US bank ends Somali money transfers
The move could have a "catastrophic impact", development groups said.A US bank said it will stop doing business with companies that transfer money from Somalis living in the United States to families back home.
Merchants Bank of California, who made the announcement last week, handles an estimated 60 to 80 per cent of the money bound for Somalia. Virtually all major US banks have now ended remittance services to Somalis in the United States.
The bank said the Office of the Comptroller of the Currency (OCC), an independent bureau within the US Treasury Department, had issued it with a "consent order" instructing it to enhance its policies and procedures to detect potential violations of the law.
"We cannot in good faith meet the obligations of the Consent Order given the complexity of your business," the bank said.
The country's economy has for many years relied on remittances from migrants.The UN estimates that 40 per cent of the Somali population relies on such remittances.
The United States is the biggest source of remittances, accounting for nearly 20 percent of the total, charity Oxfam says.
"The remittance companies and the whole sector is the backbone of the Somali economy. We think this is going to have some serious and possibly catastrophic impact," Degan Ali, executive director of humanitarian and development group Adeso told the Thomson Reuters Foundation.
Many banks across the globe have already closed the bank accounts of Somali money transfer companies over concerns that the money transmission sector was at risk of being used for money laundering and terrorist funding, and did not meet new regulatory requirements.