MINNEAPOLIS (Reuters) - A group of businesses that provide money transfers between Minnesota and Somalia said they had suspended their services on Thursday, forced into the move after a U.S. bank decided to shut down what they call a vital lifeline to the war-torn African country.

Somalia has appealed the decision by Sunrise Community Banks to end the remittances program from Minnesota, home to the largest Somali-American population in the United States. U.S.-based Somalis send about $100 million back home each year, according to the U.S. Treasury.

The move to shut down the service came two months after two Somali-American women from Rochester, Minnesota, were convicted of raising money for al Shabaab rebels, militants linked to al Qaeda who control parts of the Horn of Africa country.

Sunrise has said it was continuing to look for alternate arrangements to send remittances, but would end the service it was providing on December 30 over fears that it would risk violating U.S. regulatory and anti-terrorism financing laws.

The Somali American Money Services Association, which was ending its services even before the Sunrise deadline, said the businesses complied with state and federal laws and believed they were being singled out and denied vital banking services.

"Remittance is an essential lifeline for the Somali people, and it is the only source of funding that sustains the livelihood of millions of Somalis, mostly women and children," the association said in a statement.

The association said services would resume once a solution could be found.

The end-of-year deadline had sparked appeals by the Somali community in Minnesota, the Somali government, U.S. lawmakers and relief groups to find an alternative to the services.

U.S. banks have been closing these services over the last several years, leaving few alternatives to send money into Somalia, which has no formal banking system. Advocates said the Sunrise shutdown would force Somali Americans to use less secure and less documented routes.

The association said a rally was planned for Friday afternoon in Minneapolis to protest the end of the services.


U.S. Representative Keith Ellison of Minneapolis appealed to President Barack Obama earlier in December to find a way to continue the remittances, citing the "catastrophic humanitarian situation in Somalia."

Sunrise said it recognized the potential impact from the end of the wire transfer services and remained in constant communication with congressional leaders and government officials to look for a solution.

"We continue to work tirelessly with the community and government officials to create a temporary legal and regulatory solution that would allow the bank to extend the account closure date," Sunrise said in a statement.

The Somali government has said an estimated $2 billion -- one-third of the country's gross domestic product -- is channeled to Somalia through "hawala" or small money transfer businesses.

On Wednesday, the Somali Mission to the United Nations had appealed to the Sunrise CEO to extend the December 30 deadline. Sunrise had first planned to end the services on December 15, but later extended the program to December 30.

Sunrise said the challenges of providing aid and services to Somalia were not new and that the U.S. government had found ways to remove legal obstacles temporarily for aid groups providing food to famine victims.

"The bank remains hopeful that the government would be willing to consider a similar solution in this instance," Sunrise said. "Until that solution is found, the bank must continue to comply with all U.S. laws and banking regulations."

Sunrise has said its decision to end the service was unrelated to the federal trial of Amina Ali and Hawo Mohamed Hassan, the women from Rochester convicted of fund-raising for al Shabaab. Ali and Hassan say the funds were intended for the poor and needy.

Some 18 people have been charged in Minnesota in an investigation into efforts to recruit Americans to train or fight in Somalia. At least two Minnesota men are thought to have died in Somalia fighting for al-Shabaab.

(Reporting by David Bailey; Editing by Cynthia Johnston)

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