Money transfers to Somalia frozen in Minnesota

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At a branch of one of the largest Somali-owned money wire businesses in Minneapolis, customers stood outside the teller window last week with wads of cash in their hands and weary looks on their faces.

"I wanted to send this money to my wife," said Hashi Yusuf, whose spouse and children live in Somalia. "When I ask this guy to send it, he said to me, 'No more we send the money.'"

Yusuf said the $300 he sends every month pays for his family's food. It's the only income they receive, he said. Without it, he's not sure how they will survive.

More than a dozen hawalas -- money transfer businesses used by Somali-Americans to send money to loved ones in Africa -- suspended money-wiring services Thursday, a day earlier than the Dec. 30 deadline when Sunrise Community Banks said it would close the accounts.

Bank officials cited concerns that the accounts put them at risk of violating federal rules designed to halt terror financing.

In a statement issued Thursday, the Somali American Money Services Association, which represents 14 Minnesota money-transfer businesses, announced it would suspend remittance operations in the state, effective Thursday.

"SAMSA members will resume services as soon as we address this matter," the statement said.

The bank announced in late November that it planned to close its hawala accounts Dec. 15, after two Minnesota women were convicted of conspiracy to support a known terrorist group in Somalia, wiring $8,600 through hawalas. But amid public outcry, bank officials extended the deadline to Dec. 30 in the hopes of working with government officials and community leaders to come up with a way to keep supporting the hawalas.

Sen. Al Franken and Rep. Keith Ellison, both Minnesota Democrats, lobbied the State Department and the Treasury Department to intervene. One proposed solution would have granted Sunrise a waiver from liability.

With time running out and no waiver or other solution on the horizon, Minnesota hawala owners say they are uncertain of their long-term fate.

"Probably, we'll be out of business," reasoned Said Malin, owner of Amaana Money Transfer Co., a money-wire business with offices in Minnesota, Ohio, Kentucky, Virginia and Nebraska.

Those who use the hawalas say they are a lifeline for millions of people living in Somalia, a war-ravaged nation that has no formal banking system, much less a functioning national government.

According to the CIA World Fact Book, money-transfer services have popped up throughout the United States, handling up to $1.6 billion in remittances annually. Minnesota has the largest Somali-American population in the country, so much of the money flowing to Africa originates in the state.

(Contact Allie Shah at ashah(at)startribune.com.)

Editors: This story is for print use only. Must credit Minneapolis Star Tribune