I started this blog post in 2013, following a decision by Barclays Bank in the UK to close the accounts of Somali and other remittance companies. The problem has spread to other countries, most recently the US where on Friday 6 February 2015, the main bank providing services to Somali money transfer companies, Merchants Bank of California, closed their accounts.
Initially, the US-based Somali remittance companies suspended operations - but on 28 February they said they would restart operations, albeit in limited form. How will they do this? By carrying cash. I have highlighted the relevant part of the press release.
Initially, the US-based Somali remittance companies suspended operations - but on 28 February they said they would restart operations, albeit in limited form. How will they do this? By carrying cash. I have highlighted the relevant part of the press release.
Statement of the Somali American
Money Services Association.
Press
Release
February 28, 2015
Since Merchants Bank of California
terminated the accounts of Somali American Remittance Companies on February 6,
transmission of family support money to the needy Somali people in East Africa
grounded to a halt. Remittance companies lost the bulk of their wiring
capabilities and were forced to drastically scale down their services in many
states and completely shut down in many others.
For a long time, the Somali American Money
Services Association (SAMSA) had been reaching out to US regulators, elected
officials and other Government officials by warning of an impending
humanitarian crisis in the Horn of Africa if the un-banking of remittance companies
was not resolved. Unfortunately the situation appears to have come to the
precipice SAMSA and its advocates have been warning of. SAMSA wishes to convey
its utter disappointment that, at the moment, there is nearly no sustainable
channel to wire money to the desperately poor people of Somalia – unless
hundreds of millions of dollars a month are packed in suitcases and physically
transported across continents.
In recognition of the magnitude of the
problem, Members of the US House of Representatives and Senate met with the
State Department and Regulatory Agencies on February 26, 2015 in an effort to
find a solution to this critical problem. SAMSA wishes to express its dismay
that this high profile meeting could not identify a single possible short term solution
to this crisis. We wish to share not only our disappointment but our conviction
that there is surely a way to maintain this lifeline to the Somali people.
For SAMSA members, remittance is not just a
business; it is personal. We run a service that is the single most important
component of the Somali people’s livelihood. For millions across East Africa,
the $150-$200 a month remittance means the first and last line of defense
against starvation and homelessness. It is what ensures the children we left behind
continue to have food on the table. It is a vital bulwark against that next,
ever-looming man-made famine.
Considering the magnitude of the potential
humanitarian crisis, the Remittance Companies have resolved to resume their
services in a limited capacity on March 1, 2015, even if it is only possible
for a few weeks or months more with the unsustainable options that remain for
transporting money. The plan is to utilize the last remaining option available
to us (carrying cash abroad in person), no matter how unsafe or antiquated, to
deliver money until it, too, is no longer available. In all likelihood, this
desperate option will not last for more than a month or two, but it will be
worth it if we can prevent an avoidable, artificial famine even for a day
longer. Not only is this method too
costly and unsustainable, it also is likely to result in the loss of nearly 50%
of transmissions, as Money Transfer Companies will stop operating in many
regions due to the fact that it will be unrealistic to transport money from
them. We estimate that, with the limited capacity, these efforts will result in
the resumption of only about 50% of transmission volumes.
Meanwhile, SAMSA continues to believe in
the willingness of the United States, its regulatory Agencies and elected
officials to find a lasting solution to this problem. In Particular, US
Treasury and State Department cannot afford to continue taking this lightly. It
is our belief that the US Government does not intend for this money transfer
shutdown, or its inevitable humanitarian, economic, security and political
consequences, to transpire.
Finally, SAMSA wishes to appreciate the
efforts of elected Members of the US House of Representatives, Senate and the
Humanitarian Organizations that continue to advocate on behalf of the millions
of Somalis who face an uncertain future without remittances.
END
