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Somalis Struggle to Send Funds Home as Banks Back Away
By Brian Monroe
printAmerican sanctions, terrorist financing prosecutions and rising related compliance costs have made it increasingly difficult for Somalia's U.S.-based community to move money to the African nation. Over the past five years, Somalis living in the United States have seen the number of formal and informal financial institutions willing to process their wires drastically drop after the nation's two largest money services businesses (MSBs), MoneyGram and Western Union, suspended all remittances to and from Somalia. The move has been echoed by large depository institutions, including Wells Fargo & Co. and U.S. Bancorp, that have chosen both to suspend the accounts of...
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Kenyan officials will remove some money services businesses from a governmental blacklist following evaluations of the companies' compliance controls, according to an individual with direct knowledge of the matter.
Kenyan sanctions imposed Tuesday to clamp down on the finances of Somali terrorist group al-Shabab have sharply impacted money remittance businesses in London, company agents told ACAMS moneylaundering.com Thursday.
U.S. bank restrictions have exacerbated the troubles of Somali money services businesses to the point that companies and individuals alike are resorting to complex workarounds to send money to the East African nation.
Fear of regulatory trouble is compelling some banks to turn down business to avoid the huge compliance costs of vetting potential clients, attendees at a banking conference in London heard Thursday.
Short of abiding by the Community Reinvestment Act and other prohibitions against discriminatory lending, banks still have the right to choose who they'll do business with. While that seems like an obvious statement, it gets drowned out in the debate about "de-risking."
Somali pirates are exploiting remittance services offered by regional telecommunications companies to launder the proceeds of kidnapping and other crimes, according to the World Bank.
The British High Court injunction Tuesday against Barclays ending its relationship with Somali money services businesses is likely to keep the bank from dropping the accounts for five or six months, according to compliance experts.
American and British officials will likely weigh steps to quash fundraising by the Somali rebel group behind the terror attack and hostage standoff in Kenya, two investigators said Monday.
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In the years since a high-profile mistrial in the prosecution of a Texas charity, counterterrorism financing officials have shifted their focus away from nongovernmental organizations and toward individuals sending money abroad.
When training agents working through money services businesses, compliance officials should take a creative, multimedia approach, said Anthony Rodriguez, global compliance officer at the Los Angeles-based Associated Foreign Exchange, Inc (AFEX).
Financial institutions will be paying closer attention to the accounts of their shipping clients after the Obama administration issued an executive order aimed at curtailing Somali piracy, say consultants.