Barclays Delays Closing Bank Account for Somalia Money Transfers

Barclays Plc (BARC), Britain’s second-largest bank by assets, said it will delay closing an account used by Dahabshiil Holdings Ltd. to transfer remittances from the U.K. to Somalia.

Barclays said in May it would close the account, citing the lack of “strong anti-laundering governance structures.” That date was moved from July 10 to Aug. 12 and then to Sept. 30, after British lawmakers lobbied the London-based lender.

“Barclays has given Dahabshiil a short extension during which time we hope it can finalize alternative banking services,” it said in e-mailed response to questions today.

Dahabshiil has opened accounts with another bank for corporate and aid agency remittances, though the Dubai-based company is still finalizing arrangements for individuals, Barclays said. While acknowledging Barclays’s “legitimate concerns” over money-laundering and terrorism, the Somali government last week said the bank’s decision may exacerbate the situation in the Horn of Africa nation, which depends on remittances for 60 percent of its foreign-exchange earnings.

Barclays, handles as much as a third of the $1.5 billion sent home annually by those living abroad to Somalia, according to Dahabshiil, which sought a court order on Sept. 24 to prevent the British bank from closing its account.

The court case, which was due to be heard today, has been adjourned to Oct. 15 to allow both parties to gather sufficient evidence, Dahabshiil said in an e-mailed response to questions.

“This case is baseless and the hearing has been adjourned to a date when the court can consider the issues fully,” Barclays said.

As many as 15 al-Qaeda-linked gunmen stormed the Westgate Mall in the Kenyan capital, Nairobi, on Sept. 21 and killed at least 67 people. Al-Shabaab, a militia that’s been fighting to establish an Islamic state in Somalia since at least 2006, claimed responsibility for the attack.

To contact the reporter on this story: Eric Ombok in Nairobi at eombok@bloomberg.net

To contact the editor responsible for this story: Shaji Mathew at shajimathew@bloomberg.net

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