TA High Court in the United Kingdom has recently granted an injunction to a remittance provider in Africa over Barclays’ attempt to close the company.
Dahabshiil focuses its remittance work in Africa but mainly in Somalian area. This type of money transfer which enables those who have left their home countries to send money back for their families, accounts for the second largest inflow of money into many developing countries. It is also a very important means of getting aid money into countries like Somalia, with organisations such as the UN, Oxfam and the Mo Farah Foundation all using the money transfer service.
With the country finally trying to get back on its feet after two decades of political unrest, 41% of the natives rely heavily on their remittance income. Somalians use this money for the all important aspects of daily life that developed countries take for granted; such as education, healthcare, clothes and most importantly for putting food on the table in order to feed their families.
Back in May, Barclays made the decision to review their money laundering policy. This resulted in the bank deciding to close a massive 250 companies claiming that they no longer met the relevant criteria. Unfortunately for Dahabshiil they were one of approximately 80 organisations within the remittance sector to be shut down by the bank.
Barclays has come forwarded and stated that they had concerns over money laundering through remittance transfers. The bank also didn’t want to be responsible for unknowingly facilitating any acts of terrorism. Despite this, Dahabshiil do advertise their company as a money transfer service that can be trusted who also clearly state that their customers must comply with their anti-money laundering service in order to combat the financing of terrorism.
This decision, if allowed to happen in the future would massively impact on the country of Somalia. Remittance transfers account for one-third of their GDP totalling $1.2 billion each year. By taking away the means to fund charitable organisations the country would no longer benefit from the help to build new schools, hospitals and wells for clean water – all of which are necessary in Somalia.
Upon hearing of Barclays plans to close down Dahabshiil, many local businesses had concerns. These were then raised with their MPs and has led to the recent battle in a High Court. For now though, Somalia’s remittance transfers will continue as usual despite Barclays’ efforts to put an end to them. They have however said that they will be appealing the Court’s recent decision.