Somaliland Minister Says Blocking Remittances Would Spur Criminal Activity

Somalians in London protesting at Barclays bank. They want to maintain remittances sent to the Horn of Africa state through the financial institution., a photo by Pan-African News Wire File Photos on Flickr.

Somalia: Somaliland Minister Says Blocking Remittances Would Spur Criminal Activity

BY KARRIE KEHOE, 2 DECEMBER 2013
AlterNet

If Barclays were to stop Somalis and Somalilanders from sending money home - a cutoff being weighed in an effort to prevent the flow of funds to terrorists - it could spur a surge in money laundering and migration to Europe, according to a minister from Somaliland.

Barclays Bank had announced in May plans to close the accounts of around 80 remittance companies for fear that funds might end up in the hands of groups branded as terrorists, but its July deadline was extended several times because of protests.

Then last month, the UK high court ordered Barclays to keep the account of the Somali remittance company Dahabshiil open. The temporary injunction is set to remain in place until a trial is concluded in 2014.

A cutoff by Barclays - the last major UK bank providing money transfer services to Somalia - would deliver a cruel blow to millions of Somalis who depend on remittances from relatives abroad. Aid agencies have called on Barclays to scrap its plans.

"Remittances for the Somali people in general - and that includes Somaliland people - they are really a lifeline," said Saad A. Shire, the minister of planning and development for Somaliland, an autonomous region of Somalia.

"Without that support I think that a lot of people would be ending up in camps, as a matter of fact, and a lot of people would be migrating, a lot of young people would be migrating from Somalia and Somaliland to Europe," Shire told Thomson Reuters Foundation in a telephone interview on Thursday.

MONEY PUSHED UNDERGROUND

Diaspora remittances of some $1.5 billion a year are Somalia's biggest foreign currency earner, accounting for one-third of the country's economy and two to three times the amount provided in aid.

An estimated 40 percent of Somalis - more than four million people - receive remittances from family and friends overseas. Remittances from Britain, most of them sent through Dahabshiil, are worth an estimated $160 million a year.

Shire argued that a Barclays block on remittances to Somalia - which does not have a functioning banking system because of its long-running civil war - would actually encourage criminal activity by diverting the flow of cash to illegal channels.

"We hope that common sense will prevail because I think if Barclays stops and closes down the accounts, at the end of the day people will still be sending money, but that money will go underground and unchecked, and I think it will allow criminals to take advantage of that," he said.

"So you will see money being laundered underground in the way that criminals who are involved in the trade of drugs launder money ... I understand that Barclays have concerns of money laundering and irregularities, and I think we can address these issues specifically," Shire said, though he did not elaborate further.

Read the original of this report on AlertNet Climate, the Thomson Reuters Foundation's daily news website on the human impacts of climate change.