A North Dakota bank is the latest financial institution in the United States and elsewhere that has decided to close the accounts of companies that transfer or convert money, a trend that has upset Somalis who want to send money home.
Officials with Fargo-based Bell State Bank say the federal government has called for stricter regulations for dealing with so-called cash-intensive money service businesses and they cannot risk massive fines. They say they don’t like to lose any business, but added that the bank has dropped all such transfer companies and the Somalia accounts were a small part of that sector.
“Fines can reach up to $50 million, depending on your organization,” said Matt Stenehjem, a Bell State Bank fraud and security officer who was hired by the company to deal with new federal and state regulations.
Messages left with a media relations spokeswoman with the U.S. Treasury Department were not returned.
Many banks dumped money service businesses after 9/11 over fears the money was going to terrorist groups. One of Britain’s largest banks, Barclays, decided recently to drop customers who were sending money to Somalia.
U.S. Census Bureau statistics from a three-year survey taken between 2010 and 2012 estimate that about 1,000 people with Somali ancestry live in North Dakota. Most of them are believed to be living in the Fargo area.
Robert Entringer, commissioner of the state Department of Financial Institutions, said he can understand the decision by Bell to dump money service businesses.
“Their costs of compliance with state and federal regulations, especially with the passage of the Dodd-Frank Act and all that is coming out of that legislation, have just dramatically increased,” he said.
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