People in Somalia depend on support from family members abroad to meet their basic needs. If that lifeline is cut, Somali families may face an uncertain future.
Each year, members of the Somali diaspora send $1.3 billion to their friends and relatives in Somalia—more than the country receives in foreign aid and investment combined. Somalis spend most of this money on food, healthcare, school fees and other basic household needs. Approximately 40 percent of Somalis rely on money from abroad to meet these basic needs. The Somali diaspora in the United States alone sends over $200 million each year.
Since Somalia does not have a functioning banking system and since Western money transfer companies are not a practical option, the only legal and transparent way to send money from the US to Somalia is through Somali-American money transfer companies. These companies need bank accounts in the United States in order to operate. Unfortunately, under pressure from the US Treasury Department, banks have closed the accounts of Somali-American money transfer companies at an alarming rate in recent years.
Now, Merchants Bank of California—the bank that has facilitated most money transfers to Somalia over the past two years—has announced that it will close the accounts of many Somali-American money transfer companies on July 31. Unlike most other banks, Merchants specializes in serving money transfer companies and preventing money laundering through them. Nonetheless, Merchants came under heavy pressure from its examiners and now says it must close the accounts in order to protect itself from fines and other legal risks.
If the account closures move forward as scheduled, some of these Somali-American companies will be unable to send money and will be forced out of business. Most of the companies will be affected—and therefore, so too will Somali-Americans and their families who are depending on help from abroad to survive.
“The support from my brother is our lifeline … We cannot do without it,” says Basra Muhumed. She is caring for a household full of children, grandchildren, her disabled husband, and her ill mother—all on the $300 a month she receives from her brother in Columbus, Ohio. The money helps pay for food, rent, doctor bills, electricity, water, and school fees.
“In the absence of support, we will only concentrate on food: no schooling for our children and no other basic necessities,” says Muhumed.
Fargelegge is calling on the Treasury Department to promise that it will ensure that all Somali-Americans are able to send money to Somalia through formal, legal channels.
“I hope we find a solution,” says Amiin Harun, a Minneapolis, Minnesota resident who has just finished his second year of law school and sends about $400 a month that he earns from a job to his family. “I know the government of the US and the Treasury Department don’t want to create a catastrophe. I hope we find a solution where money is not laundered and keep the lifeline open for families who otherwise would have nothing to live on.”