Thursday, August 08, 2013

Barclays Bank - Bare-faced hypocrites!

Barclays Bank have informed Somali money transmitter, Dahabshiil that Barclays will no longer allow customers to send money to Somalia via Dahabshiil. A well-known financial entity in Somalia, Dahabshill describes itself as “the most trusted money transfer company for many immigrants willing to support their families and friends.”

But global anti-terror laws hold banks – like Barclays – responsible if they transfer money to criminal or terror elements, without taking the necessary steps to ensure that their systems are not being used for criminal purposes! As a result, fewer are willing to send money into countries like Somalia.

These global anti-terror laws are part of the same anti-money laundering laws which require global banks to take a wide series of measures to ensure that the money they are transmitting does not fall into terrorist hands.

The vast majority of these laws are routinely ignored by British Banks as has been consistently reported by this blog and corroborated by official findings by the UK regulatory agencies. Suddenly however, Barclays Bank have become very sensitive about a business proposition they have been engaged in for many years with Dahabshiil.

Thousands of ex-pat Somalis living in the UK send money home to their families to help them survive. The money is deposited in Sterling in one of Dahabshiil's many branches in the UK. They routinely transfer this money to their account in Barclays Bank, and the money is then transferred by Barclays to Dahabsill's office in Mogadishu. There the money is collected by Somali citizens in US dollars, and then taken to street traders to be converted into Somali Shillings.

This is not the only means of remitting money to Somalia available to Somali's living here. They could take their money instead to an 'alternative remittance' trader or 'Hawala' broker. These brokers exist in every ex-pat community and will transfer money cheaply and safely for ex-patriot people, but since 9/11 these 'underground remittance men' have been treated with huge suspicion by the relevant authorities, because their methods leave no records and there is no trace of the monies transferred, so their use has been hugely discouraged.

Thus people wanting to transfer money legally and transparently, use the facilities offered by firms like Dahabshiil, because their relationship with a correspondent bank like Barclays means they have an audit trail for every transaction.

A study released earlier this month by the Food Security Nutrition Analysis Unit for Somalia, a project by the United Nations' Food and Agriculture Organization found yearly remittances to Somalia to be a minimum of $1.2 billion per year. The aid group Oxfam said that soon to be published research shows that Somali immigrants in the U.K. alone send more than $154 million back to Somalia each year, behind only the U.S.

The big question is that when a bank transfers money to Somalia, how can it be sure it’s not sending money to terrorists? That question is now allegedly forcing Barclays to cut ties with the largest cash transfer bank in Somalia, a company that brings in the majority of the country’s $1.2 billion in yearly remittances.

Many in Somalia are in desperate need of money. Payments from family and friends overseas are how many get by, and that’s why more than 100 aid workers and Somalia experts signed a letter this week pleading with the British government to find a solution.

Barclays issued a very po-faced, holier-than-thou statement about this issue!

Barclays told Dahabshiil the move was "a commercial decision due to the risks of the sector in which you operate".

"The decision to exit our business relationship with you is not a negative reflection of your anti-money laundering standards, nor a belief that your business has been unwittingly been a conduit for financial crime," Barclays wrote in a letter sent to Dahabshiil.

Barclays is the last major British bank to still provide such money transfer services in Somalia.

 “...It is recognized that some money service businesses don’t have the proper checks in place to spot criminal activity and could therefore unwittingly be facilitating money laundering and terrorist financing,” Barclays said in a statement. “We want to be confident that our customers can filter out those transactions, because abuse of their services can have significant negative consequences for society and for us as their bank...”

The Guardian reports that other British banks are exiting this sector.

"... Barclays's decision follows the imposition of a $1.9 billion fine on HSBC last year by the US authorities for poor money laundering controls. HSBC said last autumn it would get out of the money-service sector entirely. .."

Yes but hold on just a tad, that fine was for running a money laundering operation for Mexican drug mafiosi, and had nothing to do with getting all delicate about small workers remitting a few bucks to their families to keep them alive. Trust a British Bank to twist the truth when it comes to explaining a policy decision!

For all the campaigning, Barclays seems resolute. Earlier this month the bank said the onus must be on firms to show they have sufficient safeguards. "We remain happy to serve companies who have strong anti-financial crime controls, but are asking the others to find another bank."

Abdirashid Duale, chief executive of Dahabshiil, noted that his company is one of a number of transfer businesses affected by of Barclays’ decision.

