Barclays' reprieve for Dahabshiil welcomed by Oxfam

Somalia protest
Image caption Many Somalis in the UK say remittances are a lifeline for relatives

UK banking giant Barclays' decision to delay closing the account of leading Somali money-transfer operator Dahabshiil has been welcomed by the charity, Oxfam.

The reprieve would allow Somalis in the UK to continue supporting their relatives in Somalia, Oxfam said.

Dahabshiil had launched court action to prevent Barclays from shutting its account.

Barclays says its action is aimed at preventing money-laundering.

Somalia does not have a proper banking system and has been in turmoil since the fall of Siad Barre's government in 1991.

'Illegal providers'

The al-Qaeda-linked al-Shabab group is currently waging an insurgency to overthrow the UN-backed government.

Barclays had given Dahabshiil a deadline of Monday to close its account, but has agreed to extend it to 16 October.

It described Dahabshiil's court action as "baseless".

"Barclays has given Dahabshiil a short extension, during which time we hope it can finalise alternative banking services," it added in a statement.

Oxfam said Barclays' "eleventh hour decision offers a brief respite" to Somalis reliant on remittances.

"The Treasury should now show leadership by urgently pushing for a robust solution that ensures ordinary Somalis are not penalised by regulations intended to crack down on illicit financial flows," it added in a statement.

A recent UN study found that more than 40% of the Somali population received remittances.

Dahabshiil, the largest such business providing services to Somalia, said it would press ahead with its court action, despite the reprieve.

"We have one potential alternative provider, but they cannot process cash remittances which is the vast bulk of our business. If it were as simple as Barclays suggest, then we wouldn't be where we are now," it said.

In August, Olympic gold winner Mo Farrah joined a public campaign calling on Barclays to reverse its decision.

A petition signed by more than 25,000 people was handed to Downing Street.

Farah came to the UK from Somalia at the age of eight.

Barclays' rival HSBC last year agreed to pay US authorities $1.9bn (£1.2bn) in settlement over accusations that it allowed the laundering of billions of dollars of cash from drug barons and rogue states through its international branches.

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