'Hawalas' provide lifeline to impoverished Somalia

By Thursday afternoon, the news cameras that descended on Abdirahman Omar's money-wiring shop just one day before had vanished. So had his customers.

"We've seen maybe two or three customers," Omar said. "Usually at this time, we see about 20."

Omar's shop, also known as Mustaqbal Express, is hoping his business rebounds in the wake of Wednesday's raids. The FBI seized documents related to financial transactions going to Somalia and a host of other African countries, along with the United Arab Emirates.

Although the raids did not shut down the businesses, known as "hawalas," some Somali-Americans say they they're nervous that more sweeps could be on the horizon.

Hawalas allow Somali-Americans to support relatives in an impoverished homeland. Mustaqbal Express alone transfers about $1.5 million a month to the Horn of Africa. Globally, the Somali diaspora is estimated to contribute about $1 billion a year to Somalia, although owners of money-wiring businesses say remittances from the U.S. have decreased significantly since the recession began.

Omar said he has not heard from federal authorities what triggered the raids. But the fact that the April 3 search warrant was filed in the Eastern District of Missouri could indicate that the St. Louis branch of the FBI is following its own investigation. It's possible that authorities are tracking whether individuals, possibly from Missouri, gave money to terrorist networks by using a Minneapolis money-wire service.

Community activist Mohamed Hassan of the advocacy group Somali Cause said he supports an investigation, as long as it does not put the local community at risk -- or his family back in Somalia.

Hassan, a Hennepin County employee and father of six, uses a hawala every month to send $1,600 to his relatives in the Horn of Africa.

"What other choice do I have?" Hassan said. "There are no banking services in Somalia. The wiring services are the bank. If [my relatives] don't collect the money, they'll go without food and medicine."

Omar, the manager of Mustaqbal Express, said an FBI agent told him the raids were not directly related to an investigation into about a dozen missing Somali-American men from the Twin Cities.

But the question is whether the two investigations may overlap. The group believed to have recruited the young Americans is Al-Shabaab, a violent Islamic militia in Somalia. But a few years ago, some Somalis, including those in the diaspora, perceived Al-Shabaab members as nationalistic freedom fighters defending their country from Ethiopian troops who had invaded Somalia.

It's unclear whether any individuals from the United States gave money to Al-Shabaab through the remittance companies.

But at a Senate committee hearing last month, one leading scholar on Somalia testified that the U.S. government needs to provide more clarity to Somali-Americans on what is legal regarding political engagement in their homeland. Ken Menkhaus of Davidson College noted that the U.S. did not classify Al-Shabaab as a terrorist group until March 2008.

Menkhaus said Somalis in the diaspora could have financially supported Al-Shabaab without knowing that they were violating any U.S. anti-terrorism laws.

"The fact that shabaab was not designated a terrorist organization before March 2008 but then was so designated is an example of the legal confusion facing Somalis," Menkhaus told the Senate committee for homeland security. "Something that was legal in February 2008 is now aiding and abetting terrorism in March."

The records seized at the Minneapolis hawalas go back to 2007.

Federal and state regulations provide some oversight of money-transfer businesses. The Minnesota Commerce Department requires them to be licensed. Nearly 70 are registered with the state.

But Bill Walsh, a commerce department spokesman, said the department's main role is to make sure the businesses are financially solvent and are not putting the consumers at risk.

One manager of a Minneapolis money-wiring service, whose business wasn't raided, said stiff regulations were created in the wake of the terrorist attacks on Sept. 11, 2001. The man requested that his name not be used for this story because he didn't want to be associated in any way with the raids.

The manager said any customer who wants to transfer more than $3,000 needs to fill out a detailed form providing the applicant's name, address, social security number and an explanation of where the money came from. If the amount is more than $10,000, the business needs to submit the form to the U.S. Treasury department.

The manager said the industry has struggled as many major U.S. banks have closed their accounts with the hawalas, in part because recent regulations requiring them to keep an eye on the money-transfer businesses became onerous.

Although the recent raids did not shut down business this time, federal authorities froze a handful of money-transfer businesses following 9-11. Authorities were concerned that the businesses were laundering money to terrorists. No indictments resulted from that investigation.

Editors Note: This story has been amended from its original version to change the attribution of information concerning the FBI's raid. The original story stated that the FBI said the raids are not directly related to the agency's ongoing investigation into missing Somali-American men from Minneapolis. That statement should have been attributed to the manager of a money-wiring business, not to the FBI. The FBI declined to comment on links between the two cases.