The U.S. Department of the Treasury, along with the rest of the U.S. government remains deeply concerned about the ongoing humanitarian crisis in the Horn of Africa. To help combat the famine, the U.S. government has become the largest humanitarian donor to the region, providing more than $870 million to meet ongoing and urgent humanitarian needs, including nearly $205 million for Somalia. President Obama recently announced an additional $113 million in emergency relief funding for the region to support urgently needed food, health, shelter, water and assistance needs.
We also recognize the important role that remittances play in meeting these urgent needs, as so many Somali-Americans have sent money to their loved ones in the region struggling to survive. Treasury engages regularly with the Somali-American community and the financial institutions that service them in Minneapolis and elsewhere to promote the continued use of legitimate and transparent methods for these critical transfers. Maintaining safe, transparent payment channels is of the utmost importance given that funds have also been transferred to Al-Shabaab, an internationally-sanctioned terrorist group – something financial institutions work diligently to prevent.
It is important to note that the Treasury Department does not have the authority to direct any financial institution to open or maintain a particular account or relationship. The decision to maintain any financial relationship is made by each financial institution itself. Such a decision is often based upon a number of factors, including the bank’s capacity to effectively manage money laundering and terrorist financing risks. Financial institutions are required to identify, assess and take steps to design and implement controls that are appropriate to manage risks, in compliance with their obligations under the Bank Secrecy Act, as well as under counter-financing of terrorism and sanctions laws.
The Treasury Department expects financial institutions, in their compliance with the Bank Secrecy Act, to reasonably discharge their due diligence obligations -- not that they be infallible in doing so. The Department also expects financial institutions to take appropriate steps to comply with sanctions and counter-financing of terrorism laws. There is no assumption on the part of Treasury that money transmitters present a uniform or unacceptably high risk of money laundering, terrorist financing or sanctions violations.
In 2005, Treasury’s Financial Crimes Enforcement Network (FinCEN) and the Federal Banking Agencies issued a joint statement recognizing the importance of money services businesses, including money transmitters, that comply with the law having reasonable access to banking services. As noted in subsequent guidance, banks are expected to apply Bank Secrecy Act requirements to money services business (MSB) customers on a risk-basis as they do with all accountholders. Banks do this by first assessing the risks associated with the particular customer and then taking appropriate steps to manage the identified risks. Banks thus have the flexibility to provide services to a wide range of MSBs, even ones deemed high-risk, and remain in compliance with the Bank Secrecy Act.
It is the view of the Treasury Department that financial institutions that establish and maintain appropriate risk-based anti-money laundering programs will be well-positioned to appropriately manage such accounts, prevent illicit transactions, and avoid enforcement action.
The Treasury Department believes that the Somali-American community will continue to have legitimate and transparent methods to transfer funds to Somalia and we look forward to continuing our active engagement of all stakeholders, including the Somali community, financial institutions, regulators, and law enforcement on this issue.
Scott Rembrandt is a Policy Advisor in the Office of Terrorist Financing and Financial Crimes at the U.S. Department of the Treasury.