Minnesota's Somali money brokers court U.S. Bank

  • Article by: ALLIE SHAH , Star Tribune
  • Updated: March 3, 2012 - 7:16 AM

Somali wire transfer shops have struggled to stay open since losing banking services in December.

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Ahmed Elmi, compliance officer at Amaana Money Transfer in Minneapolis, transferred money to Somalia for Mohamed Nurmohame on Friday.

Photo: Glen Stubbe, Star Tribune

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The embattled money transfer shops used by Minnesota Somalis to send funds to their loved ones in East Africa are now courting U.S. Bank to help them stay open.

Most of the 14 businesses have found ways to reopen since losing banking services in December from Sunrise Community Banks -- the main Minnesota bank working with the Somali-owned money brokers.

But reports that at least one Somali-owned money service businesses closed recently, in part because of the banking problem, have raised fears that the rest will eventually suffer a similar fate.

"They're very worried," said Sadik Warfa, a community activist who will be speaking at a public forum on Saturday in Minneapolis to discuss the money wire crisis. "I sense they're really worried about how things are progressing. The longer it goes on, the less optimistic they are."

The surviving money operators are handling smaller transactions, using out-of-state banks or running on credit.

"The money service is working but really they are struggling a lot," said Hashi Shafi, executive director of Somali Action Alliance, a nonprofit group serving the local Somali community that has been active in the money wiring issue. "Some of them are close to going out of business. So really it's tough."

Meantime, the money wire operators are in talks with Minneapolis-based U.S. Bank to explore possible ways to work together, Shafi said.

"At the request of leaders in that community, we met with them recently to discuss the gap between their existing process and what is required by federal law," U.S. Bank spokeswoman Nicole Garrison-Sprenger said in an e-mail Friday. "Our goal is to help them identify new ways of sending money to friends and family in Somalia that comply with federal regulations."

Ibrahim Nur, one of the organizers of Saturday's community meeting, said he hopes that U.S. Bank will step up and agree to provide banking services to the money transfer operators. "The last couple weeks we've been going back and forth and meeting with U.S. Bank. They haven't responded yet with a green light. We are waiting," he said.

He has pledged to work to mobilize people in the Somali community to open accounts with U.S. Bank as an enticement for doing business with the money transfer shops.

Somalia has been without a functional national government since 1991, the start of a civil war that led the resettlement of tens of thousands of Somalis in Minnesota.

Somalis in the United States send an estimated $100 million in remittances every year to Somalia, according to the United Nations. Shafi said most of that money originates in Minnesota.

The money transfer businesses act as brokers between the people who want to send the money in Minnesota and the banks that do the actual wiring of the money overseas.

In recent years, stricter rules designed to cut off funding of terrorist groups have prompted American banks to sever ties with the money service businesses that send money to Somalia.

Sunrise closed its bank accounts with the Somali-owned money service businesses in Minnesota on Dec. 30, citing newly identified security risks and liability concerns.

The closings sparked protests in the Minnesota Somali community -- the nation's largest -- as people who wire money to support families in their famine-stricken native land wondered how their relatives would manage to pay their bills without their monthly remittances from Minnesota.

Said Maalin, chairman of the Somali American Money Service Association, said one money transfer shop -- Qaran Express -- closed about two weeks ago. Another one, Taran Express, closed its doors in December after losing its bank and has yet to reopen. "We lost all our customers," said Fosi Hassan, Taran's general manager.

On Friday, at the Amal Money Wire in Minneapolis, Sadia Adan watched as the branch manager prepared her transaction. She said she sent $300 to Mogadishu to her mother and father, who are in their 70s and rely on the money she sends to pay for their basic living expenses.

Adan said she is the only one in her family who is living outside Somalia. "If I don't help them, they will die. How are they going to eat?" she said.

The fate of the money wire businesses weighs heavily on the minds of others such as Katra Arale, a janitor who says she sends money every month to her relatives in Somalia.

"If they're open or closed, still I'm worried about it," she said.

The public meeting will be held from 6 to 8 p.m. Saturday at Abubakar Asiddiq Islamic Center, 2824 13th Av. S. in Minneapolis.

Allie Shah • 612-673-4488

  • related content

  • Fosi Hassan was forced to close his money transfer business, Taran Express, on Dec. 30 when Sunrise Bank closed its accounts with Somali-owned money service shops, citing liability concerns. Hassan hopes to reopen as soon as he can find another bank.

  • Many money-transfer customers say they’re the sole support for family in Somalia.

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