Double Olympic gold medallist Mo Farah has thrown his fame and weight behind a campaign to stop Barclays Bank withdrawing from Britain's £2bn remittance market, a decision campaigners say will have catastrophic repercussions for some of the world's poorest countries, including his native Somalia.

The runner has sent a direct appeal to the Barclays board pleading with them to step back from its plan to withdraw banking facilities after 12 August from about 250 remittances services sending money transfers to countries in Africa and Asia. Barclays is the last of the major banks dealing with a significant number of the smaller remittance firms but fears its continued involvement could it leave it open to accusations of aiding terrorists and money laundering. Last year, the US authorities imposed a $1.9bn fine on HSBC for poor money laundering controls, prompting that bank to run down its activities in the money-service sector.

But MPs, aid agencies and campaigners say the move will be devastating for countries that rely on remittances from minorities in the UK. The Treasury and the Department for International Development – though loath to dictate to Barclays – are also known to be concerned, as remittances sent by workers in Britain to their families abroad relieve the pressure on the aid budget. Aid agencies have voiced concern because many use the smaller remittance firms to pay their staff, particularly those working in remote areas less well covered by the multinational remittance companies.

Farah, who returns to the Olympic stadium on Saturday to compete in the anniversary Games, pleaded for a year's stay of execution. "Cutting this lifeline would be a disaster for millions," he said. "The small sums sent home by British Somalis each week enable family members to buy food, medicines and other life essentials. I have been sending money home for a number of years and the Mo Farah Foundation, along with some of the world's biggest international charities and organisations, including the United Nations, rely on these businesses to channel funds and pay local staff. Everyone following the issue understands that Barclays has a bank to run, but this decision could mean life or death to millions of Somalis."

He said the timing of the Barclays decision was disastrous. The bank has already set back its deadline by one month, but still small remittance firms say they were given too little notice to make alternative arrangements. Remittances account for 50% of Somalia's gross national income.

"I just cannot see how cutting the remittance lifeline squares with British foreign policy in the Horn of Africa. It will undo all the good work the government has achieved in the region," he said. "I have written to the prime minister, the foreign secretary and the mayor of London to voice concern, as have all the leading aid charities and development academics. We desperately need to find a solution."

The issue has been rumbling behind the scenes in parliament for several weeks. Recently the Bethnal Green MP Rushanara Ali and 46 other Labour MPs sent a letter to Barclays seeking a six month delay.

One fear is that people will be reluctant to use more expensive money transfer firms. Another is that the remittance market will be driven underground, making its use for illicit transfers more likely.

The Somali president, Hassan Sheikh Mohamud has also called on Barclays to rethink its decision, saying his country is at a crucial stage, having endured "two decades of chaos".

Firms such as the east London based Dahabshiil argue that they are already subject to rigorous regulation and say they cannot understand why Barclays does not seek to address its concerns with further checks.

In a letter to Dahabshiil, a Barclays representative said the decision is "not a negative reflection of your anti-money laundering standards, nor a belief that your business has unwittingly been a conduit for financial crime. It is, however, a commercial decision that we have taken due to the risks of the sector."

For all the campaigning, Barclays seems resolute. Earlier this month the bank said the onus must be on firms to show they have sufficient safeguards. "We remain happy to serve companies who have strong anti-financial crime controls, but are asking the others to find another bank."