A bill to improve the ability for remittance services to send funds to conflict zones passed the House of Representatives May 7, 2014. The Money Remittances Improvement Act (HR 4386) is intended to reduce the fears some banks have working with Money Service Businesses (MSBs) and other non-bank firms that operate in complex conflict zones, like Somalia. Rep. Keith Ellison (D-MN), the bill’s primary sponsor, hailed its passage as “a cause for celebration for all diaspora communities.”

According to a report by Oxfam America, Adeso and the Inter-American Dialogue, over 40 percent of Somalis rely on the $1.3 billion U.S. dollars remitted annually. “Streamlining the remittance process and eliminating regulatory barriers to sending money home is critical for many American immigrants supporting their extended families overseas,” said the bill’s co-sponsor, Rep. Sean Duffy (R-WI).

If passed by the Senate and signed into law, the bill would authorize state and federal financial services regulators to share compliance and due diligence information about MSBs and non-bank firms with one another. According to a report in American Banker, this should mollify concerns of “skittish” banks that working with MSBs is inherently risky and could make them subject to prosecution if money is transferred for illicit purposes.

In the past several years, a number of large banks have closed or refused to open accounts with remittance firms, particularly those sending money to Somalia. “Because of anti-money laundering regulations, there’s been extra scrutiny on money transfer accounts” said Anne-Marie Schryer-Roy, communications and advocacy manager at Adeso, a development organization working in Africa.

In the UK, for example, Barclays bank announced that it would close the accounts of a number of MSBs, including the largest African remitter, Dahabshiil, for fear that they might be aiding terrorist financing.  In the U.S. similar action was taken by a number of banks, making it almost impossible for MSBs to find a bank that would open accounts.

In addition to addressing banks’ concerns, the bill may also reduce paperwork for remittance firms. The Financial Crimes Enforcement Network, part of the Treasury Department, would be allowed to utilize compliance exams generated by state regulators, rather than relying only on those created at the federal level. This removes some duplication and administrative burden on MSBs and other non-bank firms.

The bill is supported by a number of fianncial services regulators, aid and development groups, and MSBs including: The Conference of State Bank Supervisors, Money Transmitter Regulators Association, Oxfam America, African Development Solutions (ADESO), the Somali American Remittances association, Tawakal Money Express, Kaah Express, Dahab-shiil, Amal USA Inc, and the Somali Action Alliance, and The Confederation of Somali Community in Minnesota