Author: Syedur Rahman 16 September 2020
The UAE has made it mandatory for the country’s hawala service providers to register as part of its efforts to tackle money laundering and terrorist financing.
The UAE’s Central Bank announced the move after the sixth meeting of the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations (NAMLCFTC) in Abu Dhabi.
Hawala, also known as hundi, is an unofficial and informal means of transferring money that originated in South Asia. It involves the use of an agent who instructs an associate to deliver money to the customer’s house. It is estimated that between $100 billion and $300 billion is transferred annually using this system.
The UAE, which is a major market for hawala, believes regulating the practice will improve its monitoring of money laundering and its ability to prevent funding of terrorism. It is also assessing how it could use technology and manpower to strengthen its ability to use financial sanctions to prevent terrorist financing.
Senior UAE figures are also considering greater cooperation with countries that are also looking to combat money laundering and the funding of terrorist organisations.
The registration requirements for hawala should be seen as a positive step for the UAE as it looks to strengthening its anti-money laundering controls. It is one of a number of options that the UAE believes can make a difference.
But it must be noted that using hawala services is, in itself, not an indication of wrongdoing. Hawala is a traditional money transfer system. Its popularity stems from the fact that it is often a cheaper and more efficient means of transferring money around countries where traditional banking is either not comprehensive or involves bureaucracy that is hugely time consuming.
This article originally featured on Mondaq, it can be read here.
Syedur Rahman is known for his in-depth experience of serious fraud, white-collar crime and serious crime cases, as well as his expertise in worldwide asset tracing and recovery, civil recovery, cryptocurrency and high-stakes commercial disputes.