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Kennedy And Coleman Call For Action On Banking Regulations Effect On Somali Community

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Kennedy And Coleman Call For Action On Banking Regulations Effect On Somali Community

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Kennedy and Coleman send letters requesting consideration of regulatory changes and Minnesota field hearing

Congressman Mark Kennedy (R-MN) & Senator Norm Coleman (R-MN)

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. ( Read Full Text)

August 25, 2006

Mr. Robert W. Werner
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. ( Read Full Text)

Leroy Coleman, (202) 224-5641

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