U.S. Somalis Can’t Support Families During Famine, Thanks To Anti-Terror Laws

Posted: Dec 19, 2011

Like a lot of small countries on the wrong side of post-colonialism, Somalia’s GDP is deeply dependent on remittances, money sent back home from abroad by migrants who leave the country to find work. But unlike other countries, Somalia has spent twenty years with no government worth mentioning; as a result, Somalia has no banks to receive money transfers. Even predatory transfer centers like Western Union can’t set up shop. So, Somali innovators have created hawalas, money transfer companies that relay money through a midpoint in a neighboring country’s bank.

This system has worked well enough for years — but since 9/11, hawalas in the United States have come under increasing federal scrutiny and complex anti-terror laws, so much so that most American banks simply won’t work with them. Today, one of the few remaining banks that serves the Somali community in this way is Minneapolis’ Franklin Bank, part of Minnesota’s Sunrise Community Banks network. Because of the Twin Cities’ massive Somali community (and to the reticence of other banks), Franklin Bank has become a hub for hawalas across the country, overseeing hundreds of millions of dollars in small-amount transfers to family members back home, and helping Somalia deal with a horrific famine crisis.

Now, following the conviction of two Minneapolis women accused of using hawalas to finance Somali radicals al-Shabab, Franklin Bank has announced that it will be ending its hawala program in the next two weeks; although the bank has been an ally to the Somali community for years, the risk of inadvertently violating federal anti-terror laws is simply too great. And while estimates vary as to how many hundreds of millions of dollars in remittances get sent from the U.S. to Somalia each year, nobody doubts that the economic results with have deadly consequences. Not to mention, of course, the golden opportunity this will represent for al-Shabab. Read more here.

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