Mogadishu---Mohammed Adan's four school-age children are the latest victims of new international banking regulations aimed at terrorists, but hitting ordinary Somalis hard.
Adan's brother lives in the United States where he runs a small business and sends money home to Somalia to pay school fees. Now new rules imposed this month to stop money laundering and terrorist financing mean all US transfers to Somalia are blocked.
"Why should someone stop my brother from helping my family?" Adan asked as he left a hawala -- or money transfer office -- empty handed after the payments he was desperately waiting for failed to come through.
Terrorist financiers undoubtedly use the hawala system but so too do millions of Somalis struggling to get by with the help of relatives abroad. The tough new bank restrictions do not discriminate and are severing what the government calls a "vital humanitarian lifeline" to Somalia where no formal banking system exists.
Every year diaspora Somalis send an estimated $1.3 billion (1.1 billion euros) home via the hawala system, a sum that dwarfs annual foreign aid to the impoverished Horn of Africa nation.
Hawalas are cheap and efficient to use, allowing money to be deposited in a foreign bank and instantly credited to recipients who have to provide only basic identity details matching those provided by the sender.
Besides the Horn of Africa, the ancient money transfer system based on trust and honour is also used across the Middle East and North Africa.
But banks in Britain and the United States have become increasingly reluctant to keep the hawala businesses as customers for fear of regulators who might prosecute them for financing terrorism and money laundering.
This month, the US-based bank that provides the majority of services to Somali money transfer companies said it would stop doing so after receiving a "consent order" from the US Treasury compelling it to increase oversight of clients' businesses.
- 'Catastrophic' move -
Aid groups said the decision by Merchants Bank of California would stop up to 80 percent of the $200 million sent home annually by relatives in the US.
Degan Ali, director of aid agency Adeso, called the cuts "catastrophic".
As a result Somalis are "losing their only formal or transparent channel through which to send money," a joint report by Adeso and Oxfam warned this week.
The crackdown is fuelling anger and prompting warnings from aid agencies that the restrictions could actually increase criminality, by driving transfers underground where they are hidden from scrutiny.
The charities warn that cutting services could actually boost criminal and terrorist gangs, including the Al-Qaeda-affiliated Shebab, who carry out regular attacks inside Somalia and the region, including the 2013 massacre of 67 people in the upmarket Westgate mall in the Kenyan capital Nairobi.
"Informal business networks, supported by couriers carrying hundreds of thousands of dollars, would likely replace the current formal systems that are accountable to regulators and the communities they serve," the report said.
"Families that depend on remittances would suffer, while the criminal networks that seek to exploit the system would benefit."
AFP
