|Written By:Margaret Kalekye/Reuters, Posted: Fri, Dec 30, 2011|
The main money transfer service providers between Minnesota and Somalia have been suspended.
This comes after two Somali-American women from Minnesota, were convicted of raising money for al Shabaab rebels. Minnesota, is home to the largest Somali-American community in the United States who send about 100 million dollars to Somalia each year.
A group of businesses providing money transfers between Minnesota and Somalia suspended services on Thursday, saying it was forced into the move after a U.S. bank shut down what the group called a vital lifeline to the war-torn African country.
Somalia has appealed the decision by Sunrise Community Banks to end the remittances program from Minnesota, the state that is home to the largest Somali-American community in the United States. U.S.-based Somalis send about $100 million back home each year, according to the U.S. Treasury.
Sunrise has said it is looking for alternate arrangements to send remittances, but would end the service it was providing on Friday over fears that it would risk violating U.S. regulatory and anti-terrorism financing laws. It said the decision to end the service was unrelated to the trial of the two women.
The Somali American Money Services Association said the businesses complied with state and federal laws and believed they were being singled out and denied vital banking services.
“Remittance is an essential lifeline for the Somali people, and it is the only source of funding that sustains the livelihood of millions of Somalis, mostly women and children,” the association said in a statement.
The association said services would resume once a solution could be found.
The end-of-year deadline had sparked appeals by the Somali community in Minnesota, the Somali government, U.S. lawmakers and relief groups to find an alternative to the services.
The Somali government has said an estimated $2 billion — one-third of the country’s gross domestic product — is channeled to Somalia through “hawala” or small money transfer businesses.
U.S. banks have been closing such services over the past several years, leaving few alternatives to send money to Somalia, which has no formal banking system. Advocates said the Sunrise shutdown would force Somali-Americans to use less secure and less documented routes.
The association said a rally was planned for Friday afternoon in Minneapolis to protest the end of the services.
Democratic U.S. Representative Keith Ellison of Minneapolis appealed to President Barack Obama earlier in December to find a way to continue the remittances, citing the “catastrophic humanitarian situation in Somalia.”
Sunrise said it recognized the potential impact from the end of the wire transfer services.
“We continue to work tirelessly with the community and government officials to create a temporary legal and regulatory solution that would allow the bank to extend the account closure date,” Sunrise said in a statement.