Barclays are trying to shut down the last international service that transfers money to Somalia, threatening the country’s stability by cutting off a support network that helps to feed millions of people. The British bank is spooked because HSBC had to pay a £1.2 billion fine last year for failing to stop "drug kingpins" depositing "dirty" money and hiding transfers from "rogue nations" like Cuba, Iran and North Korea, all of which – according to American prosecutors – flout US sanctions.
Barclays wasn’t involved, but the HSBC fine was serious enough to make it try to end its 15-year relationship with Dahabshiil, the last company that allows the Somali diaspora to wire small amounts of money back home, for fear that they too are inadvertently falling foul of money-laundering regulations.
These money transfers act as a kind of welfare system in a state that offers no such support network. In fact, it’s estimated that 60 percent of Somali households receive the transfers – one-third of which wouldn’t be able to afford food, medicine and school fees without them – and together they add up to more than the country receives in international aid.
A high court ruling due this week will determine whether Barclays will get their way or if Dahabshiil will be allowed to continue to operate.
Given the fact that the company has vowed to do everything it’s been asked to prevent money laundering, London's Somalis are outraged that the payments could be stopped. I spoke to Hamse Abyan, who lives in North London and fixes computers on Holloway Road for a living.
Sitting in the Somali Social Club, he told me a decision against Dahabshiil would mean that he would no longer be able to send money home to his 100-something-year-old grandmother, who's depended on the payments since Hamse's father passed away. And it’s not just old people – many of the Somalis I spoke to are either supporting children, or adults who can't make money of their own, either because there aren't enough jobs or because the volatile situation in the country makes it too dangerous to work.
If the payments stop in the next couple of days, most of the transfers won’t be affected until the end of the month, when people get paid. Until then, everyone I spoke to is worried about something going wrong. Amiin Cusman, another Somali living in London, says that even a temporary break could be disastrous; the last time he sent money home in an emergency was because children he knew had been orphaned. Money is also often sent home because someone needs an urgent operation or is due to give birth: "If they have no money, the hospital won’t deliver the baby," he adds.
Calling from Somalia, Mohamed Odowa – a reporter based in Mogadishu – tells me, "It's not easy for me to describe the impact [of stopping the transfers] with just a few words, as the magnitude of this issue will be visible to every Somali. It will mean a total disaster for many lives here in my country."
The disaster Mohamed describes won't just be limited to those who are supported by family members abroad; charities may not be able to send money to the country, either. Aid organisations like Oxfam can register as overseas charities, allowing them to transfer money between accounts, although they still use Dahabshiil for cash distribution programmes. For smaller charities, it's more difficult. The African Development Trust, for example, say they use the service exclusively to fund their aid operations, such as projects for drought relief and food security.
It could be possible for Somalis to send money via a different country by getting relatives to forward it on, but that is a convoluted process that would take more time and would cost more money. And nobody I spoke to knows whether a black market service is viable because Dahabshiil has always been so cheap and easy that no alternative has been necessary. That said, if the wire service does stop, the sheer level of demand means it's likely that something will be created to take its place.
Ed Pomfret, Somalia campaigns and policy manager at Oxfam, warned that the country’s progress over the last few years could be jeapordised: "We are very worried that if the flow of money is disrupted, life will become increasingly tough for Somalis and many people could fall back into crisis," he said. "The international community have been very keen to see increasing stability in the country, but if you throw thousands back into crisis, this approach could be completely undermined."
There are also worries that the situation could be exploited by terrorist groups, primarily Somali-based organisation al-Shabaab. "They want this to happen," says Abdi Kosaar from the African Development Trust. "They want the economy to collapse so that it's easier for them to market their ideology that the Western world will never allow you anything."
With this breadth of potential negatives in mind – and considering Dahabshiil insist they are abiding by all the rules set out to them by Barclays – it remains to be seen if Barclays go ahead with their plans.
Follow Chris on Twitter: @MediaSpank
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