News

SOMSA Press Release 30/09/2013

Today is the deadline for Barclays to close the bank accounts of the remaining four large Somali
money transfer businesses. Despite suggestions to the contrary, none of our SOMSA members have
been able to secure equivalent alternative banking arrangements ahead of the deadline today.
Unless Barclays has a change of heart, the impact of the closure of these accounts will be felt
immediately by the Somali community in the UK and people in Somalia.

Barclay’s has stated that 12 of SOMSA’s 16 members banked with banks other than Barclay’s, and
that of the four that Barclay’s has asked to find another bank, at least one has been successful in re-banking
thus far. These assertions are incorrect. One has a very limited arrangement in place, but
that will not in any way cover the needs of the community as it does not cover processing cash
remittances which are the bulk of the business. The 12 organisations to which Barclays refer are
small payment institutions (SPIs) – none of them has a bank account. The four large SOMSA
members which have an account with Barclay’s are authorized payment institutions (APIs). Unlike
SPIs, which are forbidden from remitting more than €3 million per month, APIs have to obtain
authorization from the Financial Conduct Authority and can remit unlimited sums.

Unless Barclay’s changes its mind, three of the four largest members of SOMSA will have their bank
accounts closed today. One member, Dahabshiil, has been granted a brief two-week extension as a
result of their competition claim against Barclay’s but this is by no means a long term solution. One
alternative being considered by the remaining organisations is to downgrade to SPIs, but this would
result in a significant reduction in the sums that they can remit to people that need it that most.

There is no question about the importance of remittances to the Somali community. Estimates place
remittances flows to Somalia at over US$1.3 billion – far more than humanitarian or development
aid – representing approximately one third of the country’s GDP and sustaining the most basic needs
of at least 40% of the population. In the absence of a formal banking system, the movement of these
funds is dependent upon money transfer services.

We understand from the round table on the 27 September that the Government is looking at long term
solutions, including an action group to consider the issue of cross border remittances. SOMSA
has already proactively developed a draft proposed solution which has the endorsement of the
Somali government and IGAD (the Intergovernmental Authority on Development). We are keen to
sit down with the Government, the banks, and other key parties to agree a long term sustainable
solution. We believe progress is being made and we therefore ask again that Barclay’s grants our
members a further extension of time to allow a solution to be found.

Download the press release as PDF file.

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