Somalians caught in crossfire as US bank withdraws cash lifeline

The plight of millions facing starvation is to be made worse by America's new anti-terror legislation

There were urgent warnings yesterday that a decision by a large American bank to stop allowing money transfers from Somali-Americans to relatives and friends in Somalia – a vital lifeline for much of its famine-struck population – could lead to a worsening of the already dire humanitarian crisis there.

Hundreds of Somali-Americans were due to march through Minneapolis last night to protest against the decision by Sunrise Community Banks to back out of executing remittances to Somalia for fear it may find itself in violation of US government anti-terror regulations. The Somali government, as well as its mission to the United Nations, is also appealing to Washington to step in to keep the money flowing.

“This is the worst time for this service to stop. Any gaps with remittance flows in the middle of the famine could be disastrous,” said Shannon Scribner, Oxfam America's humanitarian policy manager, who calculates that up to $100m in remittances could now be in jeopardy. “The US government should give assurances to the bank that there will be no legal ramifications of providing this service to Somalis in need.”

The Somali government says as much as $2bn a year – one third of its gross domestic product – comes to the country as remittances handled in Somalia by local transfer enterprises called hawala. Any drop-off in that source of income threatens only to further destabilise the already impoverished country, which has suffered a prolonged civil war and has no traditional banking system.

A group of money-wire businesses in Minneapolis, home to the largest Somali-American population in the US, said they could no longer accept payments for Somalia because they relied on the Sunrise Community Banks to execute them. Hinda Ali, for the Somali-American Money Services Association, underlined the hardship it could cause.

“A tremendous amount of lives will be lost because they cannot get medical care,” she said. The association added: “Remittance is an essential lifeline for the Somali people, and it is the only source of funding that sustains the livelihood of millions of Somalis, mostly women and children.”

US financial institutions face large penalties if they fail to guard against handling money bound for any terror-related entities. Transfers to Somalia have came under particular scrutiny since the conviction a few weeks ago of two women from Rochester, Minnesota, for raising and transferring funds to al-Shabaab rebels in Somalia, which, according to the US government, has links to al-Qa'ida.

In a statement, Sunrise Banks said it empathised with the Somali people “during this very difficult and uncertain time”. It added: “We continue to work tirelessly with the community and government officials to create a temporary legal and regulatory solution. Until that solution is found, the bank must continue to comply with all US laws and banking regulations.”

Among those pressing the Obama administration to intervene has been Keith Ellison, the only Muslim member of the US Congress whose district includes Minneapolis. “The problem is not just this one bank. The problem is nearly all the banks have sort of stopped out of the business of facilitating remittances to East Africa,” he said.

In New York, the first secretary of the Somali mission to the UN, Omar Jamal, held out hope an arrangement to re-open the remittance lifeline would be reached. “This is a crisis, a humanitarian one, and hopefully a solution will be reached soon,” Mr Jamal said.

Many Somali-Americans feel they are being discriminated against because of a very small, but highly publicised, number of cases linking them to Islamic rebels in the Horn of Africa.