Reprieve for Somalia citizens after court bars Barclays

Somalia citizens who rely on remittances from overseas have received a temporary reprieve following the court’s ruling to stop Barclays Bank from terminating its services in the country.

Dahabshiil, the largest African Money Transfer Operator (MTO) in Somalia had moved to court to seek an order stopping the bank from pulling out.

Yesterday, the Court in London handed down its judgment, granting an interim injunction that would preserve Dahabshiil’s banking arrangements with Barclays until the conclusion of a full trial and has also awarded the operator the costs incurred for the injunction.

Barclays Bank has been planning to move out of the country as a precautionary measure to avoid hefty fine that might be slapped on them following lack of transparency between the senders and the receivers of money transacted by the institution to the horn of Africa country.

The move to pull out is informed by the likely risk involving illegal money transfers, which in recent years saw Standard Chartered Bank slapped with a fine of USD330 million for facilitating money laundry.

It is feared that the money that is send to the country by the friends and relatives of the Somalia people living in the United Kingdom could be finding its way in the hands of terrorists.

A statement sent by Dahabshiil stated that the move was crucial to millions of Somalia who rely on remittances from diaspora for their daily lives.

“Cutting the flow of remittances would result in nothing short of a catastrophe in a fragile, post-conflict country.

Millions of Somalis now face the prospect of losing around $1.2 billion per year in vital remittances, nearly $500 million per year flows from the UK alone,” said the statement.

The institution was to move out in July this year but extended the deadline to 30th September 2013.

In an earlier communication to an international organisation that operates in the country and which depends on the bank for their financial transactions, Barclays executive officer Anthony Jenkins said that there was risk that the money was being used for transmission of proceeds of crime.

“There are a number of serious concerns about the operations of the money transfer operators (MTOs), with the sector at particular risk of being used for transmission of the proceeds of crime or for money laundering,” said Mr Jenkins.

Reacting to the move by Barclays, Somali President Hassan Sheikh Mohamud said the lives of millions of innocent Somalis depended on the funds coming from diaspora through the bank.

“Our people are now recovering from a long and devastating civil war and this is not the time to punish them again by closing the legitimate lifeline on which millions of Somalis absolutely depend on,” said Mr Mohamud on a brief to media by his director of communication.

Dahabshiil says that they have been Barclay’s customer for 15 years and have always had a good relationship with them.

“We remain keen to meet Barclays and are prepared to agree any sensible criteria that they want to suggest so that we can continue our banking relationship,” read the statement.