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10 March 2015


Somalia: Prevalence and availability of institutions that conduct Hawala transfers both into an out of Somalia; documents or identification needed to use a remittance company (Hawala); whether they deal with institutions operating in Ethiopia or Kenya

Research Directorate, Immigration and Refugee Board of Canada, Ottawa

1. Overview

According to sources, Hawala remittance systems are informal financial arrangements that allow the transfer of funds both domestically and internationally (U4 23 May 2008, 1; Adeso May 2012, 2). Oxford Dictionaries defines Hawala as "[a] traditional system of transferring money used in Arab countries and South Asia, whereby the money is paid to an agent who then instructs an associate in the relevant country or area to pay the final recipient" (n.d.). According to sources, Somalia has not had a functional banking system since the outbreak of the civil war in 1991 (SCERDO 6 Feb. 2015; Sabahi 29 Dec. 2014; BBC 6 Feb. 2015). Sources report that in the absence of banks, Hawala remittance companies emerged as a means of transferring money from the diaspora to Somalia (World Bank 2 Nov. 2014; Sayid et al. 2012, 270).

According to a 2012 study about mobile money in Somalia by three professors at the International Islamic University Malaysia, the Hawala system is founded on "public trust" and "reliability" (Sayid et al. 2012, 270). A January 2014 report by the Africa Research Institute, a UK thinktank focused on policy-making in Sub-Saharan Africa (n.d.), explains that there are "close ties between remitters and specific remittance companies. Such ties may be based on clan or regional allegiances, but are also service-related and underpinned by trust" (27 Jan. 2014). An article published by Fortune of Africa, a research group that promotes development in Africa (n.d.a), likewise states that "there are social and historical factors that reinforce a relationship of trust between individuals who are doing business, these are tied to the extended family, geographic and clan factors" (n.d.b).

Sources state that Hawala serves as a "lifeline" to people in Somalia (BBC 6 Feb. 2015; NPR 8 July 2014; Oxfam et al. 2013, 6). According to sources, remittances sent from members of the diaspora to individuals in Somalia are used for necessities like food, healthcare, and education (ibid.; Africa Research Institute 27 Jan. 2014). Estimates of the amount of remittances sent to Somalia each year through Hawala range among sources from US $1 billion (UN 19 Sept. 2013), to US$1.2 billion (Huffington Post 15 July 2013; WPI 13 Feb. 2014; Dahabshiil n.d.a) to US$1.3 billion (UN 19 Sept. 2013; Reuters 7 July 2014), to as much as US$2 billion (Al Jazeera 7 Aug. 2013; UN 19 Sept. 2013). According to the World Policy Institute (WPI), a New York-based institution that develops policy solutions in the areas of global and national security (n.d.), the amount of remittances exceeds both foreign direct investment and international aid to Somalia (WPI 13 Feb. 2014). According to a joint report published by Oxfam, African Development Solutions (Adeso), and the Inter-American Dialogue [1]

[r]emittances support efforts at the municipal or regional levels, contributing to infrastructure projects such as the development of water-filtration systems, payment of teacher salaries, and construction of schools and hospitals. Moreover, remittances enable Somali families to mitigate poverty, and, in many cases, remittances help them fulfill their immediate needs for food, shelter, clothing, and other basic necessities. (Oxfam et al. 2013, 9)

Sources report that approximately 40 percent of Somalis rely on remittance payments from another country (UN 19 Sept. 2013; BBC 6 Feb. 2015).

1.1 The Geographical Scope of the Hawala System

WPI indicates that Hawala agencies operate in more than 150 countries (WPI 13 Feb. 2014). Adeso, an African-based humanitarian and development NGO that promotes grass-roots aid and development in Africa (Adeso n.d.), states that remittance companies "operate openly and are registered with governments in countries all over the world" (Adeso May 2012, 3). The joint report by Oxfam et al. states that many remittance companies transfer money to other East African nations, including Kenya, Ethiopia, Djibouti, and Sudan (Oxfam et al. 2013, 12). According to the website for Tawakal Express, a remittance agent with over 600 offices worldwide (n.d.a), money transfers can be made to Somalia, Ethiopia, Kenya, Sudan, and Eritrea, among several other countries (Tawakal Express n.d.b). Adeso notes that Hawala agents operate in "poor and remote areas" that are "out of reach of the formal financial sector" (May 2012, 5).