“Naturally, Dahabshiil is appealing this decision and would like to emphasize that to date Barclays’ has acknowledged that our Anti-Money Laundering and Anti-Terrorist Financing policies are fully compliant with industry regulations,” he said.

It is not often that I get the chance to be able to confirm facts which are within my own knowledge, but I can say with some certainty that Dahabhiil are, or certainly used to be one of the most compliant banking institutions who do business in this area of the world.

How do I know?

Because I used to undertake their annual compliance training reviews and lectures when I was working for one of the UK's leading Compliance Consultancies, MHA Consulting.

On a number of occasions I would visit a training forum, usually in the East End of London, where all Dahabshiil's bank representatives from all over the UK would be gathered for a 2-day training and compliance refresher course.

We would routinely go through their very comprehensive compliance manual, reminding ourselves of legal compliance obligations; discussing the latest laundering methodologies; examining case studies from both inside and outside the institution and generally making a complete root and branch review of AML compliance systems and controls. At lunchtime, we would all sit together and eat one of the best lamb curries it has ever been my privilege to eat.

These guys knew their business and they knew the risks they were faced with and they made damned sure that their staffs were fully briefed with the best and most up-to-date evidence available to ensure that they were taking their responsibilities seriously and were operating legally in a compliant atmosphere.

This was an awful lot more than most British banks were doing at the same time.

OK, things might have changed, what was a culture of complete compliance might have become a fast and loose criminogenic enterprise, but I don't think so. These guys knew how easy it would be for the UK regulators to take them down if they stepped out of line, so they made very sure that they were squeaky clean.

'Dahabshiil',  Abdirashid Duale said, 'remains operational while it explores alternative banking arrangements', but it must know that if they cannot find an alternative remitter, their clients may be forced to use the Hawala brokers instead.

A group of aid workers and researchers said the decision at stake here “is a lifeline that provides essential support to an estimated 40 percent of the population of Somalia.” The group said it has seen firsthand the impact remittances have on families in the Horn of Africa.

“My son is in the U.K. He sent us money every month for our sustenance and school fees for the children. Where are we going to get the money to pay our bills?” said Dahabo Afrah, a longtime customer of Dahabshil in Mogadishu. “This is unfair to us and will affect hundreds of thousands of Somali people.”

As I said before, Barclays said it remains happy to maintain a relationship with businesses that have anti-financial crime controls.

And here, I think lies the real answer!

That £154 million a year in remittances to Somalia remains a juicy plum! At the moment, Barclays earns a small remittance fee for each transfer, which nets them a nice commission. But if they could get those Somali clients to open bank accounts with Barclays, then Barclays could have all the business for themselves, and would be able to do all the business with someone else whose systems they 'preferred'!

Of course this could be mere sophistry, and it may not have occurred to Barclays!

Yet, Barclays do business all over the world in countries where there are equal terrorist concerns, like Pakistan for instance. Pakistan is one of the leading countries of concern for terrorist money laundering as well as drug money laundering and other forms of business corruption. This doesn't appear to have put Barclays off dealing with them!

Nor have they evinced any problem doing business in Dubai, once described by the Americans as the "...epicentre of terrorist financing.."

This is the bank that has been involved in every kind of financial criminality going on in the present dysfunctional market.

They have been hauled over the coals for PPI fraud; they have engaged in other forms of interest-rate product fiddling; a few years ago, a subsidiary of Barclays – Barclays Private Bank – was exposed as having been used to launder drug money from Colombia through five accounts linked to the infamous MedellĂ­n cartel. By an ironic twist, Barclays continued to entertain the funds after British police had become involved after a tip-off, from HSBC. They have been fined for their part in the LIBOR rigging, and more recently, Barclays and four of its traders have been fined a total of $488m (£322m) for manipulating the energy markets in the United States.

So, for Barclays to say that they cannot continue to do business with Dahabshill for fear of engaging in  financial crime is frankly the height of fucking hypocrisy.

Why are we not surprised!


AbogadoNZ said...

Thanks Rowan - a great assessment of a truly awful case of; "Don't do as I do, do as I say." The arrogance of these criminals knows no bounds. First they steal from their customers, then pay the fines by stealing from their shareholders then tell us they are morally obliged to withdraw from trading where is a possibility of money laundering! This would be funny if it were not so serious.

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