As Wire Transfer Options Dwindle, Somali-Americans Fear A Lost Lifeline : Parallels Every year, money transfer brokers help Somali-Americans send more than $200 million to family members in Somalia. But one of the few banks to support that process will soon back out.
NPR logo

As Wire Transfer Options Dwindle, Somali-Americans Fear A Lost Lifeline

  • Download
  • <iframe src="https://www.npr.org/player/embed/328183695/329731534" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
As Wire Transfer Options Dwindle, Somali-Americans Fear A Lost Lifeline

As Wire Transfer Options Dwindle, Somali-Americans Fear A Lost Lifeline

  • Download
  • <iframe src="https://www.npr.org/player/embed/328183695/329731534" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

STEVE INSKEEP, HOST:

Somali-Americans say a crucial source of economic support to their homeland is in jeopardy. One of the last banks to facilitate cash transfers to Somalia is getting out of the business. And the Somali community in Minnesota, which is largest of any state, is lobbying Washington to find a way to keep the financial lifeline open. Matt Sepic, of Minnesota Public Radio, reports.

MATT SEPIC, BYLINE: After a quarter-century of conflict, there has been some good news in Somalia lately. Militants have been forced out of major population centers, and the U.S. may soon reopen its embassy in Mogadishu. But there's some bad news too. Eight agencies feel this year's lack of rain could lead to another drought and famine.

That has Somali-Americans, like 28-year-old, Goth Ali, concerned for family members in East Africa. Ali works at a cell phone store in Minneapolis in a Somali shopping mall where you can get everything from traditional clothing and rugs to lunch and a haircut. At the mall's three money service businesses, also known as hawalas, you can wire cash anywhere in the world. Ali says every month he sends $400 to $500 to his siblings, including an older brother in Somalia who struggles to make ends meet - even though he owns a small business there.

GOTH ALI: It's not enough to provide for his family. The money we send to Somalia is a lifeline.

SEPIC: Hawala owner, Shakir Hussein, says the money transfer business is tightly regulated.

SHAKIR HUSSEIN: If somebody walks in right now, the first - I'd require identification. Even if you're sending $50, I have to get identification.

SEPIC: The charity, Oxfam, says businesses like these help Somali-American send more than $200 million to Somalia every year. Oxfam says remittance payments from the U.S. and elsewhere account for an astounding 40 percent of Somali's economy. But hawalas need bank accounts to operate. And that's a problem because most American banks are reluctant to work with them. They fear the money could wind up in the wrong hands, and it has.

In 2011, two Somali-American women from Rochester, Minnesota were convicted of funneling money to the terror group al-Shabab. That led a Twin Cities bank to get out of the wire transfer business. Now Merchant's Bank of California, one of the last to work with hawalas, says it's pulling the plug at the end of the month. Merchant's officials didn't respond to repeated calls for comment, but banking consultant, Bert Ely, says many in the industry fear severe penalties for transferring dirty money, even accidentally.

BERT ELY: There have been some banks - particularly large banks - that have been fined very significantly for violations in this area. And so the safe way to play it is just not to do the business.

SEPIC: On top of the financial threat looming over Somalia, there's the natural one. Aid agencies are worried about a potential repeat of a drought-related famine that killed more than a quarter million Somalis three years ago. Jaylani Hussein, with a Twin Cities-based American Relief Agency for the Horn of Africa, says it's urgent that Congress pass legislation to make it easier for banks to handle wire transfers.

JAYLANI HUSSEIN: This is an issue that just needs to be resolved now. Otherwise we'll be talking in August and talking about the number of people we've lost. And we have something we could do today to save lives.

SEPIC: A bill from Democratic Congressman, Keith Ellison, passed the Republican-controlled House in May and is now in the Senate. Ellison says it's streamlined some money wiring regulations that'll reduce the risk for banks. Ahmed Ali, who wires cash to relatives who farm in rural Somalia, says his money can make the difference between them eating or starving.

AHMED ALI: Without that money, they cannot support their livestock. There is no government functioning down there now, so that's why this money helps a lot.

SEPIC: Aid groups say if the money wiring problem is resolved, they'll be able to spend less time lobbing and more time trying to prevent another famine in Somalia. For NPR News, I'm Matt Sepic in Minneapolis.

Copyright © 2014 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.