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Banks Cut Off Money Families Send to Somalia, May Actually Be Fueling Terrorism

Somali-Americans join conservatives and libertarians at an annual anti-tax rally in St. Paul.

Somali-Americans join conservatives and libertarians at an annual anti-tax rally in St. Paul.

The chokehold on the money Minnesota's Somalis send home to relatives will tighten even more before U.S. banks can agree on a solution.

Fearing that the money will end up in the hands of terrorist group al-Shabaab, virtually all major U.S. banks have canceled their transfer services to Somalia.

See also: Money-wiring shutdown worries local Somalis

There was a major crunch in February when Merchants Bank of California closed all accounts with Somali-American transfer companies known as hawalas, a type of wiring service that could reach Somalia's most far-flung rural villages in lieu of a formal banking industry.

Merchants Bank handled about 80 percent of Somalia's U.S. transfers. In May, one of a few remaining banks plans to close accounts as well, U.S. Rep. Keith Ellison recently wrote in a New York Times op-ed.

"The fragile progress in Somalia and other parts of East Africa is sustained in part by money sent from friends and family overseas," Ellison writes. "Every year Somali-Americans send about $215 million to Somalia, more than the $200 million annual aid package from the American government ... Unfortunately, the remittances lifeline from the United States may soon be cut off completely."

Minneapolis Councilman Abdi Warsame predicts the closing of that lifeline will ultimately fuel terrorism, not deter it.

"Once you cut the opportunities that our money creates for starting small businesses, for educating youth, for healthcare, who would the people turn to?" Warsame says. "The aim is to stop terrorism, but what you're doing by cutting this resource for [al-Shabaab] to say, 'Oh, look at what the Americans are doing. They don't even want your relatives to send money back home.' It becomes a rallying call for these groups."

Somali Minneapolitans worry, Warsame says, because support from the European and North American diaspora accounts for 30 percent of Somalia's economy. Their money is going toward building roads and sending kids to schools precisely so they won't fall in the hands of al-Shabaab.

"We're trying to do our best as a municipality because we have such a large population of Somalis, but there's a lot of confusion," Warsame says. "The community is writing petitions and calling their elected officials to speak to the banks, but the reality is that the money sent back to Somalia is not as much as the money that is sent back to other countries that have greater problems."

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