Tuesday, August 27th: Barclays’ (LON:BARC) decision to stop facilitating cash transfers to Somalia might bring even more poverty to the lawless country in East Africa. About half of the impoverished 10-million population of Somalia and the self-declared autonomous state of Somaliland depend on $1 billion (£0.64 billion) worth of remittances coming from 1.5 million Somalis living overseas. Barclay’s shares were trading down 2.21 percent at 280.50p as of 10:31 BST.
The British bank plans to cut off around 250 cash transfer agencies, including some in Somalia and Somaliland, from the end of next month. Barclays said in June it would stop the payments, claiming that some of the cash transfer services could be helping terrorism and money laundering.
Last year HSBC was fined $1.9 billion (£1.22 billion) for money laundering and Standard Charterer was fined $677 million (£435 million) for moving funds on behalf of Sudan and Iran in violation of international sanctions. Barclays is most likely to be considering leaving the Somali market as it fears that regulators might target it next. Earlier this year the bank wrote in a letter to Dahabshiil, the main funds transfer company operating in Somalia, that its move was “a commercial decision due to the risks of the sector in which you operate”.
Scott Paul, policy lead at Oxfam which has researched remittances, has said that regulators have never been able to find any evidence that money remittance companies have participated in financing global terrorism. He argues that if regulators require banks to stop providing these services, the alternative is “suitcases on planes”, in which case the authorities will have no way of tracking the money.
Barclays has recently launched its own money transfer service together with Western Union which, however, has only one branch in Somalia. The US-based company charges almost double what Dahabshiil does for a transfer.
Source INVEZZ.com
