Crossed Wires Starve Somalia of Cash

Liban Gaal is one of an estimated 1.5 million Somalis living abroad who are helping the economy back home stay afloat. The owner of the Somali Restaurant in Windsor, Ont., says he sends $300 each month to a sister-in-law in Mogadishu whose husband died in 2008 on a smugglers’ ship that capsized in the Mediterranean. Without Gaal’s contribution, she and her four children wouldn’t be able to get by. “When you go to Somalia, if you see people begging on the street or living in the bush, that usually means they don’t have someone from the diaspora sending them money,” says Gaal.

Remittances from expatriate Somalis total about $1.3 billion annually, according to the humanitarian group Oxfam International, which estimates as many as 43 percent of households depend on the transfers. That lifeline is getting squeezed as some countries step up enforcement of anti-money-laundering laws as part of a crackdown on terrorist groups. Merchants Bank of California, the last U.S. bank handling large volumes of money transfers to Somalia, stopped in January. Financial institutions in the U.K. and Australia have also ceased the transfers. Banks in Canada continue to process them.