Here’s a timeline of statements and actions in the past two months that give hope – and pause.

Scott Paul is a senior humanitarian policy advisor at Oxfam America. 

Somali-Americans have been able to send money to their loved ones in Somalia without incident since Merchants Bank of California announced its life-saving decision to keep the accounts of Somali-American money transfer operators (MTOs) open two months ago. Yet, much has happened in October and November that important to anyone concerned with the ability of migrants to safely and legally transfer money.

Here’s some highlights from the timeline, last updated on February 6th:

October 8^th

Assistant Secretary of the Treasury Daniel Glaser publishes a blog post entitled, Treasury’s Work to Support Money Transmitters. At first glance, the statement doesn’t look like much. The Treasury Department has offered vague assurances that it supports money transfer operators (MTOs) before, such as the US Treasury’s December 2011 blog post on remittances to Somalia or its presentation at a joint Oxfam/Adeso event on Somalia remittances in Minneapolis in May 2014.

Unlike earlier statements, however, Assistant Secretary Glaser’s post lays out a number of action points that, if realized, could make a tangible difference in the ability of MTOs to access banking services. In doing so, this could make it easier and cheaper for migrants in the US to send money to their loved ones around the world.

The most important of these steps could be a promise to work with federal banking agencies to update guidance for banks – specifically to clarify that it is possible to do business with high-risk MTOs. Assistant Secretary Glaser noted Treasury’s bilateral work with the UK and other governments, as well as its multilateral work with the World Bank and G20 to survey global MTO account closures. Finally, the post mentions Treasury’s work to improve the Financial Action Task Force’s guidance for governments on banking MTOs.

October 23^rd

Just weeks after the Treasury blog’s publication, the Financial Action Task Force (FATF) issues its own statement on bank de-risking (or, in non-financial-speak, terminating business relationships to avoid the burden of managing risk). Though the statement oddly takes banks to task for de-banking entire sectors (odd, since the US Treasury and other national regulators have made abundantly clear that they won’t try to directly influence bank behavior), it makes abundantly clear that de-risking is a threat to financial inclusion. It concludes by promising further study and debate at the next FATF plenary.

November 10^th

The agency within the US Treasury Department responsible for administering the Bank Secrecy Act, the Financial Crimes Enforcement Network (FinCEN), issues its own statement on money service businesses. Very much in line with the October Treasury blog and with previous FinCEN statements, this communiqué re-hashes Treasury’s risk-based approach for banking MTOs and other money service businesses, but then explicitly notes that: (1) FinCEN does not require banks to be the de facto regulator of any industry, (2) FinCEN does not expect any bank to detect all illicit transactions through its customers, (3) nor identify the individual customers of its corporate customers – a distinctly different flavor.

November 19^th

The Office of the Comptroller of the Currency (OCC) issues a statement on banking money service businesses, but it isn’t moving in the same direction as the others. Crucially, unlike FinCEN or Assistant Secretary Glaser’s bureau, the OCC is what’s called a “prudential regulator.” Rather than set general policy or monitor compliance with a particular law, the OCC is concerned with the general safety and surety of the banking system. That puts the OCC, along with the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board, on the frontlines of the US government’s supervision of banks. Its tone is critical.

Unfortunately, unlike the blog and the FinCEN statement, the OCC did not emphasize that banks are able to engage with MTOs and high-risk customers. So, not helpful in the slightest.

November 24^th

MTOs sue Westpac, one of the four largest Australian banks and the last to facilitate remittances to Somalia, on the date Westpac had planned to close their accounts. Though the court has asked Westpac to maintain the accounts until a hearing on December 22, Westpac says it may not be able to facilitate remittances if a US-based correspondent bank refuses to accept the transactions.

January 13^th

The Treasury Department hosts a roundtable on banking and money service businesses (MSBs), a category that includes money transmitters, check cashers, and other types of companies, many of which play a crucial role in providing financial services for the poor. Treasury representatives made clear that they do not expect, and in fact discourage, the practice of banks’ exiting entire sectors that are perceived as high-risk. For their part, representatives of banks and MSBs expressed frustration that bank examiners from agencies such as the OCC, FDIC, and Federal Reserve Board continue to disregard Department guidance and press banks to do more due diligence or exit high-risk businesses.

February 5^th

This marks the deadline set by Merchants Bank as the last day they will operate remittance accounts with Somali MTOs. As of the morning of February 6th, according to MTO leaders, 80% of Somali remittances will be halted. Oxfam and others are calling for the US government, led by the Treasury Department, to intervene and save this vital remittance lifeline.

As of February 5th, all of the Somali companies are ending services at most of their branches; some will shut down altogether. Merchants Bank, located in California, was the only bank capable of accepting cash from branches across the country and wiring it abroad. Most MTOs do have at least one local or state bank that they can work with for the time being, but these banks are only able to handle 20% of the cash Somali-Americans send each year. In addition, these banks can only wire money collected in specific regions. Service in Ohio and Virginia, for example, will close down altogether; most service in Washington will be halted, with remaining offices closing in a matter of weeks. Minnesota, home to Somalia’s largest diaspora population in the United States, will experience a drastic reduction in service.

Somali families rely on remittances to pay for things like school fees, health care costs, food and other necessities. With only a week’s warning, there was little chance for families to plan for this devastating disruption.

“The time for the US government to act is yesterday. Tomorrow, many Somali-Americans will wake up wondering whether their parents and children will survive the month. Unless the Obama administration takes action, many won’t. Our leaders are going to have to reckon with that.” 

While the US government has been thoughtfully working towards a lasting solution, a stop-gap is now urgently necessary. A few policy options are available to the US government in the short-term, and while none of them are ideal, all of them are vastly preferable to the humanitarian and security consequences that will follow from a disruption in formal channels for remittances.

Going Forward

In short, the re-writing of banking guidelines in the US cannot come soon enough for Somalis, who live in fear that bank account closures will disrupt their ability to receive life-saving help from their Somali-American relatives. Oxfam will continue to be part of the conversation, to protect the sacrifice Somali-Americans make every day to help their families back home survive and prosper.