Sources note that the Somali diaspora in the US sends the greatest amount of remittance payments to Somalia (UN 19 Sept. 2013; Oxfam et al. 2013, 9; Africa Research Institute 27 Jan. 2014), while the UK ranks second (ibid.; Oxfam et al. 2013, 9). The joint report by Oxfam et al. states that nearly 20 percent of all remittances flow to Somalia from the US (ibid., 10). Sources indicate that Somalis in the US send approximately US $215 million to Somalia each year (Business Insider 30 Jan. 2015; Oxfam et al. 2013, 9), while the UK is said to remit approximately US$162 million to Somalia annually (ibid.). The Oxfam et al. joint report lists Canada as the sixth highest remittance-sending country with an estimated annual transfer sum of US$49 million (ibid.). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

2. How Remittance Systems Work

The website of the remittance company Kaah Express, which is headquartered in Dubai with offices in North America, Europe, Asia, Australia, and Africa (Kaah Express n.d.a), including Somalia, Kenya and Ethiopia (Kaah Express n.d.b), states that the procedure to send a remittance through the company involves:

  • Completing a registration form at the agent location
  • Providing identification documents (required for compliance reasons)
  • Presenting the amount to be sent and beneficiary details
  • Obtaining a receipt from the agent with full transaction details
  • Checking the status of the transaction online
  • Recipient provides details of the transaction, ID documents, and signs a receipt to collect funds (ibid. n.d.c).

Sources likewise state that funds are transferred from an agent in the sender's host country to an agent in the recipient's country (U4 23 May 2008, 2; Oxfam et al. 2013, 12). The Oxfam et al. joint report notes that the recipient of the payment is notified by telephone or text message when their remmitance is ready to be collected (ibid., 13).

Sources report that remittance companies require accounts with a banking establishment in order to be operational (Foreign Policy 30 Jan. 2015; Huffington Post 15 July 2013). Foreign Policy, a US-based magazine that provides analysis of global affairs (n.d.), states that "money transmitters, like smaller versions of Western Union or Moneygram, collect the payments and bundle them together, but need a bank to handle the international wire transfer" (30 Jan. 2015). Reuters similarly states that remittance agencies act as "intermediaries between foreign banks that make the wire tranfers and the intended recipients of the money" (7 July 2014). According to the Huffington Post, banks are involved in the Hawala system both to transfer accumulated remittance deposits and to serve as "'proxy regulators' used by governments to combat money laundering and terrorist financing" (15 July 2013).

According to sources, individuals sending Hawala payments must present a valid identification document to the remittance agent (NPR 8 July 2014; UN 30 Oct. 2013). The UN Integrated Regional Information Networks (IRIN) states that money transfer companies in the UK go beyond legal requirements and "demand proof of identity from everyone sending money, even small sums" (UN 30 Oct. 2013). An article by NPR, an American multimedia news organization and radio producer (n.d.), quotes a Hawala operator from Minnesota as stating that remittance businesses in the US are "tightly regulated" and that he requires identification from all senders, even for an amount of US$50 (NPR 8 July 2014). According to the joint report by Oxfam et al., the sender of a remittance from the US provides the agent with "his or her full details (name and address) and a valid identity document" (Oxfam et al. 2013, 12). The agent then screens the names of both the sender and recipient through the Specially Designated Nationals (SDN) List [2]; if the check returns with no results, then the transaction can be approved (ibid.). Corroborating information about the screening process could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

The joint report by Oxfam et al. states that recipients of Hawala must provide "his or her details, proof of identity, and the name and the location of the sender" (ibid, 13). An article published by IRIN, however, states that "it is impossible to know what remitted money will be used for, or even, given the lack of national identity documents in most of Somalia, exactly who will receive it" (UN 19 Sept. 2013). The U4 Anti-Corruption Resource Centre, a Norwegian research institution that writes on the impact of corruption on sustainable development (n.d.), likewise reports that the recipient of a remittance does not need to provide any identity documents as long as they possess a receipt or "identification code" linked to the funds (U4 23 May 2008, 2). The article published by Fortune of Africa states that "remittance operations are far more efficient than other financial services" (Fortune of Africa n.d.b). According to the Adeso report, "[a] Hawala remittance transaction for one individual takes place within one or two days" (May 2012, 5). The WPI likewise states that money transfers "often occur in less than 24 hours" (13 Feb. 2014). The website of the remittance company Kaah Express states that a transaction with their company can occur in as little as 15 minutes (n.d.c).

2.1 Hawala Remittances Sent via Mobile Devices

In correspondence with the Research Directorate, a representative from the Somali Canadian Education and Rural Development Organization (SCERDO), an Alberta-based NGO that promotes the development of Somalia's education and agricultural programs (n.d.), stated that "Somali citizens can receive their Hawala remittance through their mobile phone" (SCERDO 11 Feb. 2015). The WPI similarly states that "Hawala organizations collect funds from Somalis living abroad and contract with agents on the ground in the country, who use mobile phones and email to transmit money to the recipients" (WPI 13 Feb. 2014).

