Somalis Face a Snag in Lifelines From Abroad

Compared with the trillions of dollars flowing through the international financial system every day, the estimated $1.3 billion sent each year from small storefronts in Somali neighborhoods in places like London and Minneapolis to families back home in the Horn of Africa is a mere droplet.

In a country where 40 percent of the population depends on remittances from relatives abroad, however, these transactions are a lifeline. And because Somalia has little in the way of financial infrastructure, the money transfer companies that make them possible play a central role in keeping the financial ties to the diaspora open, a few hundred dollars at a time.

But in an echo of politically charged fights over aid that have vexed Somalia before, the same money transfer services that help keep children in school and elder relatives off the streets also can be used to send money to help finance dangerous groups like the Shabab, the feared Islamist militants who once controlled much of the country.

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The move by Barclays would affect not just Somalia but also countries like Bangladesh, Nigeria and Haiti. But Somalia is uniquely exposed because decades of violence and chaos have left it without a functioning banking system. If the money transfer businesses are shut down, experts say, the transfers will not go through other official channels but will be driven underground instead, making it harder to track money going to militant groups.

“The alternative is bulk cash smuggling, carrying suitcases of cash across the border from other places,” said Jonathan Schanzer, the vice president for research at the Foundation for Defense of Democracies and a former terrorism finance analyst at the United States Treasury.

“If you’re trying to assist people on the ground in Somalia, you have to work with the same remittance houses that are committing violations and assisting groups like Al Shabab,” Mr. Schanzer said.

When the militant group’s clandestine division needed money to pay for a planned wave of assassinations of government officials late last year, the Shabab turned to supporters in the Somali community in Qatar for donations. Shabab operatives used Dahabshiil to send the funds back to Somalia, according to a United Nations report.

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