Squeeze on money-transfers to Somalia requires new vigilance by U.S. banks

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Somalis and Somali-Americans in Minneapolis, Minnesota are struggling to send money to their families now that the small, ethnic-based, money-remittance firms they relied on are no longer operating. Banks are no longer willing to process their transactions;  they worry that such transactions involving “hawala” transfer agents, commonly known as “hawaladars,” will cause the banks to run afoul of U.S.  sanctions and laws against money laundering and terrorism financing.

The hawaladars in Minneapolis and other cities that have experienced similar problems accessing bank accounts continue to seek ways to wire money to counterparts — often in Dubai, United Arab Emirates — so it can be forwarded to recipients elsewhere in the Middle East, Africa and Asia though informal  networks, experts in anti-money laundering enforcement say.  As a result, U.S. banks must beware of customers who might be running clandestine hawala operations from personal or business accounts.

“There is nothing to stop the users from skirting the system and using personal and/or business accounts to wire money. It is very difficult for most (bank) compliance officers to detect something like that with the little information they have available,” said John Cassara, a former U.S. Treasury agent who was among the first U.S. officials to track the hawala system and has written a book that describes the terror-finance threat they pose.

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