Barclay’s is About to Cut Off Millions of Somalis for Banking Policy


Tomorrow Barclay's will pull the plug on transactions with over 100 money transfer and remittance companies, known as Hawalas. Particularly popular with Somalis, Hawalas were a common way to transfer money to relatives from abroad. Many banks, however, have closed their accounts with the tightening of wire transfer rules after 9/11.

Barclay’s move makes business sense, after HSBC’s $1.9 billion fine for lack of money laundering controls last year. This particular fine rivals the total amount transferred in Somalia last year, and dwarfs the fees from such transactions. And why risk a staggering fine for little profit?

Why? Our banking policies are about to starve millions.

Politically, this whole issue is shrouded by the recent Somali-based al-Shabab, and their attack on Westgate Mall. This is a shame, because while al-Shabaab did commit absolute atrocities, we’re particularly good at forgetting our role in creating problems once we’re found a “bad guy” to pin everything on. And, hell or high water, no one gets in the way of the west and their bad guys.

Since their formation, al-Shabab has been one of the more extreme and militant of Somalia’s factions, but from the beginning they were tethered to moderate institutions. That is, until we nixed that whole moderate part.

The Islamic Courts Union was stabilizing Somalia for the first time in over a decade as of 2006. They enforced sharia law, which is where most news outlets stopped listening, and where political talking points let us continue to stop listening. But they also enforced Xeer, or Somali customary law, which greatly tempered Islamic punishments. Because sharia law was not held to be the exclusive law of the land, or even apply to all circumstances, many judges were not even traditional wadaaddo, or religious scholars. Instead they were respected locals experienced in dispute resolution. Regrettably, some extreme aspects of sharia persisted, but the alternative of no jurisprudence for 16 years had taken its toll. As of 2005 life was on the up and up in Mogadishu, regardless of the Islamist fears of the west. The airport and seaport were opened for the first time in a decade, road blocks were cleared away, and long-standing piles of rubble were removed.

By July 2006, US intelligence, paired with an Ethiopia afraid that the Islamic Courts Union were gaining too much power decided to intervene, leading to UN resolution 1725 (an African Union peacekeeping mission). Justification for the strike was that “someone” related to the Islamic Courts Union was harboring terrorists in Mogadishu. Fighting ensued, the largely volunteer force of the Islamic Courts Union crumpled, and moderate leadership was forced to flee to Kenya and Yemen.

And so we get the reported justification of al-Shabab’s attack, as well as the origin of concerns about Hawalas being used by extremists to launder money. Not only did we contribute to the deterioration of the first working Somali government in over a decade, now we’re set to deprive 40% of the population (3.8 million people) of the remittances that support them.

The issue is larger than Somalia, with remittances, money invested in a country other than it is earned (often sent by family members abroad), doubling from 1990-2000, and tripling from 2000-2010. But the rationale for shutting down remittance payments in Somalia is particularly tied to a group that we prompted into radicalism.

3.8 million people is a lot. Somalia already has the second lowest human development index in the world. We should be ashamed of ourselves.