Somalia appeals against US wire transfer closure

MOGADISHU: Somalia appealed against a decision by a US bank to shut down its money transfer service that serves as a lifeline for tens of thousands of Somalis who depend on remittances, saying the closure could lead to the collapse of the economy.

Sunrise Community Banks handles a large amount of Somali transfers from Minnesota to Somalia, has said it will ends its service from Dec. 30 over fears it could risk violating US regulatory and anti-terrorism finance laws.

The deadline has sparked appeals by the Somali Diasporas in Minnesota, the Somali government, US lawmakers and relief groups to find a swift alternative to a service in which US-based Somalis send about $100 million a year back home.

The Somali government says an estimated $2 billion a third of the country's gross domestic product - is channeled to Somalia through "hawala" or small money transfer businesses.

Somalia's prime minister has warned that without remittances, the unstable economy would face collapse and said he had written to US Secretary of State Hillary Clinton urging her to intervene, according to a statement sent to media on Saturday.

Sunrise had extended its closure deadline to Dec. 30, but said in a statement on Friday it had no choice but to discontinue the service.

"Money remittances from the Somali diasporas through the US banking system must have a new solution to satisfy the important legal and regulatory requirements currently in place across the nation," it said.

"Without legal and regulatory relief, the bank must stand by its decision to close the money service business accounts on Dec. 30."

Copyright Reuters, 2011