Channing Kennedy of ColorLines is reporting that U.S. Somalis are having a difficult time sending money home because of strict anti-terror laws. Because Somalia has spent the better part of 20 years without a government, the country's GDP is dependent on remittances from those who live abroad.

Somalia has no banks to accept transfers, so Somali innovators created hawalas: money-transfer companies that relay money through a midpoint in a neighboring country's bank.

This system sounds simple enough, but since 9/11, "Hawalas in the United States have come under increasing federal scrutiny and complex anti-terror laws, so much so that most American banks simply won’t work with them."


One of the few remaining banks that will work with U.S. Somalis to send money home is Minneapolis' Franklin Bank, part of Minnesota's Sunrise Community Banks network.

Kennedy writes:

Because of the Twin Cities’ massive Somali community (and to the reticence of other banks), Franklin Bank has become a hub for hawalas across the country, overseeing hundreds of millions of dollars in small-amount transfers to family members back home, and helping Somalia deal with a horrific famine crisis.

Now, following the conviction of two Minneapolis women accused of using hawalas to finance Somali radicals al-Shabab, Franklin Bank has announced that it will be ending its hawala program in the next two weeks; although the bank has been an ally to the Somali community for years, the risk of inadvertently violating federal anti-terror laws is simply too great. And while estimates vary as to how many hundreds of millions of dollars in remittances get sent from the U.S. to Somalia each year, nobody doubts that the economic results with have deadly consequences. Not to mention, of course, the golden opportunity this will represent for al-Shabab.

Manning interviewed Hassan Warsame of the Association for Somali American Nationals to find out how Somalis are fighting against this closing, which will have a negative impact on Somalis at home. He speaks about the legitimacy of hawalas and the dependency of the Somalian economy on their existence. Warsame calls this issue a humanitarian one, since millions of people will suffer without money from relatives — not to mention the direct impact on U.S. security.


Some people think that hawalas should not be allowed if the money could be going to fund terrorist organizations, while others think that one bad apple should not spoil a system that helps people. What do you think?

Read the Warsame interview and the entire article at ColorLines.

Share This Story

Get our newsletter