EPF Calls for Challengers to Restore MSB Banking: Shutting out remittances is destroying lives

Money service bureaux continue to close as banks move to clean their portfolios by simply deleting business that doesn't meet their tightening risk appetites. This may play well for shareholders and risk officers, but does the cost justify the benefit? It can't be denied that some MSBs have been used as money-laundering vehicles, as evidenced by the joint crackdown by HMRC, the FCA and Metropolitan Police in September 2019. But the resulting bank withdrawal from the sector, which may have closed down 50% of the UK's bureaux, has much in common with babies and bathwater.

An MSB closure typically puts five to ten people out of work. That's not a number that will blip any unemployment graphs, but multiply it by the number of MSB closures and we start to see a much larger effect. And to put that into perspective, since 2015, Barclays has closed 65% of its MSB accounts.

However, the real human cost is far more widespread. Most money service bureaux provide a range of services, including pawnbroking, loans, foreign exchange and remittances. Domestically, they provide an essential service to well over a million unbanked adults, many of whom are financially vulnerable. As regulated entities, the vast majority of bureaux operate legally and ethically, yet they're being punished along with the guilty. Overseas, the effect can be even more devastating. When Barclays withdrew banking facilities from Dahabsiil Bank in Somalia, it closed the last major bank corridor to that country. This wasn't because of any specific transgressions, it was because of concerns that the corridor might be used for money-laundering and terrorist funding.

Foreign remittances represent almost a quarter of Somalia's GDP. If they stop, an entire economy could collapse, beginning with those most vulnerable.

It's long past time for a challenger to step up with a viable solution to provide MSBs with safeguarding accounts and banking support. The systematic wipe-out of home remittances is an epidemic far more fatal than the one on which the world is currently focused.