SOMSA’s Response to Barclay’s Recent Statement
In light of recent statements issued by Barclays, SOMSA would like to address a number of inaccuracies in the public statements they have made.
We note Barclays’s statement that 12 of SOMSA’s 16 members banked with banks other than Barclays, and that of the 4 that Barclays has asked to find another bank, at least 1 has been successful in re-banking thus far. These assertions are incorrect.
The 12 organisations to which Barclays refer are small payment institutions (SPIs) – none of them has a bank account.
The 4 large SOMSA members which have an account with Barclays are authorised payment institutions (APIs). Unlike SPIs, which are forbidden from remitting more than €3 million per month, APIs have to obtain a licence from the Financial Conduct Authority and can remit unlimited sums.
None of the 4 APIs have been able to secure equivalent alternative bank accounts within the deadline Barclays has set. At this stage, no banks other than Barclays Bank are able to provide the range of services we require to meet the needs of the communities and clients we serve. One of the 4 remaining companies has a very limited arrangement in place, but that will not in any way cover the needs of the community. SOMSA cannot comment further on those arrangements due to issues of commercial sensitivity.
The lack of transparency regarding Barclays Bank’s decision has made the process of securing alternative banking arrangements considerably more difficult. All SOMSA members are regulated by FCA and are regularly audited by HMRC. We are ready to meet any of Barclays’s concerns, but first need to know what these are, as well as any revised eligibility criteria that we need to meet. SOMSA members have asked Barclays to tell them what criteria they need to meet but Barclays will not share this information with the companies impacted.
Barclays have suggested that they have to close our members’ accounts because of “Regulations”. This is untrue and misleading. The regulations applicable to our businesses have not changed recently (and Barclays has banked some of our members for many years). It has never been suggested that any of our members are in breach of any of the regulations. It is particularly bewildering that SOMSA members who have not breached any regulations are losing their accounts, while Barclays is retaining the accounts of other large international MSBs who have been charged and fined for breaches. Why is Barclays happy to continue to serve these companies but not SOMSA companies?
In Barclays most recent statement, they cite the ‘heightened money laundering risks’ identified by the FCA’s Annual Financial Crime Report as a basis for their decision. They also refer to the report by the ‘Monitoring Group on Somalia and Eritrea’ to the UN Security Council on 12 July 2013 as evidence for the need to take immediate action. SOMSA is not mentioned in the UN monitoring report or the Financial Conduct Authority Annual Financial Crime Report to which Barclays refer.
Whatsmore, Barclays announced it was closing SOMSA member’s accounts over two months before the monitoring group report was issued and in recent weeks UN experts and multiple NGO and development agencies operating in the Horn of Africa have appealed against Barclays decision which fundamentally jeopardizes their operations in the region.
Earlier this month the Overseas Development Institute published research into the specific situation in Somalia. This found that the risk of money laundering via remittance companies is minimal and can be mitigated through careful monitoring and engagement with agents on the ground. Crucially, it also found that “preconceived ideas about risk in Somalia may be overriding a more balanced assessment”; and that “there is a world of difference between providing banking services to drug barons in Mexico and delivering a service that pays for health, education, food, housing materials and small enterprises in Somalia”. In other words, Somalia is different.
The risk of being a conduit for financial crime, is one faced by all financial services – not just money transfer companies.
The impact of the closure of these accounts will be felt immediately by stakeholders in the UK and in Somalia following the September 30th deadline.
Download the response as: SOMSA’s-Response-Barclay’s-Statement