Somalia's money transfer businesses appealed on Monday for the last major British bank they work with not to close its accounts, warning this would cut lifeline services for the war-torn nation.
With their country ravaged by decades of conflict and without a formal banking system, many diaspora Somalis depend on money transfer services to send millions of dollars annually to support family in the impoverished country.
The Somali Money Services Association (SOMSA), an umbrella group of transfer services, has said that Barclays bank is to close the accounts of its members next month.
International banks have been tightening rules in a bid to cut money laundering and funding of groups accused of terrorism.
However, SOMSA said closures would "have dire consequences in Somalia, where no alternatives to the money service businesses exist", warning it could push transfer "underground into the hands of unlicensed, unregulated and illegal" providers.Barclays is the last major British bank providing such services, SOMSA said, noting that aid agencies also use the service to send cash to support some of the world's poorest people.
"The key issue is the damage to flows of cash to the vulnerable Somali people, who depend on remittances for their livelihood; and the likely threat of this action to economic and political stability in fragile parts of the Somali region," SOMSA added.
Somalis send money back home via the transfer shops known as hawala, which can accept deposits abroad and immediately credit recipients in Somalia.
However, the hawala system need larger banks to help balance the books with larger transfers.
Of SOMSA's 17 members, 12 have already had their accounts closed, with the remaining five facing "imminent" shutdown. Dahabshiil, the largest of all the transfer services, will have its Barclays account shut on July 10.Over a hundred Somali and international academics and researchers have signed a letter criticising the closures.
"What is at stake is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia," the letter read, noting that the services are key for some 1.5 million Somalis abroad to send cash to family still in the country.
"We understand that in recent years there has been a concern about funds going to support individuals and groups who have been designated as terrorists," the academics' letter read, organised by Laura Hammond of London's School of Oriental and African Studies.
"We think that the best way to work to avoid this is to promote responsible, transparent, and accountable systems... rather than by closing down the channels by which funds are sent."
Similar bank cuts in the US state of Minnesota in 2011 left the large Somali community there struggling to send money to support their families, but new deals were worked out to resume transfers earlier this year.