Sunday, August 04, 2013
Barclays bank is under growing pressure to reverse a “kneejerk” decision to pull the plug on UK companies that allow people to send money home to support families in some of the world’s most desperately poor countries.
Olympic and world champion runner Mo Farah has thrown his weight behind a campaign to stop the bank closing the accounts of 250 UK money-transfer companies operating what Farah called a “lifeline” into poor countries.
Farah’s native Somalia has no regulated banking system and gets 50% of its income through remittances. Last week Farah wrote to the PM and this weekend added his name to a petition calling on the bank to extend its deadline of 12 August, asking his 800,000 Twitter followers to do the same.
“The Mo Farah Foundation, along with some of the world’s biggest charities and organisations, including the UN, relies on these businesses to channel funds and pay local staff,” he said. “This decision could mean life or death to millions of Somalis.”
On Wednesday, a delegation led by shadow international development minister Rushanara Ali will deliver the petition to Downing Street, asking David Cameron to intervene. The prime minister hosted a major conference on Somalia in May when he said failure to support the country would increase the global terror threat. A diplomatic storm is also gathering, with Pakistan, Bangladesh, Ghana and other states expressing concern.
Barclays is the major player operating in the £2bn sector, which supports some 3,500 British jobs. But the UK and US governments have been tightening bank regulation. US authorities fined MoneyGram $100m andslapped a $1.9bn fine on HSBC last year over poor money-laundering controls.
Ali, MP for Bethnal Green and Bow, said: “Countries across Africa and Asia will be badly affected and none more so than Somalia, a population reliant on what their friends and families send. Barclays’s decision will indeed cost lives – quite apart from potentially triggering a new crisis in the region.
“Shutting this vital lifeline risks giving people no other choice but to send money through dangerous and alternative methods out of desperation.
“We’ve not heard a whisper from the foreign secretary on this issue. He ought to step in. Barclays’s decision risks undoing the fragile progress that has been made after decades of conflict, not to mention humanitarian emergencies, piracy and terrorism,” said Ali.
Oxfam is also pressing the government to act. “It seems an extraordinary move of risk aversion by the bank. A rather kneejerk reaction when we are talking about people sending small amounts, usually £200 to £300 at a time,” said Emma Fanning, its humanitarian and conflict policy adviser. “Vital to the people receiving it but very unlikely to be the kind of funds that terror organisations would be dealing in.
“The impact of this will be felt by ordinary people, families and communities who are already in poverty and are now finding an essential lifeline being cut off. There will be suffering as a result. Not only that but aid agencies and charities will be left to plug that gap when people in countries like Somalia are cut off from financial support coming from families abroad.
If the bank isn’t willing to find a solution then the government has to come up with one. They have to find a way round this and quickly.”
Barclays said it would give extra time to money transfer companies who asked. “As a global bank, we must comply with the rules and regulations in all the jurisdictions in which we operate. The risk of financial crime is an important regulatory concern and we take our responsibilities in relation to this very seriously.
“Some money-service businesses don’t have the necessary checks in place to spot criminal activity with the degree of confidence required by the regulatory environment under which Barclays operates. Abuse of their services can have significant negative consequences for society and for us as their bank. We remain happy to serve companies who, in our opinion, have sufficiently strong anti-financial crime controls and who meet our amended eligibility criteria.
“We have been engaging with the UK Government, remittance industry bodies and other stakeholders to discuss the issues.”
A government spokesman said: “The Government is committed to supporting a healthy and legitimate remittance sector, allowing UK residents to remit funds abroad whilst also ensuring a robust anti-money laundering regime.
“Ministers have met industry to discuss the issues facing the sector. The Department for International Development is also urgently reviewing the impact of changes on developing countries and examining what can be done to support those affected.”
Source: The Guaridan