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rfmcdonaldLisa Vives of the Inter Press Service describes how concerns with money laundering and the funding of terrorism are shutting down money-transfer services to Somalia, with potentially catastrophic results. American laws which make banks liable for the consequences of their transfers are key. (Does Canada do similar things?)
Minneapolis Congressman Keith Ellison called the decision “catastrophic.” His district has the largest concentration of Somalis in the United States.
“For the past few years, I have been warning every regulator and official about the devastating effects of closing the last safe and legal pipeline to provide humanitarian remittances to Somalia,” he said in a statement released by Oxfam. “There is no doubt that a decline in remittances will exacerbate the humanitarian crisis and erode the gains Somalia has made in recent years.”
US regulators said they suspect that some of the money transfers could be finding their way into the hands of Islamists tied to the al-Shabab militia. The US bank, the regulators determined, had inadequate safeguards against money laundering.
According to a recent report funded by the Food and Agriculture Organisation (FAO), more than 700,000 Somalis are facing acute hunger. An additional 2.3 million Somalis need help to protect their livelihoods and build reliance against future shocks.
Remittance payments to Somalia dwarf aid spending. Overseas development assistance to Somalia is 75 dollars per capita, including both humanitarian and development aid, compared with an estimated 110 dollars per capita in remittances entering the country, which amounts to 35 percent of GDP, the highest level in the world.
