U.S. Senator Al Franken met with Somali money transfer business owners on Saturday, February 21, 2015 in Minneapolis. The purpose of the meeting was to listen Somalis in preparation for next week’s meeting between federal elected officials and regulators.
Somali money transfer businesses in Minnesota have been operating at reduced capacity since the Marchants Bank of California stopped providing international routing services on February 6th. A group of federal elected officials including Senators Al Franken and Amy Klabuchar as well as Congressmen Keith Ellison(MN-5) and Eric Paulson(MN-3) sent a letter to Secretaries of State and Treasury requesting a meeting. The requested meeting is scheduled on February 26th.
The letter emphasized the impact lack of routing services will have on the humanitarian situation in Somalia. One-third of families in Somalia are said to rely on money remitted by relatives living overseas for basic needs. Somali-Americans sent $215 million last year according to the letter.
Letter also highlighted the sense of urgency for short term and long term solutions. Here is the paragraph that addressed possible solutions:
"Somalis urgently need a solution. We call on the appropriate agencies, in collaboration with community and industry partners, to formulate a short-term plan to keep a remittances pipeline open, as well as a longer-term plan to provide ongoing access to money transmission services. For example, the State Department might be able to provide temporary remittances channels through its humanitarian programs. Financial regulators could be enlisted in efforts to facilitate solutions that build on the recommendations of State and the NSC, preserving the integrity of the U.S. counterterrorism and anti-money laundering efforts while keeping open remittance pipelines through private or public mechanisms. Together, banking regulators could, if necessary, then promulgate formal join guidance. The Federal Reserve Bank of New York could use its wire transfer service to provide remittances from immigrant workers in the U.S. to their family members at home—might be enlisted to help facilitate these efforts. All of these possibilities, and other creative alternatives, should be explored to find a solution to this crisis."
I asked Senator Al Franken his expectation for the February 26th meeting with regulators. Here is what he said:
Meanwhile, Somali money transfer service businesses in Minnesota have closed altogether as of February 19th. Abdulazis Sugule, head of Somali-American Money Services Association and first from the right in the above picture, said at the meeting businesses closed after unable to cover opperating expenses. “Operating costs have skyrocketed recently” said Sugule. In addition to international wiring services, banks are charging as much as $12,000 per account that used to cost few hundred dollars. But it's the volume reduction by 80% in some cases after Marchants Bank of California stopped offering wiring services that resulted the new rounds of closure.
The primary driver of cost increases and volume reduction has been federal regulation. Federal regulation has made money transfer business virtually inoperable and essentially ran it into the ground. For more on how money transfer work read previous blog post Money Transfer Explian
However, there was some optimism at the meeting. Garad Nor, third from the left who opened one of the first Somali money transfer service businesses in Minnesota thanked Senator Franken for his leadership on the effort to find solution for the current crises.
Nor also urged Congressmen John Kline (MN-2) and Tom Emmer(MN-6) to join the effort by attending the February 26th meeting. Minnesota's 2nd and 6th congressional districts have significant Somai-Amereican constituents who are unable to remit money to their families. Both Congressmen Kline and Emmer could help this effort as members of the majority party in Congress.