Somali refugees fear their families will starve after a money transferring operation was shut down under new anti-money laundering and terrorism laws.

BNZ has closed an account under the name of Adam Deer, a Somali refugee who came to New Zealand three and half years ago. Deer, who lives in Wellington, said the account was used by roughly 30 Somali families in New Zealand to send money back to relatives in the war-torn country.

The money was being used to support desperate families, not terrorism, and without it many would starve, he said.

"I send $100 a month to my mother. If I can't send that money she won't be able to get any food."

Asad Abdullahi, another refugee who has lived in New Zealand for 16 years, says the account was a vital lifeline for many families, including his own.

"There is no banking system in Somalia. If that is cut, the only way to send the money is for someone to go home."

With a weak central banking system and ongoing civil conflict, Somalia relies heavily on honour-based system of money traders, known as hawala, like the one used by Deer.

Deer's account is just one of a handful closed by New Zealand banks amid concerns they could be used to launder money or finance terrorism.

Banks had been auditing millions of accounts in order to comply with new laws, which will come into force on June 30.

It will require banks and other finance-based businesses, such as casinos, to detect and deter money laundering and the financing of terrorism. Failure to do so could result in a $5 million fine for a company and two years in prison for an individual.

BNZ financial crime management centre national manager Ash Kai Fong said the bank sympathised with Deer and his associates, but it had to follow the law.

Deer's account was receiving deposits from many individuals unknown to him, before that money was sent to a third party in Dubai. From there, BNZ was not able to track where the money went, he said.

"It's about not knowing where the funds have come from and where they are going."

A spokeswoman for Justice Minister Judith Collins said the new law did not prevent money being sent to Somalia but the bank had clearly decided the operation was too risky.

She said the people involved should talk to BNZ about what additional assurances they could provide or, failing that, complain to the Banking Ombudsman.

BNZ and ANZ have both confirmed closing a small number of accounts that were being used to funnel money offshore, often on the behalf of an unknown third party, to comply with the new law.

Kiwibank spokesman Bruce Thompson said the bank had closed some accounts where the account holders were being used as mules to receive and forward illegal obtain money. These closures were not specifically related to the new law, he said.

New Zealand Banker's Association chief executive Kirk Hope said banks were now asking tougher questions of customers, particularly concerning their identity, and closing accounts if necessary.

The police and Ministry of Justice's latest advisory on "at risk" countries for money laundering and terrorism financing does not include Somalia.