The Africa Research Institute reports that "[t]he mobile money market is developing rapidly in Somali regions, but is still very much in its infancy and concentrated in certain urban areas" (17 Jan. 2014). IRIN notes that one remittance company based in the UK sends all money through mobile phones, using the international telecoms infrastructure but states that this is "only practical in Somaliland, where mobile cash transfers are already commonplace" (UN 30 Oct. 2013). For more information on mobile money transfer in Somalia, including its prevalence and companies offering such services, please see Response to Information Request SOM105092.

3. Remittance Companies

Sources report that Dahabshiil is the largest remittance company that transfers money from foreign countries to Somalia (UN 30 Oct. 2013; Huffington Post 15 July 2013; Dahabshiil n.d.a). Dahabshiil's website indicates that they have 286 locations in Somalia (ibid.). According to the WPI, "[a]pproximately 60 percent of the remittances sent by Somalis in the diaspora are routed through Dahabshiil" (13 Feb. 2013). The joint report by Oxfam et al. states that the three largest remittance companies serving Somalia are Dahabshiil, Amal Express, and Qaran Express (2013, 12). The report by Adeso notes that there are "many" Hawala companies operating in Somalia, including Amaana Express, Amal Express, Barwaqo Financial Services, Cidgal, Dahabshil, Kaah Express, Al-Mustaqbal, Qaran Express, Salama Money Express, and Tawakal Express (Adeso May 2012, 2).

According to the representative from SCERDO, Hawala agents available specifically to the Somali-Canadian diaspora include: Dahabshiil, Amal Express, Tawakal, Iftin, Kaah, and Almustaqbal (SCERDO 6 Feb. 2015). The same source stated that "they are accessible and can be found anywhere in Canada and around the world, particularly major cities such as Toronto, Ottawa, Montreal, Edmonton, Calgary, Vancouver, Halifax, Winnipeg, Saskatoon, Regina, etc." (ibid.). According to the website of Dahabshiil, there are several agents serving major Canadian cities, including Toronto, Montreal, Vancouver, and Ottawa (Dahabshiil n.d.b). Reuters reported in 2014 that, according to a money-laundering specialist from Toronto, there were 3 remittance agencies transferring funds to Somalia, while there were 11 agencies 10 years earlier (7 July 2014).

4. Use of Remittance Agencies by Development Agencies, NGOs, Government and Businesses

Sources state that remittance companies are used by international aid agencies to deliver humanitarian assistance to Somalia (Africa Research Institute 27 Jan. 2014; Adeso May 2012, 2; Reuters 3 Feb. 2015). According to the BBC, remittance companies "play a crucial role during the frequent droughts as internantional aid agencies use them in cash for food programmes" (BBC 6 Feb. 2015). Reuters reports that, according to Oxfam, remittances are used to fund development projects such as the construction of schools, hospitals, and water management systems (Reuters 3 Feb. 2015). The same article states that "money transfer companies are also used by the Somali government to pay public servants and by traders to buy goods (ibid.). The Africa Research Institute states that money transfer companies also service multi-lateral donors and local charities (27 Jan. 2014).

According to sources, NGOs rely on remittance companies to pay their staff in Somalia (Oxfam et al. 2013, 16; Dahabshiil n.d.a). On its website, Dahabshiil states that several international organizations and NGOs use its remittance service to pay their staff, including: Action Aid Africa, African Development Trust, BBC Media Action, Muslim Aid, Save the Children UK, United Nations Development Programme and the World Food Programme (Dahabshiil n.d.a). Similarly, the joint report by Oxfam et al. states that

[a]id agencies in Somalia would not be able to implement cash transfer programs, let alone pay staff members in the field were it not for the MSBs [money service businesses]. The entire humanitarian community in Somalia fully relies on the availability of MSBs to do business including transferring funds for project activities to organization staff or local partners and paying for staff and office running costs (Oxfam et al. 2013, 16).

Sources state that 80 percent of new businesses in Somalia are launched by start-up funds through remittances (Al Jazeera 7 Aug. 2014; Dahabshiil n.d.a).

5. Hawala Accounts with Western Banks

According to an article on the blog "People Move," published by the World Bank, "[s]ince the events of 11 September 2001, many countries have adopted stringent Anti-Money Laundering and Combatting the Financing of Terror (AML-CFT) regulations for funds transfers" (World Bank 2 Nov. 2014). Sources state that regulators have compliance programs which banks must ensure that their account holders respect (Reuters 7 July 2014; BBC 6 Feb. 2015; Huffington Post 15 July 2013). Due to the risk of remittance accounts being used for money laundering purposes or to fund terrorist organizations, banks in the US and UK have begun closing Hawala operators' accounts (ibid.; UN 19 Sept. 2013).

