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Minneapolis mayor urges feds to help Somali-Americans send money back home

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Minneapolis Mayor Betsy Hodges joined mayors from around the country Monday in calling for a federal solution to help Somalis living in the U.S. more easily send money to relatives and friends in their homeland.

Many Somalis in America use money transfer operators to send funds, called remittances, back home. Somalia, which has been in the throes of civil unrest for years, has no functioning banking system of its own, and the remittance system is one of the only ways for money to be sent to residents there.

In recent years, U.S. banking operations have shut down their money transfer operators because of stricter federal regulations designed to prevent the money from getting to terrorist groups instead.

The latest bank to do so was Merchants Bank of California. It handled between 60 percent and 80 percent of all U.S. transfers to Somalia, according to the International Business Times.

It closed down its accounts in February, leaving thousands of Somali families in dire straits.

In a news release, Hodges said she and Seattle Mayor Ed Murray sponsored a resolution that was adopted Monday by the U.S. Conference of Mayors, urging the Obama administration to develop a system that would restore the "normal flow of remittances to Somalia without compromising the safety and security of the United States."

Minneapolis and Seattle are home to the largest and second-largest Somali immigrant communities in the United States, according to Hodges.

“Their ability to send money home provides loved ones in Somalia with a critical lifeline that we must protect," she added.

Minnesota's political leaders have been pressing the federal government for months for a solution. Sens. Al Franken and Amy Klobuchar, as well as Rep. Keith Ellison, met with federal officials in late February to discuss the issue, to no end.

Some 40 percent of the families in Somalia – more than two million people – depend on remittances from overseas to help pay for food, water, shelter and education, the Guardian reports.

Somalia receives approximately $1.3 billion in remittances each year, which is the single largest sector of the country's economy, according to Oxfam America.

Banks in the United Kingdom and Australia also shut down their money transfer operations in recent months, the Guardian notes.

Is plastic a solution?

One of the world's largest credit card vendors, MasterCard, recently announced it will move into the Somali market by offering debit cards to Somali citizens to help them receive money from abroad, according to the International Business Times.

Right now most of the remittances are distributed in cash by money changers. Using prepaid cards or debit cards would help ensure the funds go to their intended recipients.

The Times notes, though, that Somalia might not yet have an infrastructure that's reliable enough to support the use of cards on a wide scale.

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