In the next couple of weeks a prosperous British industry will be reduced to ashes.
The industry in question is the remittance sector - a vast and growing area made up of hundreds of Money Service Businesses (MSBs) - local, generally small businesses which provide diaspora communities with a means to remit money back home.
Generally the sums being transferred are less than $1000, providing a lifeline for some of the world's most vulnerable people. In 2011 flows via MSBs totaled $3.2bn in Britain and $530bn worldwide in 2012. This is greater than the entire global aid budget.
Since 9-11 western governments and banks have been suspicious of MSBs. In November 2001, the Bush administration froze the assets of Al-Barakat, a Somali remittance company, and major lenders began to restrict lending to MSBs.
Today the UK remittance industry relies, almost entirely, on Barclays for financial assistance. However this is all set to change: Barclays has recently decided to end its assistance to small British MSBs, claiming that they are open to exploitation by money laundering and terrorist activity.
UK MSBs are well regulated
The argument put forward by Barclays that British MSBs are unregulated and a conduit for criminality is unfounded.
Most UK MSBs are credentialed members of community trade organisations. For example the Somali MSBs belong to the Somali Money Transfer Association (SOMTA), which help maintain reliability and accountability.
Additionally HMRC tightly regulates the industry under the 2007 Money Laundering Regulations Act, putting limits on turnover and creating tough transparency rules.
In contrast some of the large US credit unions, set to benefit from Barclays move have had a chequered past:
In 2010 Western Union agreed to pay $94 million to settle civil and criminal investigations by the Arizona attorney general's office, into claims that undercover state police, posing as drug dealers bribed Western Union employees to illegally transfer money.
Another area of contradiction is that in some cases Barclay's is cutting off funding to MSBs despite finding no illegality in their business:
Duale, chief executive of Dahabshiil (which has a big presence in Somalia), highlights a recent letter he received from the bank.
It states that the decision to end the relationship between Dahabshiil and the bank was not based on a belief that Dahabshiil was a channel for money laundering or terrorism but rather that it presented a "commercial risk to Barclays".
The US is setting the agenda
The heavy handed way in which Barclays is dealing with MSBs follows the imposition by US authorities of a $1.9bn fine on HSBC last year for poor money laundering controls.
This led HSBC to exit the remittance sector entirely.
The HSBC case contaminated the image of MSBs and led to other US based banks such as Barclays to distance themselves from the industry.
It is not right that this thriving UK industry worth $2bn which employs thousands of people and contradicts no UK laws can be wrecked by US domestic policy.
This concern was raised by Mike Gapes MP at a recent Westminster Hall debate on the matter, who stated that "there is a wider issue to do with the relationship between the United States, the US authorities--perhaps in particular US jurisdictions--and their way of dealing with extraterritoriality".
It is the duty of our government to make sure that foreign governments do not create the agenda on issues directly affecting British industries. On this occasion, they have failed.
A double standard
The way in which the government has allowed the MSB industry to die is not only unjust but contradictory.
Earlier this year David Cameron welcomed Somalia's President Hassan Sheikh Mohamud in a landmark conference on the relationship between the two countries.
At the conference the UK and other donors pledged £84m in aid to Somalia, and committed to assisting Somalia's fledgling government on its transition towards democracy.
However the benefits of this deal will likely be outweighed by the closure of MSBs in the UK.
MSBs have been crucial in Somalia, as Islamist terrorism has made the creation of aid networks extremely difficult.
There are now an estimated 108,000 Somalis living in the UK, making the UK remittance industry essential to Somalia's economic recovery: The aid group Oxfam said that Somali immigrants in the U.K. send more than $154 million back to Somalia each year.
By allowing Somali MSBs to die David Cameron will effectively eliminate any benefits from an increased UK aid budget.
He will have set one standard for the banks and another for the British public.
The British remittance industry will not die loudly. As with many issues concerning diaspora communities in the UK it will largely be hidden from the public eye.
But the effects of its death will be felt for many years to come. Forced underground the remittance industry will be far more prone to criminality and exploitation and remitted money will be less likely to reach intended recipients.
Ultimately developing economies will suffer and a successful British industry will be destroyed.
However there are lessons to be learnt from this incident.
Clearly although banks should have the right to decide which companies they lend to, they cannot be allowed to remove lending based on false claims of illegality.
It is also not right that lending to British companies (which contravene no UK laws) can be removed so as to satisfy US legislators.
We must urgently address these issues if we are to prevent other vulnerable industries from suffering the same fate as the MSBs.
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