Fears black market will flourish as Aussie banks stop Somalia remittances

Friday October 17, 2014

A decision by Australian banks to close down remittance facilities to Somalia could lead to an increase in the black market and may even play into the hands of terror groups, experts say.

Many believe the move will force the prolific remittance industry underground, and play directly into the hands of terror groups.

Thousands of Somali-born Australians use the services to remit funds to immediate and extended family in Somalia for food, clothing and education. They are concerned for their relatives’ welfare if the system is dismantled.

Aden Ibrahim from the Somali Cultural Association said the ability to remit funds in an efficient manner is crucial as a “life-line”.

“This is about life-line to communities that are having sick children, old people loved ones sending $200 or $50,” he said.

But by month’s end, Australian banks will no longer offer the service.

They declined to discuss the issue, but cite “risk” as the reason for closing the facilities.

Hugh McDermott is an expert in terror-related finance from Charles Sturt University, and says the banks each make an independent risk assessment.

“By dealing with money remitters, by exiting them out of their banking structure means they don’t have to worry about that reputational risk if something goes horribly wrong and they’ve found one of the remitters they are working with or have as customers has been linked to terrorism,” he said.

Westpac, the last of Australia’s major banks to offer the remittance service, will shut down the service by the end of October.