Africa Minister calls for “market-based solution” to Barclays’ withdrawal of services to Money Service Businesses – By Magnus Taylor
UK Minister for Africa, Mark Simmonds, has stated that the government will not intervene directly in Barclays Bank’s decision to withdraw banking services to Money Service Businesses (MSBs) including those that provide remittance services to Somalia, but said he hoped that a “˜market-based solution’ could be found.
Simmonds stated in a letter dated 18th July to SOAS academic Laura Hammond (and shared with African Arguments) that “the government would not be able to intervene on behalf of a particular company or “˜remittance corridor'”. He was responding to a letter submitted by Hammond on behalf of 105 academics, researchers and practitioners calling on the UK government to intervene to prevent the collapse of remittance flows into poor and fragile states, particularly Somalia.
Said Simmonds, “Barclays’ decision is ultimately a private commercial matter” and “it is an operational and commercial decision for each bank how it implements the regulations and ensures it is compliant” [with regulations put in place to protect banks from money laundering and terrorist financing].
However, Simmonds said that “(government) officials are working with regulators, trade associations and industry to look at all options for a sustainable market-based solution.” He indicated that the Serious Organised Crime Agency (SOCA) is working “to develop “˜safer corridors’ for remittances to high risk jurisdictions such as Somalia. The group’s letter to Simmonds had asked for government involvement in playing such a role to help find a lasting solution to the crisis and to protect remittance corridors.
A group of government ministers, led by Shadow Development Minister Rushanara Ali (MP for Bethnal Green and Bow), has also been active in drawing attention to the issue. Ali hosted a Parliamentary debate on July 17 in which several ministers with large immigrant populations gave their support to government becoming involved in working for a solution to the problem.
Barclays’ withdrawal of banking services to MSBs has been met with dismay by Somalis both in the country and in the global diaspora who either send or rely on remittances. British Olympian Mo Farah added his voice in a recent interview for ITN saying that “cutting this lifeline would be a disaster for millions” including members of his own family. An online petition has also received over 1700 signatures asking Barclays to reconsider its decision.
Dr Hammond states that she welcomes the government’s involvement in facilitating dialogue between banks, MSBs and regulators. “˜The action is coming quite late, but I hope there is still time to avert a major crisis. While the ultimate decision may be a commercial one for Barclays to make, the risks to government efforts to fight money laundering and terrorist financing, not to mention its commitment to promoting humanitarian and development work in fragile states such as Somalia, mean that it is necessary for government to be part of the effort to keep these channels open. If banks, regulators and governments are serious about wanting to combat money laundering and terrorist financing, the answer is to strengthen the sector, possibly through making regulations more robust rather than closing down the industry. In many cases, I suspect that much of the compliance that MSBs are engaged in goes unrecognized by banks – this was one of the findings of a recent report by Oxfam, Adeso and InterAmerican Dialogue on Somali MSBs in the US.’
Magnus Taylor is Editor of African Arguments. Thanks to Laura Hammond for assistance with this article.