The California-based U.S. Merchants Bank, the last financial institution to accept and process remittance payments to residents in the country of Somalia, has bowed to stricter U.S. anti-money-laundering laws. This change prohibits Somalis living, working, or going to school in the United States from sending desperately needed funds to their families in the beleaguered and troubled East African country.
With 80 percent of U.S.-based Somalia remittance payments being handled by U.S. Merchants Bank, it is estimated that the institution’s Carson, California offices have transferred 200 million U.S. dollars annually to the African country for several years. All of that came to a halt on February 6th, 2015. Pressure from the U.S. Department of Treasury and fears of being charged with financially aiding a known terror group under Title III of the Patriot Act, U.S. Merchants Bank discontinued its remittance payment program.
Somalia has no established banks or financial institutions, and is completely dependent on foreign aid and remittance payments from families overseas. Somali citizens are bracing for the worst, as this financial roadblock is set to cause more hardship that the citizenry will have to shoulder following drought, famine, and worsening regional violence.
So what is a remittance payment? The dictionary defines it as “the sending of money, checks, etc., to a recipient at a distance.” In the more common vernacular, one could simply think of them as “Western Union” or “MoneyGram”—both popular with migrant workers here in the U.S. sending money back home to Mexico. These are known as money services businesses, and up to 60 percent of money flowing into Somalia comes from these institutions.
Somali-Americans use these services to send badly needed money back to relatives to help provide food, water, medicine, clothing, school supplies, and tuition—the basic necessities we in the States take for granted. The United Nations estimates Somalis around the globe send home around $1.6bn annually, which is substantially more than the sum of foreign aid Somalia receives annually from all charitable sources. To say this is a vital support system is an understatement.
On November 19th, 2014, the U.S. Department of Treasury’s Office of the Comptroller of Currency sent this letter outlining the new rules on money services businesses (MSBs). In June of that same year, U.S. Merchants Bank was slapped with a 42-page cease-and-desist order served by the Office of the Comptroller of the Currency, or the OCC. The OCC wanted the bank to clarify some anti-money laundering procedural discrepancies and ordered them to determine “more exactly” where these funds were going, and whether they were being used for “legitimate purposes”—not falling into the hands of al-Shabaab or other terror groups in the region.
As the deadline loomed closer, U.S. Merchants Bank stated that they could not meet the requests or requirements of the Treasury Department’s OCC in regards to more clearly defining the destination of the transferred funds or if said funds were being used for nefarious means. So, the bank closed its remittance transfer operations to Somalia, leaving a complete vacuum in Somali citizens’ financial security.
Some Somali-Americans, along with Oxfam International, have taken to Twitter with the hashtag #IFundFoodNotTerror to drum up support for the nation. Yet little if any groundswell has occurred. We all know what happens with hashtag activism, especially in regards to Africa. Now these families are desperately searching for alternatives to get funds to their loved ones, opening them up the potential for catastrophic risk if they are forced to deal with the black marketeers or grifters ready to take advantage.
Another hard fact here is this has the potential to become a fantastic recruitment tool for al-Shabaab. The Somali people won’t look at al-Shabaab and blame them for this, yet according to Title III, that is the desired outcome. No, they will look to the Somali federal government and the West as the authors of this tragedy. And then the jackals will approach, with a grin and grain, fattening the sheep for slaughter.
(Featured image courtesy of thesomalipress.com)