MINNEAPOLIS—Carrying signs that read “No Bank = Death,” hundreds of Somalis rallied here Dec. 30 to protest the closing of money transfer businesses—known as hawalas—used to send funds to relatives. Since Somalia doesn’t have a banking system, money transfers are the only trusted method for sending money. On top of a growing war, Somalia faces drought and famine conditions.

The decisions by the banks to shut down transfers—the last ones doing them were the Minnesota-based Sunrise Community banks—is the result of U.S. federal laws against organizations that allegedly give “material support” to “foreign terrorist organizations.” The banks sought “waivers” from the U.S. government, but a government attorney responded, “Federal prosecutors don’t give waivers.”

Last fall, following a massive FBI frame-up operation, two Somali women from Rochester, Minn., were convicted of funneling money to al-Shabab, an armed Islamist group in Somalia. The two could face a maximum of 30 years in prison. Government evidence was based on wiretapping and unconstitutional searches of their computers, homes and trash.

—FRANK FORRESTAL