Sources state that in 2015, Merchants Bank of California announced that it would close its accounts with agencies that allow people in the US to transfer money to Somalia (Foreign Policy 30 Jan. 2015; Business Insider 30 Jan. 2015; BBC 6 Feb. 2015). Merchants Bank reportedly handled up to 80 percent of remittance payments transferred from the US to Somalia (ibid.; Foreign Policy 30 Jan. 2015). According to Business Insider, a news website that reports primarily on financial, media, technology, and industry issues (1 Oct. 2007), Merchants Bank "was one of the last US banks willing to serve as a medium for transactions on behalf of these companies" (Business Insider 30 Jan. 2015). The same source notes that since the Minnesota-based Sunrise Bank closed all remmitance accounts in 2012, remittance companies in the US have relied on "as few as two banks: Merchants Bank in California and a second bank in Minnesota with only two retail branches that's only legally allowed to transfer money collected within the state of Minnesota" (ibid.). Similarly, the UK Barclay's Bank stated in 2013 that it would no longer manage Hawala agencies' accounts (World Bank 2 Nov. 2014; Reuters 7 July 2014). According to sources, Westpac Bank, the last large bank in Australia to work with remittance transfers, announced in December 2014 that it plans to cease business with Hawala agencies (Reuters 22 Dec. 2014; Emerging Markets Business Information News 1 Dec. 2014).

According to Reuters, the Royal Bank of Canada continues to serve remittance companies in Canada (7 July 2014). Corroborating information could not be found among the sources consulted by the Research Directorate within the time constraints of this Response.

This Response was prepared after researching publicly accessible information currently available to the Research Directorate within time constraints. This Response is not, and does not purport to be, conclusive as to the merit of any particular claim for refugee protection. Please find below the list of sources consulted in researching this Information Request.


[1] The Inter-American Dialogue is a not-for-profit "US center for policy analysis, exchange, and communication on issues in Western Hemisphere affairs" (n.d.). Adeso is an African-based humanitarian and development NGO that promotes grass-roots aid and development in Africa (n.d.). Oxfam is an international NGO that aims to reduce global poverty (n.d.).

[2] The Specifically Designated Nationals (SDN) List is the US Treasury Department Office of Foreign Assets Control's list of individuals and organizations sanctioned due to counterterrorism concerns (Oxfam et al. 2013, 12).


Adeso. May 2012. Guidelines: How to Use Hawala in Somalia. <> [Accessed 3 Feb. 2015]

_____. N.d. "About Us." <> [Accessed 3 Feb. 2015]

Africa Research Institute. 27 January 2014. Hannah Gibson. Somali Remittances: 10 Things You Need to Know. <> [Accessed 3 Feb. 2015]

_____. 17 January 2014. Somali Money Matters- An Update on the Remittances Saga. <> [Accessed 2 Feb. 2015]

_____. N.d. "About." <> [Accessed 2 Feb. 2015]

Al Jazeera. 7 August 2013. Mohamed Ali. "Overzealous Western Banks Pose New Threat to War-Ravaged Somalia." <> [Accessed 3 Feb. 2015]

British Broadcasting Corporation (BBC). 6 February 2015. "Somalia Criticizes US Bank's Move to Halt Remittances." <> [Accessed 9 Feb. 2015]

Business Insider. 30 January 2015. Armin Rosen. "A California Bank's Decision Could Have Huge Ramifications in Somalia." <> [Accessed 2 Feb. 2015]

_____. 1 October 2007. "Welcome to Business Insider." <> [Accessed 3 Mar. 2015]

Dahabshiil. N.d.a. "Dahabshiil Wins Injunction Against Barclays." <> [Accessed 4 Feb. 2015]

_____. N.d.b. "Agents." <> [Accessed 22 Feb. 2015]

Emerging Markets Business Information News. 1 December 2014. "Lack of Real Action on Remittances Increases Terrorist Financing Risk." (Factiva)

Foreign Policy. 30 January 2015. Jamila Trindle. "Bank Crackdown Threatens Remittances to Somalia." <> [Accessed 2 Feb. 2015]

_____. N.d. "Why Print?" <> [Accessed 6 Mar. 2015]

Fortune of Africa. N.d.a. "Our Story." <> [Accessed 3 Feb. 2015]

