UAE tightens hawala regulations; Mandates registration for dealers

By Rahul Vaimal, Associate Editor
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In an effort to regulate hawala, the UAE has made it compulsory for the dealers in the country to register.

After the sixth meeting of the National Committee for Combating Money Laundering and the Financing of Terrorism and Illegal Organisations (NAMLCFTC) in Abu Dhabi, the Central Bank announced the new requirement for hawala service providers as part of UAE’s anti-money laundering and counter-terrorist financing (AML/CFT) framework strengthening.

What is Hawala?

Hawala or hundi is “money transfer without money movement.” Hawala is a popular unofficial and illegal money transferring method mostly common in South Asian countries.

In a hawala network, the people in these countries give their money to the hawala agents who then assign their associates in the country to deliver the money to the customer’s house. It is an alternative for the remittance channel out of the bank system.

UAE is considered as one of the major hubs of such illegal money transferring methods. As per the reports in 2019, the hawala deals in UAE amounted to about $44 billion and was led by India, Pakistan, Philippines, Egypt, UK and Bangladesh.

The meeting which was chaired by Abdulhamid M.Saeed Alahmadi, governor of UAE Central Bank and the Chairman of the committee also discussed introducing technological assistance and thus building capacity in both human and financial resources for strengthening the ability to prevent and suppress terrorist financing in the country.

A new website has also been developed to create awareness regarding these financial crimes and also to help the strategic partners and shareholders in complying with international standard reporting measures.

Further, the committee applauded the recent achievements of the country’s Financial intelligence Unit (FIU) which is an independent unit devoted to investigating suspicious transactions that include money laundering, terrorism financing and similar illegal activities.

FIU will launch a website to promote anti-money laundering and counter-terrorism financing.