Somalis fear loss of remittances as Barclays plans exit Each time relatives send cash to Mohamed Ali Mohamud, it helps him not only to pay his own bills, but to sustain dozens of other family members in Somaliland. "They use it for rice and tea," says the 51-year-old government functionary, queueing at a money transfer agency whose hall swells with customers soon after prayers finish in Hargeisa, the capital. It's for their daily life. About half of the impoverished 10m population of Somalia and the self-declared breakaway republic of Somaliland depends on remittances from among the 1.5m Somalis living overseas, worth more than $1bn a year. But their lifeline is about to be cut as Barclays plans to stop supporting money transfers with about 250 remittance companies, several in Somalia and Somaliland from the end of September. Barclays is the last leading bank serving the Somali market and aid officials and diplomats fear the halt would undermine efforts to promote stability in a fragile region suffering from terrorism, piracy and clan warfare. "We are very concerned; it can have a huge impact on livelihoods," says Michele Cervone, EU envoy to Somalia. Overseas remittances account for up to half of the economy of Somalia and Somaliland, far outstripping aid contributions from international donors. Although Barclays has given little detail about the reasons for the closures, it says some money services could "unwittingly be facilitating money laundering and terrorist financing." Al-Qaeda-linked jihadis control a swath of Somalia and regularly detonate suicide bombs in the capital Mogadishu. One of its leaders was born in Somaliland, the semi-autonomous territory without a single bank. Rushanara Ali, a British parliamentarian heading up a campaign to keep the money flowing, says banks "are scared of the impact if they fall foul of the regulators." Last year, the UK's HSBC bank was fined $1.9bn for money laundering. Standard Chartered was fined $667m and nearly lost its US licence for moving money on behalf of Iran and Sudan in violation of sanctions. Scott Paul, policy lead at Oxfam which has researched remittances, says "the squeeze [on money transfer companies] has been going on ever since September 11 really." But Oxfam says regulators have regularly failed to find evidence that money transfer companies are conduits for financing global terrorism, and that withdrawing wire services risks far greater insecurity. "The alternative [is] suitcases on planes - the risk is that regulators [will] have no idea where the money's going," says Mr Paul, who argues banks should instead put more effort into their due diligence. The UK - a big donor to Somalia and Somaliland - says it supports "a healthy and legitimate remittance sector" and is meeting banks and regulators to try to find a way to provide remittances. But it has yet to iron out a solution. The planned shutdown by Barclays will hit Dahabshiil, a privately owned company founded by a Somalilander and Africa's biggest supplier of remittances. The company has 286 payout locations across Somalia, whose people have yet to put back together a country destroyed by 22 years of civil war. Oxfam estimates that more than a quarter of remittances headed to the Somali population comes from the UK and says nearly all aid agency transfers, including by the UN, rely on Dahabshiil to pay staff. Campaigners against the shutdown, including Olympic runner Mo Farah, hope that Barclays, which has twice extended Dahabshiil's cut-off date since it announced the cull in May, will offer a further reprieve of between six to 12 months, giving diplomats, donors and companies time to find a solution. Ms Ali says turning away money transfer agencies is both "draconian" and "dangerous" and unfairly penalises local business. Barclays has launched its own money transfer service to east Africa in recent months, bypassing businesses like Dahabshiil and will continue to work with Western Union, the US-headquartered wire service that has only a single branch in all of Somaliland and Somalia. Western Union charges more than twice as much as Dahabshiil. "It's Western Union that stands to benefit," says Ms Ali of the company, which previously paid $94m in a settlement over a money laundering case in the US. But Western Union says its internal control systems are stronger than those "less stringent and less costly" than those of smaller money transfer companies. Queueing up in the middle of Dahabshiil's branch near Hargeisa's souk, Mr Mohamed says he and up to 50 nomads in remote regions depend on relatives based in Birmingham, Cardiff and London. They wire him $500 a month. They are saying why is our life going to be cut - there will be nothing . . . I think it will be very very difficult, the life of the people.