_____. N.d.b. "Somali Hawala/Money Remittance Companies." <> [Accessed 3 Feb. 2015]

The Huffington Post. 15 July 2013. Abdurahman Sharif. "Hawala and the Diminishing Humanitarian Space."<> [Accessed 2 Feb. 2015]

Inter-American Dialogue. N.d. "About the Dialogue." <> [Accessed 23 Feb. 2015]

Kaah Express. N.d.a. "Company Profile." <> [Accessed 3 Mar. 2015]

_____. N.d.b. "Africa." <> [Accessed 5 Mar. 2015]

_____. N.d.c. "Send and Receive Money." <> [Accessed 20 Feb. 2015]

National Public Radio (NPR). 8 July 2014. Matt Sepic. "As Wire Transfer Options Dwindle, Somali-Americans Fear a Lost Lifeline." <> [Accessed 2 Feb. 2015]

_____. N.d. "Overview and History." <> [Accessed 3 Mar. 2015]

Oxfam. N.d. "Who We Are." <> [Accessed 23 Feb. 2015]

Oxfam, Adeso, and Inter-American Dialogue. 2013. Manuel Orozco and Julia Yansura. Keeping the Lifeline Open: Remittances and Markets in Somalia. <> [Accessed 4 Feb. 2015]

Oxford Dictionaries. N.d. "Hawala." <> [Accessed 10 Mar. 2015]

Reuters. 3 February 2015. Katie Nguyen. "Somalia: US Bank Ending of Somali Money Transfers to Have 'Catastrophic' Impact." <> [Accessed 3 Feb. 2015]

_____. 22 December 2014. "Australia's Westpac to Quit Remittance Business by March 31." <> [Accessed 2 Feb. 2015]

_____. 7 July 2014. "Somali Expats Fear Bank Curbs on Sending Money Home." <> [Accessed 2 Feb. 2015]

Sabahi. 29 December 2014. "Somalia's New Bank Seeks to Spur Economic Growth." (Factiva).

Sayid, Osman, Abdelghani Echchabi and Hassanuddeen Abd. Aziz. 2012. "Investigating Mobile Money Acceptance in Somalia: An Empirical Study." Pakistan Journal of Commerce and Social Science., Vol. 6. <> [Accessed 18 Feb. 2015]

Somali Canadian Education and Rural Development Organization (SCERDO). 11 February 2015. Correspondence from a representative to the Research Directorate.

_____. 6 February 2015. Correspondence from a representative to the Research Directorate.

_____. N.d. "About Us." <> [Accessed 11 Feb. 2015]

Tawakal Express. N.d.a. "About Us." <> [Accessed 20 Feb. 2015]

_____. N.d.b. "Daily Rates." <> [Accessed 20 Feb. 2015]

U4 Anti-Corruption Resource Centre. 23 May 2008. Marie Chene. Hawala Remittance System and Money Laundering. <> [Accessed 30 Jan. 2015]

_____. N.d. "About U4." <> [Accessed 30 Jan. 2015]

United Nations (UN). 30 October 2013. Integrated Regional Information Networks (IRIN). "Africa: Keeping Remittances to Somalia Flowing." < [Accessed 4 Feb. 2015]

_____. 19 September 2013. Integrated Regional Information Networks (IRIN). "Briefing: Are Remittances to Somalia Doomed?" <> [Accessed 30 Jan. 2015]

World Bank. 2 November 2014. Sonia Plaza. "Anti-Money Laundering Regulations: Can Somalia Survive without Remittances?" <> [Accessed 2 Feb. 2015]

World Policy Institute (WPI). 13 February 2014. Amanda Roth. "The High Price of Losing Remittances." <> [Accessed 30 Jan. 2015]

_____. N.d. "About Us."<> [Accessed 30 Jan. 2015]

Additional Sources Consulted

Oral sources: Attempts to contact the following were unsuccessful within the time constraints of this Response: Action Africa Help; Canadian Somali Congress; Center for Research and Dialogue Somalia; Dahabshiil Ottawa; The Human Development Concern for the Horn of Africa; KAALO Aid and Development; Observatory of Conflict and Violence Prevention; Sahan Research and Development Organization; Social Life and Agricultural Development Organization; Somali-Canadian Association of Etobicoke; Somali Canadian Society of Calgary; Somali Peace Line; Tawakal Express.

Internet sites, including: African Union – African Union Mission in Somalia; Agence France Presse; Amnesty International; The Brookings Institution; Carnegie Endowment for International Peace; East African Community; The Economist; Freedom House; Human Rights Watch; The International Monetary Fund; United Nations – UN Development Programme; Somali Return Consortium; Transparency International; The Wall Street Journal; Woodrow Wilson Center for Scholars.