A City Council committee approved a resolution Wednesday supporting the ability of Somali Americans to send money to loved ones in Somalia — money transfers that have become increasingly difficult as more banks are dropping money transfer providers in the face of regulatory concerns.
The Council will vote on final approval of the resolution authored by Council Members Abdi Warsame (Ward 6) and Elizabeth Glidden (Ward 8) on Friday.
Warsame recently sent out a statement noting that he’s called on federal agencies to help come up with a solution that has become a hardship for many in the Somali community. Each year Somali Americans in Minneapolis send millions of dollars to loved ones to the African country for basic needs.
The last remaining U.S. bank allowing the transfers closed all accounts for the transfer companies Feb. 6, according to Warsame’s office.
“We want to make sure that our federal agencies are acutely aware of the importance of remittances to these countries and U.S. residents,” Warsame said. “This is a serious crisis and we are asking the federal government to do their utmost to ensure that remittances continue to flow through secure, legitimate channels.”
Sens. Amy Klobuchar, Al Franken and Reps. Keith Ellison and Erik Paulsen have also joined other lawmakers in calling for an emergency plan to allow the money transfers to continue. Here’s the text of the letter they recently sent to Secretary of State John Kerry:
The Honorable John F. Kerry
Secretary of State
U.S. Department of State
2201 C Street N.W.
Washington, D.C. 20520
Dear Secretary Kerry,
We write to request a meeting within the next two weeks to discuss the development of an emergency plan to address the acute shortage of lifesaving money transmission services to Somalia, and discuss how we can move toward a sustainable, longer-term framework for facilitating lawful money transfers through transparent channels.
The timing of this meeting is urgent. Last week, the largest financial institution currently providing wire transfer services to money services businesses serving Somalia notified their money services business clients that it was going to close their accounts on February 6, 2015 amid concerns that the institution is unable to adequately manage the risks associated with its remittance accounts serving countries in Africa, Central and Eastern Europe, and parts of Asia. As a result of this decision, money service businesses serving Somali-Americans say they are in the process of either closing most branches or drastically reducing the volume of remittances they are transmitting. We understand there are few practical substitute mechanisms left for transmitting remittances. Last year, according to an international NGO, more than $215 million was sent from the U.S. to Somalia, most of which was used to meet basic humanitarian needs.
Decreasing remittances will exacerbate Somalia’s humanitarian situation. Twenty-two aid organizations recently noted that about one-third of Somali families say they would not be able to afford basic food, medicines and school fees without help from their relatives abroad. Nearly all business startups in Somalia are funded by remittances, and with nearly three million Somalis already dependent on aid organizations, eliminating the ability to send money into Somalia could throw the country and its already vulnerable economy deeper into crisis.
Decreased remittances would also present greater security risks. As Somali President Hassan Sheikh Mohamud has said, cutting off money from the diaspora could significantly strengthen the appeal of terrorism and piracy for young Somali men. A disruption in remittances could reverse the limited gains that the Somali government and the international community has made to rid Somalia and the greater Horn of Africa of terrorism.
Somalis urgently need a solution. We call on the appropriate agencies, in collaboration with community and industry partners, to formulate a short-term plan to keep a remittances pipeline open, as well as a longer-term plan to provide ongoing access to money transmissions services. For example, the State Department might be able to provide temporary remittances channels through its humanitarian programs. Financial regulators could be enlisted in efforts to facilitate solutions that build on the recommendations of State and the NSC, preserving the integrity of U.S. counterterrorism and anti-money laundering efforts while keeping open remittance pipelines through private or public mechanisms. Together, banking regulators could, if necessary, then promulgate formal joint guidance. The Federal Reserve Bank of New York could use its wire transfer service to provide remittances. The World Bank — which has done so much over the years to reduce the costs of remittances from immigrant workers in the U.S. to their family members at home — might be enlisted to help facilitate these efforts. All of these possibilities, and other creative alternatives, should be explored to find a solution to this crisis.
To protect our national security and avoid exacerbating a humanitarian crisis, we must identify an emergency solution to prevent the disruption of remittances to Somalia. We believe it is critical that every federal agency with jurisdiction on this issue must work toward formulating a sustainable framework for remittance payments as quickly as possible. We appreciate your attention to this issue, and we hope we will be able to meet with representatives of your agencies in the coming weeks.