Congress urged to ease rules that hurt wire transfer firms

  • Article by: COREY MITCHELL
  • Star Tribune
  • June 21, 2012 - 8:38 PM

WASHINGTON - Increased scrutiny from banks that fear federal regulators has left Somali money transfer businesses in Minnesota struggling to stay afloat, the regional manager of a Somali-owned money transfer company told members of Congress on Thursday.

Hersi Suleiman, of Amal USA, testified before a congressional subcommittee Thursday that Somalis "face a dead end" unless lawmakers act to ease regulatory burdens on commercial banks that serve the companies used to by Somalis and others to wire money to relatives.

In Minnesota, business flat-lined late last year, when Sunrise Community Banks cut the remittances program in the state that is home to the largest Somali-American population in the United States.

Suleiman testified that a bill that has lingered in Congress since 2008 would limit the liability commercial banks face and help small money wire companies, also known as hawalas, stay in business.

The legislation would require money service businesses to evaluate their customers and determine that they are not engaged in money laundering or terrorist financing.

U.S. Rep. Keith Ellison, a Minnesota Democrat who represents 30,000 Somali residents in the Fifth Congressional District, supports efforts to review regulatory and anti-terrorism financing laws.

"It's time to review which of these laws really protect us," Ellison said at the hearing.

Though U.S. banks started closing their money wiring services several years ago, the trend took on urgency in Minnesota after a jury convicted two Somali-American women from Rochester of raising money for Al-Shabab, terrorists linked to militant organization Al-Qaida.

The fallout has left Somali-Americans with few alternatives to send money back to Somalia, a country without a formal banking system, where millions of residents depend on such funds. The Somali government estimates that one-third of the nation's gross domestic product comes via small money transfer businesses.

"This is a lifeline for the Somali people," said Somali community activist Sadik Warfa of Minneapolis, who attended Thursday's hearing.

Shut downs would force Somali-Americans to rely on underground, less secure routes to ship money to Africa, said Ezra Levine, counsel for the Money Services Round Table, a trade association of money wiring businesses.

"The money's going to move anyway," Levine said. "It's going to move underground. Then there's no transparency."

Corey Mitchell is a correspondent in the Star Tribune Washington Bureau. Twitter: @StribMitchell

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