Banks drop cash-delivery used by Somali immigrants
COLUMBUS (AP) – Every month, Sagal Warsme sends $400 to her mother and younger brother, Somali refugees who live in Kenya.
Warsme, 35, gives a check to a money-transfer company in Columbus that deposits it with other clients’ money at a bank. Then someone in Kenya contacts her mother and pays her a corresponding amount.
Without the bank account, the money transfer is illegal. But without the money, Warsme’s family would find themselves in trouble.
“My mom would be kicked out of her home and have no food,” Warsme said. “It’s very, very difficult. They have nothing. There are no jobs there. They can’t pay rent.”
Thousands of Somali immigrants in central Ohio rely on money-transfer companies to help support their relatives living in refugee camps and war-stricken areas overseas, the Columbus Dispatch reported on Thursday.
But as more banks close their accounts, these companies are struggling to stay afloat.
The Somali American Chamber of Commerce estimates that 45,000 Somali-Americans in central Ohio rely on 11 such companies.
Banks say it’s too costly to meet the federal regulatory standards for monitoring money headed to remote places overseas – especially in a country like Somalia, which lacks a central banking system, leaving funds vulnerable to being funneled to terrorist groups.
Banks have been closing such accounts for years, but the last banks that support money transfers in central Ohio are currently leaving the business, said David Landsman, executive director of the National Money Transmitters Association.
National City terminated money-transferring accounts, and Huntington National Bank has given agencies until the end of the year to leave, according to the Somali chamber.
The last thing a bank wants is its name in a newspaper next to that of a money launderer or terrorist financier, Landsman said.
Huntington executives decided to close remittance-agency accounts because it costs too much to monitor them, spokeswoman Jeri Grier said.
The bank told money-transfer companies it would terminate their accounts in September, but bank officials extended the deadline after an appeal by the Somali chamber.
“They are issuing a death sentence to 5 million people,” said Ahmed Mohamed, executive director of the Somali group. “We cannot be compliant while they create a disaster back home. We have the right, like anybody else, to be able to send money to our countries.”
National City Corp. spokesman Todd Morgano said the company does not discuss clients’ accounts, but the bank is cutting clients if it cannot determine exactly where the money ends up.
Just a handful of agencies have ever been fined for inadequate monitoring systems, said Bill Grassano, a spokesman for the Financial Crimes Enforcement Network.
“By and large, money-transfer companies are legitimate businesses, but they’re not all on the up and up,” Grassano said. “We’re not in the business of trying to put people out of business with regulations, but we do have the Patriot Act and Bank Secrecy Act for security.”
After the terrorist attacks on Sept. 11, 2001, the federal government made banks liable for monitoring their customers with legislation aimed at cutting off funding for terrorist groups.
Banks no longer discriminate between unregulated companies and businesses that are licensed by the state, said Isak Warsame, president of money-transfer company Dahabshil Inc.
“I have to answer questions from people who send money to their grandmothers,” he said. “Every day, everyone is asking me what we are going to do. How should I know?”
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