But the Minneapolis store owner is afraid the money transfers could end.
Tougher federal banking rules designed to thwart funding for terrorist networks has led the nation’s top banks to close their accounts with the money-wiring services that Somalis rely on.
The situation has reached “crisis proportion,” Somali financial leaders say. They predict most of Minnesota’s money-wiring businesses, often referred to as hawalas, could close within weeks if a solution isn’t found.
They have been scrambling to meet with congressional leaders, even bringing in a representative from the United Nations last week, to find a solution.
“In Somalia, there is no banking system, no Western Union, so the only way to send money is this system,” said Ghedi, a store owner in south Minneapolis.
The system is a lifeline to Minnesota’s 30,000-strong Somali community, which sends millions of dollars a month to pay for their relatives’ rent, groceries, hospital stays and other emergencies, said Garad Nor, board chairman of the Somali Financial Services Association, the umbrella group of money-transferring businesses.
Ghedi says the service is above board.
“We present an ID when we send the money, so they [authorities] know who sent it,” Ghedi explained. “We send the name of the person who will receive the money, and their telephone number.”I don’t know what we’d do without the hawalas,” he said.
Crackdown came after 9/11
Somali money-wiring businesses came under investigation after Sept. 11, 2001, when the federal government rushed to trace the source of funding for Al-Qaida’s terrorist network. In several high-profile raids, the federal government shut down five Minneapolis money-transfer businesses under suspicion that they were laundering money to terrorists.
In the end, none of those hawalas were the subject of federal criminal indictments, said Tom Heffelfinger, who was U.S. attorney for Minnesota at the time.
However, the Minnesota Department of Commerce began requiring that the businesses register with the state. They are now licensed and subject to annual independent audits, Nor said.
A stroll through a Somali shopping mall in south Minneapolis shows the money-wiring services remain vibrant. At least three money-wiring storefronts are tucked behind the colorful Persian carpets leaning against the walls and piles of velvet prayer cushions often displayed inside store doors.
Abdirahman Omar’s computer business shares a storefront with one of them. Omar sees dozens of people each day approach the teller behind the window, asking to send money home.
Omar says he sends $400 each month. His money is wired to a U.S. bank, which in turn wires it to United Emirates Bank in Dubai. That bank works with local representatives in Somalia who distribute the money quickly. Omar’s family typically gets the cash within two days.
Part of Omar’s money pays for his mother’s apartment in Mogadishu, he said. Part is sent to each of his brothers to pay for food. His brothers used to have good jobs, one as a port supervisor, another in the military. But since the government collapsed, finding a decent job is impossible, he said. People scrape by, dependent on the cash they get from relatives abroad, he said.
A big advantage of these informal banking networks is they can reach into rural areas, said Mohamed Ali, social service director for the Confederation of Somali Community in Minnesota. Ali, for example, is able to send money to his stepfather, who is a camel herder “living in the bush.” He also supports his stepmother, who weaves mats and sells them, as well as any number of relatives and friends who call him in emergencies.
“If they don’t get assistance from other countries, they will die,” he said. “This affects everyone, everyone.”
A balancing act
The Treasury Department is aware of the unusual situation facing the Somali community, said Steve Hudak, a public affairs officer for the department in Washington. It has been contacted by Minnesota Sens. Norm Coleman and Mark Dayton and Rep. Mark Kennedy, as well as the Somali financial leaders.
The tougher banking rules, promulgated last year, were not aimed at any particular community, Hudak stressed, but rather at all of the so-called money-service businesses (MSBs). While most are legitimate operations, some have been conduits for illegal activities, treasury officials have said.
The trick is to balance the needs to combat terrorism funding with the legitimate banking needs of worldwide communities, Hudak said. The department “is continuing to examine the issue,” he said.
A growing list of banks
Meanwhile, the list of banks closing their accounts with the money-wiring businesses continued to grow last month, with TCF Bank, Wells Fargo and U.S. Bankcorp joining the group.
TCF spokesman Jason Korstange said the new banking rules, which require banks to “police” the money-wiring businesses they have accounts with, were too “onerous.”It’s simply that we don’t have the systems, the manpower to follow the regulations the government has put on us,” he said.
Abdullahi Hassan, secretary of the Somali Financial Services Association, said his organization does not fault the banks for pulling out. Somali money service businesses just want to be “treated as a normal business,” he said. “We just want the federal government to treat MSBs as normal businesses.”
TCF and other key banks have said they will shut down operations with the money-service businesses by Sept. 14. Nor predicted that nearly all of the 14 money-wiring businesses in his association would close when that happened. At this time, there is no other way for Somalis to send money home, he said.
“But I’m hoping some kind of solution can be reached,” said Nor, who is in contact with the Treasury Department. “I’m hoping the American people will come out and do something.”
Jean Hopfensperger • 612-673-4511 • hopfen@startribune.com
Source: Star Tribune, Sept 4, 2006
