Al-Barakat

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The correct title of this article is al-Barakat. The initial letter is shown capitalized due to technical restrictions.

al-Barakat or al-Barakaat (which means "The Blessed" in Arabic) is a wire transfer network (or rather an informal value transfer system). It originated in Somalia and is involved in the remittance trade. By 2001 it operated in 40 countries and was the country’s largest private employer. Al-Barakat handled about US$140 million a year from the Somali diaspora, and offered phone and Internet services.

The effects of anti-terrorist financing measures of the US government and other participating countries were disastrous for Al-Barakat – and for Somalia, a country with no recognized government or functioning state apparatus, one that has not had a formal system of banking in the past 13 years. After many foreign communities largely washed their hands of the country following the disastrous peacekeeping foray in 1994, remittances had become the lifeline of some of its inhabitants. With no officially recognized private banking system, the remittance trade was dominated by a single firm, Al-Barakat. In 2001, the United States shut down Al-Barakat Bank’s overseas money remittance channel, labeling the bank “the quartermasters of terror.” (By early 2003, though, only four criminal prosecutions had been filed, and none involved charges of aiding terrorists.)

With remittances representing 25 percent to 40 percent of Somalia’s total gross national product, closure of Al-Barakat has a big effect for the Somali economy. Although other money transfer agencies soon filled the gap created in the market, the humanitarian impact of money frozen in transit was considerable.^{[citation needed]}

This Corporation started its first operations in 1986 before the fall of the last central government in 1991. However, its rise to prominence came after Hawala became the only way to transfer funds to Somalia.

Its founder Ahmed Ali Jumale, was living in United Arab Emirates at the time of the Closure. Despite numerous investigations, nothing was found to link Al-Barakaat to terrorist activities as was outlined by the 9/11 commission. Nonetheless, millions of Somalis transfered money to their relatives remain kept frozen pending conversion of the UN black listing.

Source: Devesh Kapur: "Remittances, the New Development Mantra?" in Samuel Maimbo and Dilip Ratha, Remittances, (Washington DC: The World Bank, 2004).

1 Fees
2 Availability
3 How it works: a web of trust
4 Transfer system not used in US 911 attacks
5 Guantanamo detentions
6 References

[edit] Fees

For a two percent fee they offer to transfer money almost anywhere in the world.

[edit] Availability

For a long time, Al-Barakat was one of the wire transfer services to offer transfer to Somalia. Al-Barakat is a modern form of hawala.

[edit] How it works: a web of trust

To transfer money simply go into an Al-Barakat office anywhere in the world and deposit money to be transferred with the location and contact details of the recipient. Upon deposit, the nearest Al-Barakat office will inform the recipient.

[edit] Transfer system not used in US 911 attacks

After the September 11, 2001 attacks the Al-Barakat network came under attack since it was suspected that hawala brokers may have helped terrorist organizations transfer money to fund terrorist activities.

The 9/11 Commission Report has since confirmed that the bulk of the funds used to finance the assault on the twin towers were not sent through the hawala system, but rather by inter-bank wire transfer to the SunTrust Bank in Florida. Nevertheless, the Al-Barakat network suffered anyway due to anti-terror activities

[edit] Guantanamo detentions

Several of the captives held in extrajudicial detention in the Guantanamo Bay detainment camps, in Cuba, are held because they worked for hawalas. Mohammed Sulaymon Barre worked for a Somalia hawala named Dahabshiil, that had ties to al Barakat.^[1] The alleged connection between al-Qaeda and al-Barakat, and an alleged connection between al-Barakat and Barre's hawala Dahabshiil, was sufficient justification for his continued detention. It is known that Barre was still in Guantanamo when he participated in his first Administrative Review Board hearing. on September 30, 2005.^[2]