people and cash transactions. The New York Times story on Barclays raises the specter of suitcases of money being used to replace more usual remittance channels in this crisis, but something similar is exactly what is involved in the hawala system.
Advocates, both inside and outside the country are asking Barclays for an extension. Barclays is claiming that after paying hundreds of millions in fines they don’t want to be like HSBC, the other British-based bank, and end up paying over a billion for lax standards for money laundering. Others are correctly pointing, as ACORN International has argued, that the real issue is government regulation, or as we have advocated the lack of clear and consistent regulation that supports lower, less predatory costs in line with our 5% demands.
Perhaps with specter of starvation, reduction in school attendance, and real suffering imminent in Somalia, national banking authorities in developed countries will get a needed wakeup call that action is urgent for remittance justice now.