Seattle Somalis Desperate For Way to Send Money Home

Seattle's Somali-American community and elected officials came together Tuesday night to discuss a worsening problem: There is no longer a reliable way for people here to send money to families in Somalia.

Since February, all banks in the U.S. have stopped offering these remittance services to Somalia.

The Seattle area is home to the third largest Somali community in the country, so the abrupt change is acutely felt here.

KUOW Reporter Liz Jones was at the community meeting last night in South Seattle and spoke with Ross Reynolds on The Record.

Ross: A lot of people in Somalia rely on remittances from family here. Why are money transfers no longer possible?

Liz: It’s estimated that more than 70 percent of people in Somalia rely on remittances to pay for food, housing and other basic needs.

These remittances of $1.3 billion a year account for up to half of Somalia’s economy and far exceed foreign aid.

The closure of these money transfers came about due to concerns with terrorism. After Sept. 11, Congress passed stricter money laundering regulations. Banks can be penalized if they fail to properly monitor this.

Somalia is seen as a high risk for laundering, due to its informal banking system and reports that the terrorist group Al-Shabaab targets these money transfers.

For several years, banks across the U.S. have shut down remittances to Somalia.

The last holdout was Merchants Bank of California, which handled up to 80 percent of remittances, but it ended this service in February.

How are people managing?

Some people have just been stuck with no way to send money, while others have found some creative workarounds.

I spoke to Seattle resident Shukri Olow, who came here from Somalia with her family nearly 20 years ago. She was recently at her aunt’s house while her aunt was trying to explain to a nephew in Somalia about how she’d try to keep sending him money for college.

“Telling him she’s going to send money to an uncle in London, who then is going to send money to another uncle in Nairobi, who then is going to send money to him directly in Somalia,” Olow said. “That way he can stay in school. You know, my aunt’s nephew is trying to get an education, but it’s now become difficult because it’s taking weeks just to get the few hundred dollars that he needs to continue his education.”

Olow said this is an issue for all Somali-Americans, because everyone has family back in their home country, where many face poverty, instability and ongoing conflict.

So there are real concerns about a humanitarian crisis if funds cut off, and that people could starve, lose their housing, or drop out of school.

How did people address these terrorism concerns at the meeting last night?

Several community members warned that it would be a greater national security concern if these money transfer businesses are driven underground where they can’t be monitored. There’s also concern that people who rely on these funds would need to find other means to survive, which could also make them easier prey for terrorist groups or illegal activity.

U.S. Representative Adam Smith also spoke to this security issue last night.

“Even if you want to look at it from a national security standpoint and say, ‘Yeah, but we just want to make sure no money gets in the hands of the wrong people,’ Smith said. “The key to stabilizing Somalia and stopping Al-Shabaab and other groups from funding terrorism … is giving the legitimate people of Somalia a means to a livelihood.”

Smith said he and other members of Congress have met with the U.S. Treasury, the State Department and the National Security Council but “thus far they have not taken the action they need to take.”

Smith said the feds need to simplify and clarify the paperwork for banks to meet the monitoring rules. He also suggested the State Department should work with Somalia to help set up a financial institution that can safely receive wire transfers.

What solutions are people talking about to resume money transfers?

The big idea many people talked about was to create a community bank or credit union. Members of the Somali community and Seattle City Council both talked about this possibility.

This approach would give some control to the Somali community for this current situation, or if something similar happens again.

So that’s on the local level, but the question is who would spearhead that effort. And there are models of how this type of community bank could work.

People also want to keep up pressure on the federal level and on the White House to resume these money transfers.