KENNEDY AND COLEMAN CALL FOR ACTION ON
BANKING REGULATIONS EFFECT ON SOMALI COMMUNITY
Kennedy and Coleman send letters
requesting consideration of regulatory changes and Minnesota field hearing
August 25th, 2006 - Washington, D.C. - Citing
increasing difficulties experienced by Minnesota's Somali community in sending
funds to their families in Somalia as a consequence of new banking regulations,
Congressman Mark Kennedy (R-MN) and Senator Norm Coleman (R-MN) today urged the
Treasury Department's Financial Crimes Enforcement Network (FINCEN) division to
consider proposing appropriate regulatory and guidance changes and conduct
enhanced outreach efforts with the Minnesota banking and Somali communities.
Kennedy and Coleman also requested the House Financial Services Committee and
Senate Banking Committee to hold a field hearing in Minnesota to hear first hand
accounts of the importance of maintaining remittances between the U.S. and
Somalia.
"I am confident that we can strike a balance that allows for remittances and
still prevents money laundering, terrorist financing and other criminal
activities," said Coleman. "Minnesota is home to the largest Somalia community
in America, and they are understandably nervous about being unable to send money
to their families in need. I believe that by holding a Congressional hearing in
Minnesota we can shine a greater amount of light on this situation. I will
continue working with Congressman Kennedy and the Treasury Department to find a
solution."
"Given the long standing hardships the people of Somalia have faced, it is
critical that we find a way to ensure that Somalis living in Minnesota can
continue to support their families back home. Humanitarian remittances are a
fact of life for many impoverished Somalis, so we need a fair regulatory system
that allows for the lawful transfer of funds so that money isn't driven out of
the banking system and under the radar, where we can't prevent it from ending up
in the hands of terrorists and other criminals," said Kennedy. "I am pleased to
join with Senator Coleman in asking the Banking Committee and Financial Services
Committee, on which I serve, to hold hearings on the matter in Minnesota, so
that Congress can hear firsthand from the largest Somali population in the
United States."
The Somali community remits an estimated $800 million to $1 billion a year,
according to the World Bank. This amounts to approximately $100 per capita for a
country with an annual per capita income of $600.
In April 2005, Treasury's FINCEN and the Federal Banking Agencies issued Bank
Secrecy Act (BSA) related compliance guidance to the banking community as well
as money services businesses (MSBs), which oftentimes is the only practical
financial services option for the Somali community. The new guidance has led
some banks to end or reduce their relationships with MSBs, which in turn has had
an adverse impact on the Somali community. The BSA requires banks to conduct due
diligence activities designed to uncover terrorist financing, money laundering
and other criminal activities.
Text of the letters are as follows:
August 25, 2006
The Honorable Richard Shelby The Honorable Michael Oxley
Chairman, Committee on Banking, Chairman
Housing and Urban Affairs Committee on Financial Services
United States Senate United States House of Representatives
Washington, D.C. 20510 Washington, D.C. 20515
Dear Chairman Shelby and Chairman Oxley:
We write this letter to request a hearing in our home state of Minnesota so that
you might hear firsthand about the importance of maintaining vital remittances
between our country and the homelands of our immigrant communities.
Our home state of Minnesota has been one of the most welcoming to those seeking
refuge from violence, persecution, and want. Thousands of immigrants from many
parts of the world have found a better life for themselves and their children in
Minnesota, and have become valuable members of our community. At the same time,
they have not forgotten their families, friends and communities back in their
native lands.
One way these immigrants have supported their friends and family back home is
through cash remittances. For the Somali community in Minnesota, this has been
an especially important means of providing support to loved ones in their
troubled homeland. According to the World Bank, the total amount of these
remittances is between $800 million and $1 billion a year. To put this in
perspective, this is approximately $100 per capita for a country with a per
capita income of only $600 per year. Clearly, the money sent to their homeland
by the Somali community in Minnesota and elsewhere in the country is vital – and
often the difference between life and death.
That is why we have been concerned to hear from the Somali community in
Minnesota, and other stakeholders, that the flow of life-saving remittances has
been severely threatened as a result of guidance issued in April 2005 by the
Treasury Department’s Financial Crimes Enforcement Network (FINCEN) and the
federal banking agencies. We are concerned that the guidance has failed to
strike the appropriate, albeit difficult, balance among important national
security, commercial, and social interests.
In the post-9/11 world, we fully understand and support reasonable efforts to
ensure that our global financial system is not used to launder money and
otherwise facilitate terrorism and criminal enterprises. According to reports,
our efforts in the five years since those attacks have significantly impaired
terrorist financing, and have been instrumental in counterterrorism operations
such as the recent successful arrest of the terrorist plotters in London.
That said we believe it is possible to achieve the balance between preventing
money laundering and terrorist financing, and permitting legitimate remittance
flows. We believe a field hearing in Minnesota would allow Congress to hear from
interested parties about the need to achieve this balance and the means with
which we can do it. We look forward to working with you on this important issue.
Respectfully,
_______________________________________
Mark Kennedy | Norm Coleman
Member of Congress | United States Senator
August 25, 2006
Mr. Robert W. Werner
Director
Financial Crimes Enforcement Network
Department of the Treasury
1500 Pennsylvania Avenue NW
Washington, D.C. 20220
Dear Director Werner:
We are writing to you to express our concern relating to the impact on the
Somali community in Minnesota of guidance issued by the Financial Crimes
Enforcement Network (FINCEN) and the federal banking agencies in April 2005
regarding compliance with the Bank Secrecy Act (BSA) regulations by the banking
industry and money services businesses (MSBs).
The Somali community has come to depend on MSBs to provide critical financial
support in the form of remittances to loved ones, friends and former communities
in their troubled homeland. The World Bank estimates that the total amount of
these remittances is between $800 million and $1 billion a year. This amounts to
approximately $100 per capita for a country with a per capita income of only
$600 per year. As a result of the April 2005 guidance, however, it has come to
our attention that some MSBs have ceased or will soon cease their remittance
services among other important financial service offerings, principally as a
result of their banking partners’ decisions to terminate their relationship out
of BSA compliance concerns.
In the post-9/11 world we fully appreciate and understand the difficult balance
that needs to be struck among national security, law enforcement, commercial and
social interests. We fully support efforts by the Treasury Department and FINCEN
to target terrorist financing, money laundering and other criminal activities.
We also appreciate FINCEN’s acknowledged sensitivity to the difficulty in
achieving this balance. That said, we are troubled that the current state of
affairs does not represent the proper balance.
Accordingly, with the aforementioned in mind we respectfully request that FINCEN:
· inform us of outreach efforts undertaken to date in Minnesota, especially with
respect to the Somali community;
· conduct greater outreach efforts with the Minnesota banking and Somali
communities including offering guidance in the Somali language (including on
FINCEN’s website for MSBs); and
· expeditiously review comments solicited in its recent advanced notice of
proposed rulemaking (ANPR) on the BSA and consider appropriate regulatory and
guidance changes.
Although it is important that there be full compliance with the letter and
spirit of the BSA, it is also just as important that BSA compliance efforts do
not jeopardize the critical financial support from the Somali community to its
homeland.
We appreciate your prompt consideration of our concern and recommendations and
look forward to hearing from you.
Sincerely,
_______________________________________
Mark Kennedy | Norm Coleman
Member of Congress | United States Senator
Contact(s):
Leroy Coleman, (202) 224-5641
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