Will Barclays close off Somalia’s money transfers?
When I need to manage my finances, I simply logon to my internet banking and move my money around virtually. Even between two different banks I have seen instantaneous transactions happen before my eyes on a computer screen at the tap of my fingers. When I was at university I didn’t think twice about becoming dangerously low on money and then ringing my parents and asking them to wire me a tenner via online banking so I could get something to eat that day.
Speaking of cutting things to the wire, I have it on good authority (my mother’s) that a certain sibling of mine rang her from the queue outside of a London club and asked her to transfer some money to him so he could pay the entry fee when he got to the front of the line!
I also remember the frustration my parents met with when trying to transfer a large sum of money for my brother’s wedding, it seems that mere days are just not quick enough for us anymore.
But what about those people who live in developing countries, with developing economies and often with no banking structure? In the West 89% of adults have a bank account but in the developing world this figure is as low as 41%. So many individuals in developing countries rely on Money Transfer Operators (MTO) to send and receive money. And it’s not just businessmen using these services, but individuals and families who need to send money to each other in order to survive, charities who need to pay local staff and receive much-needed funds for projects on the ground.
You may have heard in recent months that Barclays Bank have been threatening to close some 250 accounts attached to MTOs in Somalia due to fears that money is being channeled to Al-Shabab, a terrorist group. One of these accounts is used by Dahabshiil, which is by far the largest MTO is Somalia. Estimates suggest that some $1.3-1.5bn is received through foreign remittances into Somalia each year and a third of this is sent through Dahabshiil. Approximately $500m of this is sent from the UK.
Barclays have stalled this ban twice since July amid calls to reconsider, but with the new deadline of 30 September looming, will they go ahead with this? In a statement Barclays says that many MTOs “don’t have the necessary checks in place to spot criminal activity” however in a recent statement the head of Dahabshiil said they would be happy to work with UK financial institutions to find short- and long-term solutions.
The consequences of cutting off these MTOs are not limited to the direct impact on individuals and family members but will also extend to charities working in the country and, without a banking structure, may drive money transfers underground where it would be more difficult to track illicit funding of terrorism. Mo Farah, born in Somalia’s capital Mogadishu and twice gold-medal winner at the London 2012 Olympics, alongside other organisations such as Oxfam, is calling for a 12-month delay by Barclays on the ban to allow the MTOs to find a durable solution and so that transfers are not disrupted in the meantime. The Mo Farah Foundation itself, alongside other massive organisations and even the UN, uses Dahabshiil to channel funds and pay local staff in Somalia. Mo Farah has said “this decision could mean life or death to millions of Somalis” and has urged all of his Twitter followers to sign the now 100,000 strong Change.org petition.
So next time you reach for your online banking Secure Key or Pin Sentry or whatever other magical device your bank proffers, and you get exasperated as you type the 2nd, 3rd, 7th, 10th and 25th letters of your password, why not stop, take a deep breath, consider the challenges faced by those in the developing world to access their money, and just appreciate how convenient your local, national and international banking is.
UPDATE: Dahabshiil won a UK court injunction meaning that Barclays will keep providing them with remittance services until 16th October.
written by Jesamine Somerville