Anti-terrorism regulations cut a critical lifeline to Somalia

“Yes, Mogadishu. Yes, Somalia. Can I get a receipt?” asks Ayan Mohmed

She’s just finished listing a string of account numbers and pushed five $20 dollar bills through a plastic window located behind a humming drink case at the Fresh and Green Produce Market in Tukwila.

That receipt confirms that her money, earned as a hairdresser, will make its way to her waiting husband back in Somalia.

It’s called “hawala” — Arabic for transfer — and money transfer operations (or MTO’s) like the “Dahabshil” MTO operating out of Fresh and Green works with a counterpart who will hand over money to the intended recipient in Somalia in a matter of hours.

Listen: End of wire transfers from Seattle to Somalia by Jessica Partnow for KUOW Public Radio

Eventually the two MTO branches have to settle up accounts, requiring a bank willing to wire money in between the United States and Somalia (or between the United States and an overseas bank that will then transfer to Somalia).

It’s complicated but it’s the only legal way to get money to the country — which has no formal banking system and no wire transfer services like Western Union — and today it will collapse completely, at least for Somali Americans in Washington state.

“It’s just like seeing a famine coming and not being able to do anything,” says Aynab Abdirahman, Chairman of the Washington State Refugee Advisory Council. “A lot of people are going to die.”

A 2013 report by Oxfam America, a humanitarian organization working on this issue, estimates that Somali Americans and Somalis in the United States send as much as $215 million back to their home country.

According to Jonathon Scanlon at Oxfam America, the value of these remittances are comparable to U.S. government foreign aid, humanitarian assistance and foreign investment to the country.

“It really is the largest and most important financial flow going into Somalia and most of it goes to families” says Scanlon, “Money going home to help keep kids in school… Money going home to help out the family business, money going home to just keep food on the table. It really is a lifeline for the country.”

But this lifeline has been under threat for some time. The hawala system has been used by a few as a cover for smuggling funds from the U.S. to extremist groups like Al-Shabab (there was a local case of this last summer) and as a result, restrictions on the system have grown increasingly strict. I wrote about this a year and a half ago when Barclay’s Bank announced it would no longer provide the wire transfer service between MTO’s.

Back then, there were still other banks serving money transfer operations in the Seattle area but many in our Somali-American community (one of the largest in the country) were already predicting a chain reaction. And they were right.

For these banks the difficulty of complying with U.S. anti-terrorism and international banking transparency regulations simply makes transferring funds to Somalia too risky.

Last week, Merchants Bank of California, the last bank still providing this transfer service for MTO’s in Washington state announced in a letter (obtained by Oxfam) that it too would end its partnerships with MTO’s serving Somalia today.

Merchants Bank didn’t respond to phone calls or emails, but the letter sent to MTO’s simply states, “We cannot in good faith meet the obligations [set by the Office of Comptroller of the Currency] given the complexity of your business.”

Scanlon doesn’t blame the banks. He says that they’ve been asked to take on too much risk and that the only hope for keeping the system alive is for that risk to be transferred to the U.S. government, perhaps via one of the Federal Reserve Banks.

Those I spoke with at Fresh and Green agreed that the United States government must step in to help. And there was a palpable rising panic as they calculated the potential loss to out-of-work relatives, aging parents and needy spouses back in Somalia.

“A lot of people are asking me… ‘Are you going to stop? Will we no longer be able to send money?’” says Dahabshil operator Abdiraza Mahand Osman in the little fluorescent lit office on the other side of the plastic window, “I say ‘I can do nothing. Maybe be patient, maybe the American government will do something.’”

But in the meantime, he’s planning to be out of work.

Sarah Stuteville

Sarah Stuteville is a print and multimedia journalist. She’s a cofounder of The Seattle Globalist. Stuteville won the 2011 Sigma Delta Chi Award for magazine writing. She writes a weekly column on our region’s international connections that is shared by the Seattle Globalist and The Seattle Times and funded with a grant from Seattle International Foundation. Reach Sarah at sarah@seattleglobalist.com.

Jessica Partnow

Jessica was the founding executive director of The Seattle Globalist. She is an international radio journalist whose work has been broadcast by dozens of public radio stations, networks and programs. She has received two Edward R. Murrow Awards, regionally for her radio series Life on the Duwamish and nationally for Generation Putin, an hour-long public radio special on young people and political change in the former Soviet Union. She won a 2015 Gracie Award for her radio series on humanitarian drug trafficking. Jessica teaches journalism at the University of Washington.