Money-transfer services to Somalia close down today

A group representing 15 money-transfer companies in Minnesota says the businesses stopped sending remittances to Somalia as of Thursday.

The move comes as Sunrise Community Banks, one of the last remaining U.S. banks to do business with the money-wiring shops, prepares to close its accounts with them. Franklin Bank of Minneapolis decided to end its relationship with the money-transfer services, known as hawalas, in fear of violating rules against terror financing.

Minnesota Congressman Keith Ellison says he is trying to reach a solution with Sunrise and government agencies.

"The problem is not just this one bank. The problem is nearly all the banks have sort of stopped out of the business of facilitating remittances to East Africa," Ellison said. "I was dealing with this same conversation a year and a half ago with a large major bank who said, 'We're not going to do these transactions anymore.' Why? 'Just because we don't know what the risks are, so we're just not going to do it."

Ellison believes Sunrise is the last remaining U.S. bank to work with the transmitters. Ideally, he said, Somali-American investors could form their own community bank that could open accounts with the hawalas. He said he has also approached State and Treasury departments about issuing Sunrise a waiver that would protect them from the risk of prosecution.

Many fear the lack of remittances will worsen the humanitarian crisis in Somalia, but banks are concerned they could be held liable if the money fell into the hands of terrorists.

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But Somali-Americans in Minnesota say closing a lifeline to the famine-stricken country amounts to cruelty. Aden Hassan, a spokesman for the Somali American Money Services Association, says the banks are discriminating against Somalis who have no other way to support their families.

"The majority of people we serve live in areas where you will not find Western Union, MoneyGram, or conventional banks," said Hassan. "If this is shut down, then the people will have no alternative — no legal alternative."

Some worry that remittances will go underground, making it even more challenging to stop the flow of money to terrorists.

A statement Thursday from Sunrise Community Banks, the parent company of Franklin Bank, left little hope for an extension. The bank is pushing for a government waiver typically issued to international aid organizations that could afford the bank some protection.

"The bank remains hopeful that the government would be willing to consider a similar solution in this instance," the statement reads. "Until that solution is found, the bank must continue to comply with all U.S. laws and banking regulations. We stand ready to facilitate any approach undertaken by the government that meets the government's legal and regulatory requirements."