Al-Barakat
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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 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 and functioning state apparatus, one that has not had a formal system of banking in the past 13 years. After many foreign communities largely washed its 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.
Source: Devesh Kapur: "Remittances, the New Development Mantra?" in Samuel Maimbo and Dilip Ratha, Remittances, (Washington DC: The World Bank, 2004).
Fees
For a ten percent fee they offer to transfer money almost anywhere in the world.Availability
For a long time, Al-Barakat was the only wire transfer service to offer transfer to Somalia. Al-Barakat is a modern form of hawala.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. Upon deposit, your you are given a code word. You then send the code word to the receiver and the receiver can withdraw the money at a local Al-Barakat office.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
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