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The Somali community, especially those in Somalia, are crying foul over the latest directive by the US banks to cease cooperation with Hawalas money transfer system that is a source of livelihood for many in the war torn country.
This informal means of sending and receiving cash is known in Somali as Hawala, a mostly unregulated money transfer system that traditionally involved neither physical nor electronic exchange of funds.
The system is mainly used by many who do not have bank accounts and is often the only way to send money to Somalia where majority of people, many of whom have been displaced by war and famine, depend on money to survive.
Franklin Bank, which was the last US bank to do business with the Somali Hawalas, said it would stop dealing with all of them by the end of December.
The bank, which is under the management of Sunrise Community Banks, said it feared some of the money transferred through this system could end up funding terrorist activities like the al-Qaeda, al-Shabaab and other related militias operating in Somalia.
Since the September 11, 2001 attacks, Hawalas in the United States, have been required to conduct monetary transactions through formal banks to avoid this possibility.
In the month of October, two Somali women, Hawo Mohamed Hassan, 64, and Amina Farah Ali, 35, were convicted in a US court of collecting and funneling money to al-Shabaab in Somalia, highlighting the risks inherent in the system and raising the issue among Somalis over how best to reverse the decision by the US bank while abiding by the law.
The duo was later sentenced to various jail term sentences to serve as a lesson to others.
The two men were also accused of sponsoring most of the suicide bombers who came back to Mogadishu and carried out assassinations in government posts including attacks on African Union peacekeeping (AMISOM) bases.
In Kenya, Hawalas don’t operate under any regulatory framework, and there are no official estimates of amounts transferred that have caused worry to the Kenyan government.
Some observers claim that remittances to Kenya from the Somali diaspora sent through Hawalas have fueled the tempo of Somali investment in real estate, land, businesses and trade, especially in Eastleigh area of Nairobi, the capital of Kenya.
A spot check conducted by Somalia Report in Mogadishu showed that the Somali community are not pleased with the banks suspending its services to Hawalas.
“If the US banks suspend the business dealing with the Hawalas then that means there will be delays in sending and receiving money,” a Hawala operator in Mogadishu told Somalia Report.
“The money being sent mostly from Europe and US serves as the source of hope and livelihood to these people and therefore the banks and the US administration needs to analyze this issue,” added the Hawala operator.
Economist Hamza Sharif argues that the latest US bank directives will affect a larger Somali population who depend on money from relatives abroad.
“The livelihood of Somalis is at stake here and therefore there is a need for a wider consultation and let the US government control the cash. For twenty years Somalis have fled the war and are living in US, UK, Canada and the larger Europe as registered immigrants and therefore the US banks need to rethink before suspending its services to Hawalas,” Jimale Yare, a Somali Affairs analyst, told Somalia Report.
Interestingly, in the month of September, even the United States Agency for International Development used Hawalas to deliver aid to hunger-stricken Somalis living in al-Shabaab controlled areas.
The organization distributed food vouchers to the drought victims who use them to buy food from traders who in turn exchange the vouchers for cash later on by using certain identified Hawala contacts.