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Two weeks after U.S. bank remittances to Somalia dried up, regulators and lawmakers are making only slow progress at preventing a potential humanitarian crisis.
February 18 -
More U.S. banks are dropping Somali money transmitters as regulators crack down on the risk of terrorist financing at remittance houses serving the war-torn East African nation. Banks are familiar with regulatory tight spots, but rarely do their responses have life and death consequences, as is the case here.
August 29 -
As concerns mount that Somali-Americans will lose their pipeline for sending money home, Washington's response has been marked by what critics see as secrecy, buck-passing and a lack of interagency coordination.
September 2
The last Australian bank providing remittances to Somalia stopped this week, mirroring similar pullouts by U.S. banks that have endangered a crucial source of financial support for the African country.
Westpac Bank ceased providing banking services to Somali remittance companies on Tuesday, according to the nonprofit Oxfam.
Westpac, Australia's second-largest bank, announced plans to close the accounts of money-transfer companies last year, but extended the deadline in response to pleas by members of the Somali diaspora. Money sent from Somalis living abroad is a
Banks have cut off money-transfer companies in response to growing concern about money laundering and sanctions violations raised by financial regulators worldwide. Authorities in some countries view Somalia, which has not had a central government since 1991, as a high-risk location for terrorist financing and money laundering.
The Treasury Department's Operation Choke Point has
The account shutdowns "are a complex problem that has to do with the situation in Somalia and with banks' derisking globally, but we have heard that [foreign] banks' concerns stem from U.S. regulation and enforcement," Paul said.
The flow of money into Somalia has slowed following Merchants Bank's shutdown of its Somali accounts, and is likely to slow further after Westpac's withdrawal, he said. Some remittance companies have resorted to transferring cash into the country.
U.S. regulators and members of Congress have met to discuss ways to make it possible for Somali expatriates to send money home,