Somalia Criticises US Bank’s Move to Halt Remittances

Somalia has criticised a move by a US bank to close accounts of money transfer companies, warning it could create a dangerous black market.

Merchants Bank of California handles about 80% of money transfers – remittances – from the US to Somalia, worth about $200m (£131m) annually.

But it announced on Thursday that it had to withdraw its services due to new money-laundering regulations

Regulators are concerned that money is being funnelled to extremists.

But the Somali government has warned that suspending legal transfer services may give rise to a new unregulated black market in cash transfers that could make it easier to channel money to militant groups.

It also expressed concern that the move would jeopardise stability in Somalia and the welfare of millions of Somalis who depend on financial assistance from abroad.

Total annual remittances to Somalia are estimated at $1.6bn (£1bn).

‘Lifeblood’ for Somalis

Nicholas Kay, the United Nations special representative for Somalia, said the remittances were a survival mechanism for Somali families.