We have written on previous occasions (here is the most recent post) about how banking laws to protect against American money going to terrorists in Somalia have dried up the hawala businesses in places like Minnesota. Minnesota Rep. Keith Ellison is trying to change the laws so money (remittances) can continue to flow at the rate of $100 million a year to Somalia to help prop up the country.
Here is a lengthy and informative article on the latest news on money transfers from the Daily Planet:
For Aden Hassan, sending $100 a month to his uncle and cousins in Somalia felt like the least he could do. In January, as they were facing a drought-induced famine, most banks were closing accounts with Money Service Businesses, leaving him no way to help them.
Hassan said he felt guilty eating when he knew his family could be left without food or shelter without his support.
But now that a congressional subcommittee is developing a bill that will lower the financial and legal risks and costs banks encounter when holding accounts with MSBs, Hassan may soon find it easier to send money to his relatives.
“Right now the burden is on the banks to comply when really the burden should be on the wiring services,” said Rep. Keith Ellison, D-Minn.
Ellison said the bill would give banks more incentive to do business with MSBs.
Along with commercial banks, MSBs are audited frequently by government agencies, Ellison said. The Bank Secrecy Act puts more pressure on banks to be responsible for keeping records of transactions, when the responsibility should weigh on MSBs, Ellison said.
So, let’s see!—the poor fellow, Aden Hassan, who only wants to send $100 to an uncle every month happens to run a Money Service Business (aka hawala):
Both banks and MSBs have a responsibility to be audited by government agencies, said Hassan, a manager at Cedar-Riverside’s Kaah Express — one of more than 300 MSBs in Minnesota. However, Hassan said banks are more pressured to retrieve records of transactions.
$100 million a year! And, not all hawalas are legitimate!
Abdullahi Adan, a University of Minnesota graduate who sends money to his family in Somalia, said it’s necessary for Somalia to receive remittances in order for its economy to survive.
“The entire country relies on it,” Adan said.
The U.S. Treasury Department estimates remittances from American Somalis total $100 million per year.
“If you take this money out, there is no way that this community could supplement the money in remittances in the form of foreign aid,” Ellison said.
Somalia got about $9.3 million in foreign aid in 2011, according to Global Humanitarian Assistance.
“In reality the money transfer industry in Somalia is the only financial sector that really exists there,” said Adan.
[…..]
Adan acknowledged that the way some use hawalas may not be completely legitimate. [LOL! This is the second to the last line in the story—ed]