The Foreign Exchange Controversies

Which are the top 3 most hated companies in the money transfer domain? Which companies have been on the receiving end of most criticism towards its offering or its service? Which companies have been used for fraud? Which ones were called to be investigated?

After years of covering foreign exchange, these are the most shocking cases we have encountered when it comes to accusations in regards to money transfer providers and currency brokers:

1. Dahabshiil

Dahabshiil, which has the weirdest name in the money transfer industry (supposedly pronounced like this) is a company that has suffered a ton of criticism throughout the years.

Here are a few of the fiascoes that have evolved this company:

1. A Dahabshiil employee was arrested and kept in Guantanamo for alleged terror funding through the company. (2009)
2. Ever since Mr. Ahmed Mohamed Mohamoud “Silanyo” has been chosen as the president of Somaliland there have been strong accusations of him doing everything in his power to “give” Dahabshiil the control of private banking in the country. The newly elected president was quick to appoint Mr. Ali H. Hassan, who is Dahabshiil’s founder cousin, as the chief of cabinet, as well as appoint Dr. Sa’ad Haji Ali Shireh, the former manager of Dahabshiil as a minister. (2010)
3. Then, the firm has tried to address independent newsgroups and threaten them to remove any negative information about them. (2010)
4. In addition to that, the PR firm that was hired by Dahabshiil we accused that they have edited Wikipedia pages in order to clean Dahabshiil’s reputation. This has lead to an unpresidential attack on Wikipedia’s behalf (2011)
5. Dahabshiil’s UK bank accounts were shut down in 2013, but in that case, the criticism was mainly directed at Barclay’s bank and the strict regulation. (2013)
6. Most recently, the firm was sued by the son of political activist and singer  Saado Ali Warsame, which was lead the resistance to Dahabshiil and their services. Al Warsame’s son has accused Dahabshiil not only of funding Al Shabaab, which were the ones to assassinate Saado Ali Warsame, but also to put a bounty on her head and actively seek for her death. Somali communities from across the globe have shown support to this lawsuit. (2015)

This is the song by Sado Ali Warsame against Dahabshiil firm; According to her son’s lawsuit from 2015, her open criticism against the company has lead to her death.

2. Western Union

Western Union is notorious for three things: their sheer size as the world’s number 1 remittances company, their high fees and especially to developing regions, and the scam and involved with their product.

To attest for the way this company is viewed, please see the following examples:

1. In 2007, 158 different groups united into boycott the firm for its high/unfair fees.
2. In 2014, Kofi Annan, the former UN secretary has called to investigate the fees charged by companies like Western Union and Moneygram.
3. In 2014, the overseas development institutions called to the Financial Conduct Authority to check the excessive fees charged by the firm.

And this is merely a small selection of the criticism this company has been suffering throughout its 100 years of existence, and mainly over the past few years when the topic of remittances to developing countries has been getting a lot of media and government attention (after all, in its early years, Western Union wasn’t even transferring money by rather printing telegraphs).

Another main thing the company has been associated with is scam using its products. Because recipient’s identity remains anonymous in cash transfers, and of course because of its sheer size, making sure you can scam people from all corners of the world and receive payment somewhere near to you.

To attest for the danger embedded in their cash transfer service, the largest retailers in the world issued warnings about the topic alongside the most significant financial institutions:

1. Federal Bank of NY’s warning
2. FTC’s warning
3. Amazon’s warning
4. eHow’s warning regarding eBay
5. … And Western Union writes about this topic extensively on the website.

And recently CBC reported that a recent scam was done with the involvement of “legitimate” Western Union agents. Not only the service is problematic and often used for a scam, but this time certified agents are also suspected of aiding scammers. And they’ve also been fined for 1.75m Euro for not complying with money laundering regulation.

3. Crown Currency Exchange

Crown Currency exchange was a medium-sized money transfer firm from Penzance, UK that has collapsed, leaving debts to 13,000 of their customers valued at around GBP 3m. The company’s directories are currently being trialled where they are suspected of fraud and false accounting. Just the companies directories were arrested, and they have completed the sale of their other company TorFX to the confident hands of Currencies Direct (it should be noted that even though Crown Currency and TorFX shared offices and had joint ownership of a few parties, they are nowadays not related in any way).

It is suspected that Crown Currency was only a part of a bigger scheme that included cash for gold companies, and that the Benstead  family (who were directors and employees of Crown Currency and several other financial services firms) have allegedly burnt down documents relating to several of these companies before the investigating authorities could scrutinize them.

This whole story ended with a bigger tragedy when the man facing most allegations on the trial, Peter Benstead, killed himself during the trial. Some of the directors were convicted of several counts, mainly around false accounting, and some were deemed not guilty.

Are there more controversies with foreign exchange than other industries?

There have been multiple controversies involving the foreign exchange industry. In them, we could see big players like major banks, remittances leaders and massive investment firms, alongside smaller players like commercial companies; show a variety of malpractices towards clients. The information we provide here is not meant to discourage people from transferring money abroad – on the contrary, it demonstrates every sector has its faults, and in order to stay safe, it’s not enough to work through with a household name. Also, it’s clear that moving cash abroad is not really an option as there are so many limitations to it.