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Somalia: Somali Remittances Update - Banking Up the Wrong Tree

19.02.2014

Interrupting remittances to Somalia could have undesirable effects, the World Bank's Sonia Plaza has warned in a recent article: "Anti-Money Laundering Regulations: Can Somalia survive without remittances".

Interrupting remittances to Somalia could have undesirable effects, the World Bank's Sonia Plaza has warned in a recent article: "Anti-Money Laundering Regulations: Can Somalia survive without remittances".

This will be discussed at the Working Group on a Safer Corridor for UK-Somali Remittances which started work on Monday 17 February. The World Bank is part of both the Advisory Group and the Technical Implementation Group for this initiative. This meeting follows the launch of the UK government's Action Group on Cross-Border Remittances.

If money service businesses (MSBs) are often associated with money laundering, leading Somali money transfer operators (MTOs) are adamant they comply with all regulatory directives, allow all inspections and are willing to adhere to even stricter regulation.

According to Edward Paice, Director of Africa Research Institute, the crisis for Somali remittances was caused by a fragmented banking system and the inadequate response of regulators, not by Somali MTOs. It is therefore very important to maintain the flow of remittances through existing MTOs, in the absence of a functioning banking sector or alternative channels.ADNFCR-2976-ID-801695527-ADNFCR