Global Policy Forum

US Somalis Can’t Support Families During Famine, Thanks to Anti-Terror Laws


Due to US anti-terror laws, many US citizens face severe restrictions when attempting to directly send money to Somali Famine victims. Somalia has not has a stable government or central banking system for the past 20 years. As a result, Somalis have created hawalas, or money transfer companies that relay money through a neighboring country’s bank. The system worked well before 9/11, but since then, sending money to hawalas has been classified as “financing” the terrorist group, al-Shabab, preventing individual citizens from sending crucial aid.

By Channing Kennedy

December 16, 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.

To find out how Somali community organizers are fighting for their loved ones abroad, I spoke with AFSAN’s Hassan Warsame, a financial consultant and activist with twenty years of experience in anti-money laundering regulations. He’s in Minneapolis working with Somali Action Alliance and other groups, to help reach an arrangement between Sunrise Community Banks and Somali remittance companies.

Most of the reporting on the story so far has described hawalas as an ‘informal’ money transfer service. Is that accurate? And why are hawalas so important to Somalia’s economy?

Well, first of all, when people hear ‘hawala’ they think of something that’s underground and informal. This is totally different; it’s a legal business that has a license with the Department of Treasury, as well as with every state in which it operates. 

Second, this remittance business is unique. The reason is, the customers are sending money to Somalia, or to Somali refugees in neighboring countries like Kenya, and that means there is no alternative to send money to a loved one or family member. The only way to get money to them from the U.S. or anywhere else is through this remittance system, because there’s no banks in Somalia! Money-wiring services like Western Union and MoneyGram do not operate in Somalia.

The livelihood of millions of Somalis depends on these remittances from the U.S. and other western countries. And the fact that there is no other alternative, this puts at risk millions of people that will not be able to feed themselves, kids that will not be able to go to school, will not be able to get medical attention because they don’t have money. The whole Somalia business economy, really, is built around remittances — so that, also, will collapse. It’s a very, very serious issue that could easily impact millions of people; it’s as big as or bigger than the famine problem thappening hat’s now in Somalia. And it will contribute to the chaos and instability.

So this is a bad way to fight terrorism.

Oh absolutely, this is the wrong way — this would be a gift to al-Shabab, the radical group that’s operating in Somalia. They will use this as a propaganda tool. And also, this is not the way to gain the trust and the confidence of the local population! If you want to win people’s hearts and minds, this is absolutely the wrong approach.

And it’s a humanitarian issue. Hawalas are probably by far the largest aid facilitators in Somalia. I mean, there is no aid organization that handles the amount of money that goes to Somalia from the diaspora. Hawalas sustain a lot of people that don’t have any other income besides this one hundred dollars, or fifty dollars, from somewhere in the U.S., some small town, by a hardworking Somali who’s probably working two shifts to sustain family members in Somalia.

What are the alternatives?

Well, let me talk about what’s going to happen, actually. If Sunrise Bank closes those accounts, the remittance agencies will go out of business. When they close their doors, those Somali customers who normally send that fifty or one hundred dollars will not have an outlet to send that money. Which means that the beneficiaries in Somalia who rely on that hundred dollars to buy food and other necessities will not be able to do that. So the immediate impact is that the business will stop, but the real impact is on those people on the ground in Somalia that have no other source of income.

There is no alternative. The Somali customer here who sends that money cannot just walk into a bank and wire money. They cannot go to Western Union or MoneyGram to send that money. 

What’s the strategy, then? Are you talking with Sunrise Bank and saying, we’re going to pull our accounts?

Actually, Sunrise Bank has been very good to the Somali community. They have been the only bank to provide service to Somali remittance agencies, for a very long time. And as you know, they gave a two-week extension, and they’re also very much open to solutions. So there’s a discussion among Somali remittance operators to work with Franklin Bank and come up with a long-term solution, and we believe that’s still possible. 

What does a best-case scenario look like, for this fight?

The best case scenario will be for Somali remittance agencies and Sunrise Bank to sit down and come up with a workable long-term solution, so that those millions in Somalia and in Somali refugee camps can continue receiving the money sent by their loved ones here in the U.S. The best scenario is to keep those accounts open, and to solve any concerns or questions that Sunrise Bank or Franklin Bank is having. A next best solution is to look for other banks, so there are alternatives.

Who are your allies in this fight?

We’ve been working closely with a lot of officials here in the state. Keith Ellison has been a great help, Al Franken has been working hard, Amy Klobuchar… All the elected senators have been heavily involved and have really put in a lot of effort into talking to the Department of Treasury, the White House, the State Department, the Attorney General. Everyone realizes how important this issue is. It’s an issue of life and death for millions of people, and that will have a direct impact on U.S. security.

And Hassan, if I can ask, do you have family in Somalia that you send remittances to?

Yes, I do. I send money regularly to my mother in central Somalia, in a small town that never had a bank — and of course there’s no Western Union of Moneygram there, but there are at least four Somali remittance agencies in that city. So every month, she gets $200 from me. I walk into a remittance office, and that can be anywhere — if I’m travelling, it could be out of state. If I deposit the $200 tonight, for example, my mother will pick it up tomorrow. They will actually call her and tell her, ‘you have money available.’


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