The Impact of Enhancing US Treasury’s Anti-Terror Tool Act

More than 40% of Somali people depend solely on remittance from their loved ones outside of the country–particularly in the US and Europe– in order to provide the basic needs for their families who don’t have any other source of income other than that they receive from their relatives in those countries. since the banking system is now taking shape in the country and don’t have the necessary know-how, remittances sent through Hawala companies have been a significant element of Somali economy, representing between 25-45% of the country’s total economic output–even exceeding the humanitarian aid, development aid, and direct investment altogether.

A large portion of those funds comes from Somali Americans living in the United States who transfer money to their loved ones back home, but options to deliver these remittances are turning to be difficult because of concerns related to the exploitation of these funds by terrorist organizations operating in the region.

consequently, a bill called “Enhancing Treasury’s Anti-terror Tools Act”, proposed by Congressman Keith Ellison, has recently passed through the House of Representatives and now is before the Senate waiting to be voted. it is likely that this bill may get passed given the total “yes votes” number in favor for it. The importance of this Bill is that it directs the Secretary of Treasury to carry out a study on establishing a pilot program for Somali Americans. Such a pilot program could give the Somali Americans an opportunity to send humanitarian remittances to their loved ones in Somalia.

This study also suggests that the following three elements should be considered:

  1. The potential efficacy of establishing a pilot program for regulators to provide technical assistance to depository institutions and credit unions that desire to open account services for Money Transfer Operators (MTOs) operating in Somalia. This allows regulators to oversee the transactions and ensure that funds are not being used by terrorist organizations.
  2. it will determine whether this kind of pilot program can be replicated as a model for Somali Americans to safely and legitimately send money to their loved ones. it will also allow the regulators to develop a better mechanism to trace the funds that are moved to make sure that they don’t end up in the wrong hands.
  3. the evaluation of the potential impact of allowing Money Services Business to share their state banking examinations, or any other mechanism with a similar function, with depository institutions and credit unions to give them confidence and knowledge that MSBs are complying with its anti-money laundering and counter-terror financing regimes to fight against illicit financial transactions.

This study will emphasize on the necessity of transferring the humanitarian-related remittances by Americans to their relatives in Somalia as well as finding a way to ensure that this transferred money will not end up in the hands of terrorist organizations. If this bill is adopted and passed as a law by the Senate, it will whisk away many obstacles faced by Money Services Business in the US that were hardly hit by previous Anti-money laundering and counter-terrorism financing laws.

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