A British bank could soon be cutting a financial lifeline for millions of Somalis.
Barclays is poised to sever its ties to Dahabshiil, one of the Somali expatriate community’s biggest money transfer services, as part of a larger reorganization of its business. Barring a successful last-minute court challenge on Tuesday, experts say the move will jeopardize some 100 million pounds’ ($160 million) worth of payments made from the U.K. each year.
Barclays’ move, part of a company-wide effort to insulate itself from the risks associated with money-laundering and corruption, could force Dahabshiil to stop executing transfers between individuals as soon as Wednesday. The bank declined to comment ahead of the court decision expected later Tuesday.
“Today is quite an important day,” said Laura Hammond, an expert in development at London’s School of Oriental and African Studies. “Sons sending money to their mothers, who are used to doing that through Dahabshiil, they won’t be able to do that.”
A host of other money transfer businesses allow U.K.-based Somalis to wire money home, but Dahabshiil is the biggest, boasting some 24,000 agents and branches worldwide. Somalia has not had a functional government in two decades, and its people rely heavily on remittances processed by Dahabshiil and companies like it.
Britain’s more than 100,000 Somali-born residents cannot easily take their cash to the next company down the street. Rival Somali remittance services are too small to absorb the cash flow or, like Dahabshiil, have also had their bank accounts pulled.
Somali President Hassan Sheikh Mohamud said Monday that his government was watching what was happening in London “with great concern.”
“Our people are now recovering from a long and devastating civil war and this is not the time to punish them again by closing the legitimate lifeline on which millions of Somalis absolutely depend,” he said.
Hammond warned that Barclays’ move may force the Somali money transfer business underground.
“It will be the perfect opportunity for those who want to send money to Somalia to fund terrorism or enable money laundering,” she said. “It creates a black hole for accountability.”