http://grownupinsights.com/tag/retirement-income/ Mogadishu needs to rebuild.Will part of the remittances fund Al Shabaab operations? Barclays could face hefty fines for money laundering,similar to what HSBC faced in Mexico.
Somali money transfer service Dahabshiil has won extra time to prevent Barclays bank from pulling the plug on its remittance operations, winning an interim injunction Tuesday that preserves a financial lifeline for the Horn of Africa nation.
The ruling was welcomed by academics, aid workers, and the Somali government, which has warned that millions of ordinary people could see their incomes take a hit if the decision to cut Dahabshiil loose went through.
“These remittances remain an essential source of income for more than half of all Somalis,” Prime Minister Abdi Farah Shirdon said in a statement, urging both sides to come to an understanding that would preserve the money transfer service.
Britain has more than 100,000 Somali-born residents, according to recent census figures, and experts say the estimated 100 million pounds ($160 million) worth of remittances they send home annually are critical to propping up Somalia’s economy, still struggling to emerge from two decades of anarchy. One estimate puts the global total of Somalia-bound remittances at $1.3 billion a year.
Barclays, which runs Dahabshiil’s accounts, faces its own concerns. Several major banks have recently been hit with huge penalties over money-laundering failures, and Barclays said its decision to break with Dahabshiil was part of a company-wide move to insulate it from legal risk.
The decision “has not been an easy one,” Barclays said in a statement first posted to petition website Change.org several weeks ago. It said it made the call “based upon the well-known risks of money laundering and terrorist financing in the money service business sector.”
“If we were caught up in such transactions Barclays could be punished by our regulators and potentially fined, as we have seen with global banks receiving fines of hundreds of millions for anti-financial crime failures,” the statement continued. “We know not everyone will agree with our decision but hope you can now see why we made it.”
Such concerns mean Dahabshiil would likely struggle to find another bank to take over Barclays’ services.
The High Court decision means that Barclays must keep processing Dahabshiil’s payments until a full trial is held or both sides cut a deal. Dahabshiil said it anticipated a court battle sometime in 2014 unless a deal is struck.
- Somali remittances granted reprieve (bbc.co.uk)
- Somali remittances: Dahabshiil granted Barclays reprieve (theguardian.com)
- Somali Money Transfer Service Wins U.K. Reprieve (world.time.com)
- Somali money transfer service wins UK reprieve (miamiherald.com)
- Somali money transfer service wins UK reprieve (cnsnews.com)
- Somali money transfer service wins UK reprieve (jsonline.com)
- Somali money remittances granted reprieve (africareview.com)
- Somali remittance service wins reprieve at Britain’s High Court, preserving financial lifeline (canadianbusiness.com)
- New Tom Hanks movie features Minn. Somali actors (bigstory.ap.org)
- Ex-Somali colonel told to pay $15M in torture case (bigstory.ap.org)